Question

Annual Inflation Rate Year 2 Percent 4 Percent 6 Percent 8 Percent 10 Percent 2019 $1,000...

Annual Inflation Rate
Year 2 Percent 4 Percent 6 Percent 8 Percent 10 Percent
2019 $1,000 $1,000 $1,000 $1,000 $1,000
2020 980 962 943 926 909
2021 961 925 890 857 826
2022 942 889 840 794 751
2023 924 855 792 735 683
2024 906 822 747 681 621
2025 888 790 705 630 564
2026 871 760 665 584 513
2027 853 731 627 540 467
2028 837 703 592 500 424
2029 820 676 558 463 386
Using the table, what will the real value of $100 be in 10 years if you hide the money under your mattress and the inflation rate is:
Instructions: Round your responses to two decimal places.
Assume you hid the money under your mattress in 2019.
a. 0%
b. 2%
c. 8%
0 0
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Answer #1

Real value of $100 after 10 years in different inflation rate scenarios:

Scenario 1: Inflation rate = 0%

Real Value in 2029 = $100

Since, inflation is zero, that means the prices, income, purchasing power all remains the same leading to same real value after 10 years.

Scenario 2: Inflation rate = 2%

Real Value in 2029 = $82

We found out this value from table above given

Scenario 3: Inflation rate = 8%

Real Value in 2029 = $46.3

We found out this value from table above given

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