Exam 8: Inflation

At age 18, you decided to bury $1,000 in your back yard and vowed not to use this money until your planned retirement at age 65.What will be the approximate real purchasing power of this money at that time, assuming that the average annual inflation rate over this time period is 4%?

When inflation rises unexpectedly, it is generally the case that

A small amount of inflation may be good for the economy since

The real return on a ten-year Treasury bond was highest in the period from

If a one-year bond pays a fixed interest rate of 2.5% per year and this year's inflation rate is 2.8%, what is your real rate of return?

If you lost $1,000 in cash in 2000 and found it again in 2009, the real purchasing power of this cash would have changed by

An unanticipated increase in inflation will lead to a redistribution of wealth but

Wage indexation

If your parents promised to give you $1,000 in cash every Christmas for the next 30 years, what would be the real purchasing power of the final $1,000 if the average annual inflation rate over this time period is 3 percent?

If wages and prices were fully indexed,

What was the average real rate of return of three-month Treasury bills during the period of 1970 to 1979?