Jermaine lives in a world where the nominal interest rate is 3% and the inflation
Jermaine lives in a world where the nominal interest rate is 3% and the inflation
rate is 1%. Today, Jermaine has $200, with which he could purchase 80 Zaps. However, Jermaine realizes he could also put the money in savings for one year; if he did this, then in one year’s time he would have -SELECT A LABEL
2%
$3
3%
$2
1%
$6
more and would be able to purchase -SELECT A LABEL
2%
$3
3%
$2
1%
$6
more Zaps. (Assume that the price change for Zaps reflects the general inflation rate.)
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