1. Suppose you have $200,000 in a bank term account. You earn 5% interest per annum from this account. You anticipate that the inflation rate will be 4% during the year. However, the actual inflation rate for the year is 6%. Calculate the impact of inflation on the bank term deposit you have and examine the effects of inflation in your city of residence with attention to food and accommodation expenses.
Answers
Explanation:
Inflation is a variable factor but important with respect to the expenses and budget of a person.
As per the case given in question statement, the amount deposited is $200,000 and the bank pays a 5% interest rate to the depositor. Thus, the person will get $210,000 after a year. However, since the inflation will be more than interest rate, so his overall expenses will increase and infarct they might utilize all his profit from bank investment if he keeps his food and accomodation expenses as per previous year
Find more information related to inflation;
https://brainly.in/question/10405735
impact of inflation on the bank term deposit that instead of $2000 benefit there was a loss of $2000
Explanation:
you have $200,000 in a bank term account.
inflation rate expected = 4 %
Hence Equivalent money =200,000 + 200,000 * 4 * 1 /100 = $ 208,000
5% interest per annum
Amount = 200,000 + 200,000 * 5 * 1 /100 = $ 210,000
Effective interest = $ 210,000 - $ 208,000 = $2000
Profit of $2000
Effective interest rate = (208,000 * R * 1)/100 = 2000
=> R = 0.96 %
was expected
but inflation 6 %
Hence Equivalent money =200,000 + 200,000 * 4 * 1 /100 = $ 212,000
Loss of $2000
Effective interest rate = (212,000 * R * 1)/100 = -2000
=> R = -0.94 %
impact of inflation on the bank term deposit that instead of $2000 benefit there was a loss of $2000
Learn More:
If the inflation in the country is4.2 percent and the interest ratesare ...
https://brainly.in/question/18234396
If the points of inflexion of a normal curve are 40 and 60 respectively ...
https://brainly.in/question/8294920