George buys a one-year government bond on January 1, 2020, for $500. He receives principal plus...

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George buys a one-year government bond on January 1, 2020, for $500. He receives principal plus interest totaling $545 on January 1, 2021. Suppose that the CPI is 200 on January 1, 2020, and 214 on January 1, 2021. a) Find the nominal interest rate, the inflation rate and the real interest rate using the interest rate approximation equation. b) Do the same as in a), but now using the true formula for nominal interest rates. c) Suppose that instead George would receive principal plus interest totaling $650, and that the CPI on January 1 2021, was 256, recalculate a) and b) given these numbers. d) Is the error from using the approximation formula bigger or smaller in c) than it is in part a) and b)? Why? George buys a one-year government bond on January 1, 2020, for $500. He receives principal plus interest totaling $545 on January 1, 2021. Suppose that the CPI is 200 on January 1, 2020, and 214 on January 1, 2021. a) Find the nominal interest rate, the inflation rate and the real interest rate using the interest rate approximation equation. b) Do the same as in a), but now using the true formula for nominal interest rates. c) Suppose that instead George would receive principal plus interest totaling $650, and that the CPI on January 1 2021, was 256, recalculate a) and b) given these numbers. d) Is the error from using the approximation formula bigger or smaller in c) than it is in part a) and b)? Why?