Suppose Ginny is an avid reader and buys only comic books. Ginny deposits $3,000 in a bank account that pays an annual nominal interest rate 10%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a comic book is priced at $15.00. Initially, the purchasing power of Ginny's $3,000 deposit is comic books. For each of the annual inflation rates given in the following table, first determine the new price of a comic book, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Ginny's deposit after one year in the first row of the table for each inflation rate. Fina enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest comic book. For example, if you find that the deposit will cover 20.7 comic books, would round the purchasing power down to 20 comic books under the assumption that Ginny will not buy seven-tenths of a comic book. Annual Inflation Rate 0% 10% 13% Number of Comics Ginny Can Purchase after One Year Real Interest Rate When the rate of inflation is equal to the interest rate on Ginny's deposit, the purchasing power of her deposit course of the year. over the

Sally will earn $30,000 this year and $40,000 next year. The real interest rate is 20% between this year and next year; she can borrow or lend at this rate. She has no wealth at the start of this year and plans to finish next year having consumed everything she possibly can. She would like to consume the same amount this year as next year. The inflation rate is 0%. (a) How much should Sally save this year? How much will Sally consume in each of the two years? (b) How would your answers change if the real interest rate was 40% ?

Last year the jones family earned $40,000. This year their income is $42,000. If the inflation rate was 10%, did the jones family experience an increase/decrease/no change in their Normal income? Did the jones family experience an increase/decrease/no change in the real income ?

Assume you have won a lottery prize of $5,000, which works out great since you want to buy a new gaming PC that costs $5,500. You decide to save the lottery winnings for one year by purchasing a bank CD with one year until maturity. The interest rate on your deposit is 12% and inflation is expected to be 8% over the next year. You plan to work part-time to make up any shortfall in your savings covering the cost of the gaming PC one year from now. a.  How much money will you have in your bank account at the end of one year? b. What is the real interest rate you expect to earn on your deposit over the next year?  c. Will you have enough money from the savings to buy the PC next year? d. If your answer to c. is no, how many hours of work @ $15/hour will be required to make up the shortfall?

Required information In wisely planning for your retirement, you invest $18,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 2.8% per year. How many future dollars will you have in the account immediately after your last deposit? You will have $ |future dollars in your account immediately after your last deposit.

The idea that a regular annual inflation rate of 35 per cent requires CPP adjustments, but a regular annual inflation rate of 25 per cent does not, is quite absurd. Discuss.

The consumer price index (CPI) of a country was approximately 200 at the beginning of year 2010. If inflation continued at an average rate of 2.5%, what would the index be at the beginning of year 2021?

Required information In wisely planning for your retirement, you invest $34,000 per year for 20 years into a 401K tax-deferred account. Assume you make a real return of 10% per year when the inflation rate averages 3.3% per year. How many future dollars will you have in the account immediately after your last deposit? You will have $ | future dollars in your account immediately after your last deposit.

A person's savings eams an effective annual rate of return of 9%. Income tax is paid on the interest earned at a rate of 55%. If the inflation rate is 3% per year, what is the annual after-tax real rate of return? Answer as a percentage, correct to 2 decimals.

Question 7 The price of a product was $0.88 in the year 2008 and $1.28 in the year 2018. What is the average annual inflation rate for this product? 3.82 % 3.68% 3.42 % 3.98 % Question 8 If the CPI for January 2008 is 208.837 and the CPI for December 2018 is 255.539, what is the average annual inflation rate (per year) from Jan 2008 to Dec 2018? (Hint: Calculate monthly inflation rate and then use annual effective interest rate) O 1.65 % ☐ 1.75% O 1.95 % O 1.85 %