What is the real inflation tax paid by maria for second year

Reference no: EM13233539

Assume that Maria Moneybags keeps $1000 in cash in her sock drawer. Use this information to answer questions 9 to 14.

1. Over the first year, the inflation rate is 10%. What is the real inflation tax paid by Maria for this year?

2. Maria keeps the cash in her sock drawer for another year and the inflation rate is 10% again during the second year. What is the real inflation tax paid by Maria for the second year?

3. Now assume that the inflation rate was 25% in the first year and 25% again in the second year. Recalculate your answer to question 9 using this higher inflation rate.

4. Recalculate your answer to question 10 assuming that the inflation rate was 25% in both the first year and the second year.

5. How much different is Maria's total real inflation tax over the course of the two years when the inflation rate is 25% compared to when the inflation rate is 10%?

6. Use your answer to question 13 to explain why hyperinflation is such a problem.

Reference no: EM13233539

Questions Cloud

What powers of the church-middle ages : What powers of the Church, so effective during the Middle Ages, were now worthless after 1500 to force others, whether Protestant or Catholic, to do its will? How did Protestants think they could save their souls?

What are the disadvantages of the candidates plan : Concerned about the crowding-out effects of government borrowing on private investment spending, a candidate for president argues that the US should just print money to cover the government's budget deficit.

Explain what is the concentration of cn- at equilibrium : A 50.0-mL sample of 2.0 x 10-4 M CuNO3 is added to 50.0 mL of 4.0 M NaCN. Cu+ reacts with CN- to form the complex ion [Cu(CN)3]^2: [Cu(CN)3]^2- Cu+ (+) 3CN- K = 1.0 x 10^-9

Find the total magnetic moment of the sample : A sample of paramagnetic material containing $10^{25}$ atoms is placed in an external field magnetic field of 1 tesla at room temperature

What is the real inflation tax paid by maria for second year : Assume that Maria Moneybags keeps $1000 in cash in her sock drawer. Over the first year, the inflation rate is 10%. What is the real inflation tax paid by Maria for this year. What is the real inflation tax paid by Maria for the second year

What are the primary elements of each risk control : What are the primary elements of each of the three types of risk control? Assume you are in a hazard hunt; list a few factors in your job that may contribute to a hazard and how likely is it that a hazardous situation will occur?

Find the type of grammar : S - > a ? b | b ? c | aB S-> ? S|b

Explain what is the ph of a solution obtained by nitric acid : What is the pH of a solution obtained by adding 5.00 g of HI to 295 mL of a 0.786 M solution of nitric acid?

Describe how an organization should use each criterion : Identify and describe three criteria that should be used to evaluate the selection of a database management system. Describe how an organization should use each criterion to evaluate database management system selection.

User Account

All Pages