Suppose that the only good you purchase is premium bottled water and that at the beginning of the year, the price of a bottle is $2.00. Suppose you lend $1,000 for one year at an interest rate of 5...



Suppose that the only good you purchase is premium bottled water and that at the beginning of the year, the price


of a bottle is $2.00. Suppose you lend $1,000 for one year


at an interest rate of 5 percent. At the end of the year, the


price of premium bottled water has risen to $2.08. What is


the real rate of interest you earned on your loan?



May 26, 2022
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