Question: assume you just deposited 1000 into a bank account the...
Assume you just deposited $1,000 into a bank account. The interest rate on your deposit is 6% and inflation is expected to be 2% over the next year.
What is the real interest rate you expect to earn on your deposit over the next year?
How much money will you have on deposit at the end of one year?
If you are saving to buy a new smartphone that currently sells for $1,050, will you have enough money to buy it next year?