gle Chrome /evo/index.html?deploymentld%3D56736719115714608139104112999&elSBN=9781337096607&snapshotld=1586258&id%3709153660& Q Search this course * CENGAGE MINDTAP Homework (Ch 11) 5. Interest, inflation, and purchasing power Suppose Alyssa is a cinephile and buys only movie tickets. Alyssa deposits $2,000 in a bank account that pays an annual nominal interest rate of 15%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $20.00. 100 movie tickets. Initially, the purchasing power of Alyssa's $2,000 deposit is For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Alyssa's deposit after one year in the first row of the table for each inflation 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 movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Alyssa will not buy seven-tenths of a movie ticket. Annual Inflation Rate 0% 15% 18% Number of Tickets Alyssa Can Purchase after One Year 97 V 115V Real Interest Rate When the rate of inflation is equal to the interest rate on Alyssa's deposit, the purchasing power of her deposit remains the same over the course of the year. aun Cantinia ch hp 8.
gle Chrome /evo/index.html?deploymentld%3D56736719115714608139104112999&elSBN=9781337096607&snapshotld=1586258&id%3709153660& Q Search this course * CENGAGE MINDTAP Homework (Ch 11) 5. Interest, inflation, and purchasing power Suppose Alyssa is a cinephile and buys only movie tickets. Alyssa deposits $2,000 in a bank account that pays an annual nominal interest rate of 15%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $20.00. 100 movie tickets. Initially, the purchasing power of Alyssa's $2,000 deposit is For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Alyssa's deposit after one year in the first row of the table for each inflation 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 movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Alyssa will not buy seven-tenths of a movie ticket. Annual Inflation Rate 0% 15% 18% Number of Tickets Alyssa Can Purchase after One Year 97 V 115V Real Interest Rate When the rate of inflation is equal to the interest rate on Alyssa's deposit, the purchasing power of her deposit remains the same over the course of the year. aun Cantinia ch hp 8.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:gle Chrome
/evo/index.html?deploymentld%3D56736719115714608139104112999&elSBN=9781337096607&snapshotld=1586258&id%3709153660&
Q Search this course
* CENGAGE MINDTAP
Homework (Ch 11)
5. Interest, inflation, and purchasing power
Suppose Alyssa is a cinephile and buys only movie tickets. Alyssa deposits $2,000 in a bank account that pays an annual nominal interest rate of 15%.
Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $20.00.
100 movie tickets.
Initially, the purchasing power of Alyssa's $2,000 deposit is
For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of
inflation. Then enter the corresponding purchasing power of Alyssa's deposit after one year in the first row of the table for each inflation 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 movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets,
you would round the purchasing power down to 20 movie tickets under the assumption that Alyssa will not buy seven-tenths of a movie ticket.
Annual Inflation Rate
0%
15%
18%
Number of Tickets Alyssa Can Purchase after One Year
97 V
115V
Real Interest Rate
When the rate of inflation is equal to the interest rate on Alyssa's deposit, the purchasing power of her deposit remains the same over the
course of the year.
aun Cantinia
ch
hp
8.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education