John was born in 1982 and his parents opened up a bank account with $1,000. From...
John was born in 1982 and his parents opened up a bank account with $1,000. From 1982, assume that the bank account yielded a 3 percent rate of return per year.
a. (2pts) What was the value of John’s bank account when he graduated high school in 2000, when expressed in 2000 prices?
b. (2pts) Assume that inflation was 2 percent per year. What is the value of his bank account as of 2018, when expressed in 1982 prices? (Hint: Use the Rule of 70.)
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