This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Suppose you postpone consumption so that by investing at 8 you will have an extra 800 to spend in ... (Read 43 times)

sheilaspns

  • Hero Member
  • *****
  • Posts: 567
on: Jul 10, 2018
Suppose you postpone consumption so that by investing at 8 you will have an extra 800 to spend in one year. Suppose that inflation is 4 during this time. What is the approximate real increase in your purchasing power?
 
  A) 800
  B) 600
  C) 400
  D) 200

Question 2

Suppose you postpone consumption and invest at 9 when inflation is 3. What is the approximate real rate of your reward for saving?
 
  A) 3
  B) 5
  C) 6
  D) 7


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

ApricotDream

  • Sr. Member
  • ****
  • Posts: 336
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: C
Explanation: C) We can see that an inflation rate of 4 is one-half of our 8 rate of investment. Thus, one-half of the 800, or 400, is the real increase in your purchasing power.

Answer to Question 2

Answer: C
Explanation: C) We can see that an inflation rate of 3 is 6 less than our 9 investment rate. Thus, 6 is the real rate of your reward for saving.


sheilaspns

  • Member
  • Posts: 567
Reply 2 on: Jul 10, 2018
Thanks for the timely response, appreciate it

dawsa925

  • Member
  • Posts: 326
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

Glaucoma is a leading cause of blindness. As of yet, there is no cure. Everyone is at risk, and there may be no warning signs. It is six to eight times more common in African Americans than in whites. The best and most effective way to detect glaucoma is to receive a dilated eye examination.

Did you know?

The average older adult in the United States takes five prescription drugs per day. Half of these drugs contain a sedative. Alcohol should therefore be avoided by most senior citizens because of the dangerous interactions between alcohol and sedatives.

Did you know?

Approximately 25% of all reported medication errors result from some kind of name confusion.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

A wrench after it has been forged but before the flashing (extra material around the wrench) has ... A wrench after it has been forged but before the flashing (extra material around the wrench) has ...
Transplantation of an extra stomach and length of intestine in a rat. Koopmans (1981) implanted an ... Transplantation of an extra stomach and length of intestine in a rat. Koopmans (1981) implanted an ...
Let A ⊆ R and p ∈ A. Suppose A\{p}6= ∅. Prove that p is an isolated point of A if and ... Let A ⊆ R and p ∈ A. Suppose A\{p}6= ∅. Prove that p is an isolated point of A if and ...
Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ... Let f be a real function with domain R. Suppose that for each ǫ > 0, there is a continuous ...
Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ... Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ...
A highway curve of radius 80 m is banked at 45°. Suppose that an ice storm hits, and the ... A highway curve of radius 80 m is banked at 45°. Suppose that an ice storm hits, and the ...
Video: Primary Active Transport - electrochemical gradient and ion transport / water movement

For a complete list of videos, visit our video library