EXplain how rate inflation affects savings? by the income and saving
EXplain how rate inflation affects savings?
by the income and saving
Homework Answers
Inflation can be defined as a rise in general price levels in the economy. When the price level in the economy rises, the value of money falls or erodes. Suppose the price of an apple is $10 today but $11 next year, this means an annual inflation rate of 10% and the same amount of money($10) cannot purchase the same apple because of erosion in it's value.
The above mentioned explanation will make sense to you in case of savings also because the money you save will not be worth the same or will not be able to purchase the same amount of product as it did earlier due to inflation.
Thanks.
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EXplain how rate inflation affects savings? by the income and saving
Describe how inflation interact with the tax system to distort savings and how it affects investment....
Describe how inflation interact with the tax system to distort savings and how it affects investment. Is this problem more worst now or twenty years ago?
Describe how inflation interact with the tax system to distort savings and how it affects investment. Is this problem more worst now or twenty years ago?
Describe how inflation interact with the tax system to distort savings and how it affects investment. Is this problem more worst now or twenty years ago?
1. How does expected inflation rate affects interest rate? Use the demand and supply in the...
1. How does expected inflation rate affects interest rate? Use the demand and supply in the bond market to explain your answer. 2. Differentiate the Expectation theory and Market Segmentation theory in explaining the yield curve?
Question 4. (6 points each) How would each of the following affects equilibrium saving, investment, and...
Question 4. (6 points each) How would each of the following affects equilibrium saving, investment, and real interest rate? Explain using the saving-investment diagram. State your assumptions if necessary. (1) Income is expected to rise in the future. (2) Productivity is expected to drop next year.
Define demand-pull inflation. Using the AS/AD model, explain how demand-pull inflation affects the level of aggregate...
Define demand-pull inflation. Using the AS/AD model, explain how demand-pull inflation affects the level of aggregate output and the price level in the economy (which curve shifts, in what direction, and what happens to equilibrium output and price level). Give an example of macroeconomic policy that can be used to counter the effects of demand-pull inflation and discuss its effect on the equilibrium output and price level.
a-1. With a 3.0% inflation rate (Spreadsheet 21.2), by how much would your retirement annuity grow...
a-1. With a 3.0% inflation rate (Spreadsheet 21.2), by how much would your retirement annuity grow if you increase the savings rate by 17%? (Round your answer to 2 decimal places.) Growth in retirement annuity a-2. Is the benefit greater in the face of inflation? O Yes No ment Years Income Growth Rate of Inflation 07 .03 Income Deflator 50,000 1.00 53,500 1.03 70,128 137,952 1.56 271,372 2.09 533,8291 Total 1 7 ,445, 673 1 D E Savings Rate ROR...
1 Required annuity payments Retirement income today Years to retirement Years of retirement Inflation rate Savings...
1 Required annuity payments Retirement income today Years to retirement Years of retirement Inflation rate Savings Rate of return $35,000 10 25 5.00% $165,000 9.00% 10 Calculate value of savings in 10 years: 11 Savings at t = 10 Formulas #N/A 12 13 Calculate value of fixed retirement income in 10 years: 14 Retirement income at t = 10 #NA 16 Calculate value of 25 beginning-of-year retirement payments at t=10: Retirement payments at t = 10 #N/A 19 Calculate net...
Inflation is important because: all answers are correct O it affects the real interest rate O...
Inflation is important because: all answers are correct O it affects the real interest rate O it affects the value of one's income O it affects the real rate of return one earns on investments O it often affects the negotiation of wage contracts and the size of the cost of living allowances FO F7 F8 F9 F10 F11 % & 3 5 6 7 00 9 E R T Y u D ת G H J X с
with a 3.0% inflation rate (spreadsheet 21.2) by how much would your retirement annuity grow if...
with a 3.0% inflation rate (spreadsheet 21.2) by how much
would your retirement annuity grow if you increase the savings rate
by 1.7%
F В 1Retirement Years Income Growth Rate of Inflation Savings Rate ROR rROR 0291 rConsumption 42,500 44,150 51,419 75,264 110,167 161,257 49,668 .15 Saving 7,500 8,025 10,519 20,693 40,706 80,074 1,116,851 .06 2 25 Age 30 07 Income 50,000 53,500 70,128 137,952 271,372 533,829 7,445,673 03 Cumulative Savings 7,500 15,975 61,658 308,859 943,477 2,457,518 Real Annuity Deflator...
How inflation affects both the country and you personally?
How inflation affects both the country and you personally?
Question 4. (6 points each) How would each of the following affects equilibrium saving, investment, and real interest rate? Explain using the saving-investment diagram. State your assumptions if necessary. (1) Income is expected to rise in the future. (2) Productivity is expected to drop next year.
Define demand-pull inflation. Using the AS/AD model, explain how demand-pull inflation affects the level of aggregate output and the price level in the economy (which curve shifts, in what direction, and what happens to equilibrium output and price level). Give an example of macroeconomic policy that can be used to counter the effects of demand-pull inflation and discuss its effect on the equilibrium output and price level.
a-1. With a 3.0% inflation rate (Spreadsheet 21.2), by how much would your retirement annuity grow if you increase the savings rate by 17%? (Round your answer to 2 decimal places.) Growth in retirement annuity a-2. Is the benefit greater in the face of inflation? O Yes No ment Years Income Growth Rate of Inflation 07 .03 Income Deflator 50,000 1.00 53,500 1.03 70,128 137,952 1.56 271,372 2.09 533,8291 Total 1 7 ,445, 673 1 D E Savings Rate ROR...
1 Required annuity payments Retirement income today Years to retirement Years of retirement Inflation rate Savings Rate of return $35,000 10 25 5.00% $165,000 9.00% 10 Calculate value of savings in 10 years: 11 Savings at t = 10 Formulas #N/A 12 13 Calculate value of fixed retirement income in 10 years: 14 Retirement income at t = 10 #NA 16 Calculate value of 25 beginning-of-year retirement payments at t=10: Retirement payments at t = 10 #N/A 19 Calculate net...
Inflation is important because: all answers are correct O it affects the real interest rate O it affects the value of one's income O it affects the real rate of return one earns on investments O it often affects the negotiation of wage contracts and the size of the cost of living allowances FO F7 F8 F9 F10 F11 % & 3 5 6 7 00 9 E R T Y u D ת G H J X с
with a 3.0% inflation rate (spreadsheet 21.2) by how much
would your retirement annuity grow if you increase the savings rate
by 1.7%
F В 1Retirement Years Income Growth Rate of Inflation Savings Rate ROR rROR 0291 rConsumption 42,500 44,150 51,419 75,264 110,167 161,257 49,668 .15 Saving 7,500 8,025 10,519 20,693 40,706 80,074 1,116,851 .06 2 25 Age 30 07 Income 50,000 53,500 70,128 137,952 271,372 533,829 7,445,673 03 Cumulative Savings 7,500 15,975 61,658 308,859 943,477 2,457,518 Real Annuity Deflator...
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