Question: Please answer the following question. Please show full working out/ calculations and justification, explaining the economic reasoning used to reach the answer. Suppose that the

Please answer the following question. Please show full working out/ calculations and justification, explaining the economic reasoning used to reach the answer.

Suppose that the current level of the GDP deflator is 110 and the nominal interest rate is 0.04. For what expected value of the GDP deator does the real rate in this economy equal 0.01? Round your answer to the nearest whole number (e.g., if your answer is 120.3,type it in as 120, if it is 120.5 or 120.7 submit it as 121)

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2. Find out if there are other reference points that can be used as reasonable alternatives.

1. Identify your reference point when making a decision based on an element of risk.

3. If there are reasonable alternatives, think about your decisions based on the different reference points and see if there are any contradictions in the decisions.