You open a savings account with a 0.5% per year nominal interest rate, and the economy experiences 3% per year inflation. a. What is the nominal and real annual interest rate on the account? The nominal interest rate is %, and the real interest rate is %. b. What will happen to the purchasing power of the money you place in the account over time? The purchasing power of money in the account will

a. The nominal interest rate is 0.5%, and the real interest rate is -2.5%.

b. The purchasing power of money in the account will reduce.

Explanation:

a. What is the nominal and real annual interest rate on the account? The nominal interest rate is %, and the real interest rate is %.

From the question, we have:

Nominal interest rate = 0.5%

Inflation rate = 3%

In economics, the real is interest rate is calculated as follows:

Real interest rate = Nominal interest rate - Inflation rate = 0.5% - 3% = -2.5%

Therefore, the nominal interest rate is 0.5%, and the real interest rate is -2.5%.

b. What will happen to the purchasing power of the money you place in the account over time? The purchasing power of money in the account will

From the question, the interest rate attached to the savings account is a nominal interest rate. Since the nominal interest rate, unlike the real interest rate, is an interest rate that is not adjusted for inflation, the purchasing power of money in the account will reduce.

Let's call the distance between the moon and sun as z. The scientist can calculate the numerical value of sin x° and then write sin x° as y / z. They can then set the numerical value of sin x° equal to y / z and then solve for z.