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.

Kindly check explanation

Explanation:

Account balance or principal = $200,000

Interest rate per annum = 5% = 0.05

Actual inflation rate for the year = 6% = 0.06

Period = 1 year

Amount at the end of one year:

Principal × ( period + interest rate)

$200,000 × ( 1 + 0.05)

$200,000 × (1.05) = $210,000

With anticipated inflation rate of 4% :

$200,000 × ( 1 + 0.04)

$200,000 × (1.04) = $208,000

Purchasing power = $208,000

At this rate of inflation, $208,000 will buy us what $200,000 can buy today.

Excess amount = $210,000 - $208,000 = $2000

$2000 will be earned if the principal is placed in bank.

With actual inflation rate of 6% :

$200,000 × ( 1 + 0.06)

$200,000 × (1.06) = $212,000

Purchasing power = $212,000

With inflation rate of 6%, $200,000 today will be equivalent to $212,000 after one year and as such will be required to purchase the same items $200,000 can today.

Deficit amount = $210,000 - $212,000 = $(2000) deficit

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

                                          hope it