8. Interest, inflation, and purchasing power Suppose Beth is a sports fan and buys only baseball caps. Beth deposits $4.000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixedthat is, it won't change over time. At the time of her deposit, a baseball cap is priced at $10.00 Initially, the purchasing power of Beth's $4,000 deposit is baseball caps. For each of the annual inflation rates given in the following table, first determine the new price of a baseball cap, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power or Beth's deposit after one year in the first row of the table for each ination rate. Finally, 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 baseball cap. For example, if you find that the deposit will cover 20.7 baseball caps, you would round the purchasing power down to 20 baseball caps under the assumption that Beth will not buy seven-tenths of a baseball cap. Annual Inflation Rate 5% 0% 8% Number of Caps Beth Can Purchase after One Year Real Interest Rate When the rate of inflation is equal to the interest rate on Beth's deposit, the purchasing power of her deposit over the course of the year