Question

real and nominal rates of interest. Zane Perelli currently have $100 that he claims spend today on Polo shirts costing $25 each. alternatively, he could invest the $100 in a risk of free u.s. treasury security that is expected to earn a 9% nominal rate of interest. the consensus forecast leading economist is a 5% rate of inflation over the coming year. how many Polo shirts can Zane purchase today? how much money will Zane have at the end of 1 year if he forgoes purchasing Polo shirts today?

Answer 1

The answer will be 2,500. Hope this help