Which of the following is TRUE, if inflation could be always perfectly anticipated?
A. no costs to society arise from inflation
B. there are no shoe-leather costs
C. there are no menu costs
D. currency holders would not experience any loss of purchasing power
E. none of the above
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If you had $3,000 in a savings account that paid 5% interest compounded annually, how much would you have in your account after five years?
A. 3484
B. 3629
C. 3750
D. 3829
E. 4224
If you had $1,000 in a savings account that paid 4% interest compounded annually, how much would you have in your account after three years?
A. 1012
B. 1120
C. 1125
D. 1250
E. 1400
If you had $2,000 in a savings account that paid 4% interest compounded annually, what would be the real value of your savings after two years if the annual inflation rate were 2%?
A. 2040
B. 2081
C. 2160
D. 1163
E. 2247
If you had $4,000 in a savings bank that pays you 2% interest per year, what would be the real value of your savings after 2 years and the yearly inflation rate were 3% per year?
A. 3959
B. 4080
C. $4, 162
D. 4244
E. 4410