Question 11A) If "the good" has a price of $1,000, i,= 0.01, & r;= 0.02 calculate theexpected price of this the good next year (Pr+1).1B) If, instead, the interest rate decreases such that, i,calculate the expected rate of inflation next year (n°+1), exactly.0.008, & r; = 0.02

Given: 1A) Price (Pt) =$1000 it=0.01 rt=0.02 To find: the expected price of good next year

Answered: 1A) If “the good" has a price of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1A) If “the good" has a price of $1,000, i, = 0.01, & r, expected price of this the good next year (P+1). 1B) If, instead, the interest rate decreases such that, i̟ = 0.008, & r; = 0.02 = 0.02 calculate the calculate the expected rate of inflation next year (n°+1), exactly.