Suppose you were to make a $1,121 deposit for one year, with a nominal interest rate of

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Suppose you were to make a $1,121 deposit for one year, with a nominal interest rate of 8% and the inflation rate for the year is 4%.

By what percent does the purchasing power of that initial deposit grow after one year? (Hint: Calculate the real interest rate for the year. If the real interest rate is negative, that simply means the purchasing power of the deposit has decreased.)

Answer: ______

Related Book For answer-question

Introduction to Finance Markets Investments and Financial Management

ISBN: 978-1118492673

15th edition

Authors: Melicher Ronald, Norton Edgar

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Posted Date: Jan 26, 2024 08:05 AM

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Suppose you were to make a $1,121 deposit for one year, with a nominal interest rate of

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To calculate the real interest rate you can use the ... View the full answer

Introduction to Finance Markets Investments and Financial Management

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