Answer
-\$20
Work Step by Step
If the interest earned is 5% but prices increase by 7%, the money is actually worth 2% less after one year.
$1000\times0.02=20$
Microeconomics: Principles, Applications, and Tools (8th Edition)
by O'Sullivan, Arthur; Sheffrin, Steven; Perez, Stephen
Published by
Prentice Hall
ISBN 10:
0-13294-886-9
ISBN 13:
978-0-13294-886-9
Chapter 2 - The Key Principles of Economics - Exercises - 2.5 The Real-Nominal Principle - Page 46: 5.3
Update this answer!
You can help us out by revising, improving and updating this answer.
Update this answerAfter you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.
