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Suppose that you have $250 to invest: a. You decide to store the $250 in cash under your mattress. If inflation in 3 percent, what

Suppose that you have $250 to invest:

a. You decide to store the $250 in cash under your mattress. If inflation in 3 percent, what will the real value of the cash be after one year under the mattress?

b. If the nominal interest rate for a typical savings account is 1 percent, how much value did you lose by by not depositing the money at the bank?

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