You would like to buy a house that is currently on the market at $85,000, but you cannot afford it right now. However, you think that you would be able to buy it after 5 years. If the expected inflation rate as applied to the price of this house is 7% per year, what is its expected price after four years?
You would like to buy a house that is currently on the market at $85,000, but you cannot afford it right now. However, you think that you would be able to buy it after 5 years. If the expected inflation rate as applied to the price of this house is 7% per year, what is its expected price after four years?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You would like to buy a house that is currently on the
market at $85,000, but you cannot afford it right now. However, you think that you
would be able to buy it after 5 years. If the expected inflation rate as applied to the
of this house is 7% per year, what is its expected price after four years?
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