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ulan what they should be. (d) You are a banker. You predict the inflation rate to be the inflation rate calculated in (b)(1). You want
ulan what they should be. (d) You are a banker. You predict the inflation rate to be the inflation rate calculated in (b)(1). You want to make a 4% return on the money you lend to people and businesses. What is the lowest nominal interest rate borrowers should expect to see at your bank? Explain. (c) A worker is negotiating a raise with her employer. Based on the inflation rate you calculated in (b)(i), if the employee is given a cost-of-living-adjustment (COLA) of 10% to her salary, what will happen to her real wage? Explain. 25%-10%-15% Her real wages decreased because they are still 15% less than what they should be. (d) You are a banker. You predict the inflation rate to be the inflation rate calculated in (b. You want to make a 4% return on the money you lend to people and businesses. What is the lowest nominal Interest rate borrowers should expect to see at your bank? Explain. This Year's Output 800 pairs of Converse 2,000 gallons of Dr. Pepper 200 pairs of Vans 5,000 lbs. of wheat This Year's Price $10 per pair $2 per gallon $15 per pair S5 per pound Queentucky, produces 4 final goods: Converse, Dr. Pepper, Vans and wheat. (a) Calculate this year's nominal gross domestic product (GDP). $40,000 (6) Assume that in Queentucky the GDP deflator/CPI index is 100 in the base year and 125 this year. Calculate the following: ) The inflation rate, expressed as a percentage between the base year and this year. 25% (ii.) This year's real GDP: 32,000 c) A worker is negotiating a raise with her employer. Based on the inflation rate you calculated in (b), if the employee is given a cost-of-living adjustment (COLA) of 10% to her salary, what will happen to her real wage? Explain. 25%-10%-15% Her real wages decreased because they are still 15% less than what they should be. rate to be a/eroth Y to make W lewenal Interest 4 of 5 Words: 1106 of 1337
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