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You would you like to buy a CD that costs $1000 and promises you to pay $1250 at the end of the first year. If

You would you like to buy a CD that costs $1000 and promises you to pay $1250 at the end of the first year. If the economy has a flat price level increase of %10 for each year.

a) What is the annual nominal return on this CD?

b) What is the annual inflation rate in the economy?

c) what is the real rate of return on this CD?

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