Suppose you have $1000 that you deposited into a savings account that pays 5 percent per year. According to reports you hear in the news, the inflation rate this year is about 6 percent.
(a) What is the nominal value of the savings account after 1 year?
(b) In real terms, what is the value of the gain of your savings account, relative to the original $1000 deposit?
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(b) real rate...
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