Determine how much do you have in your savings account

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Reference no: EM13203597

Suppose that you are going to buy a BMW that sells for $40,000. Assume that the interest rate on a savings account is 10% and that your savings account currently has $40,000. For simplicity, assume that BMWs are the only good in the economy.

b. At the end of one year, how much do you have in your savings account?

c. Assume that the price of the BMW remains constant for the entire year. What were the nominal interest rate and the real interest rate for the year?

Reference no: EM13203597

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