Gce Model Questions Vol1 2021 Economics Question 20

Practice objective / multiple choice question 20 from the 2021 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 20 GCE_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

The Consumer Price Index (CPI) was 120 in 2020 and 126 in 2021. A savings account pays a nominal interest rate of 8 % per annum.\n(a) Calculate the inflation rate between 2020 and 2021.\n(b) Using the Fisher approximation, find the real interest rate.\n(c) If a person saved \(\text{₦}10{,}000\) at the start of 2020, what is the purchasing power of the amount at the end of 2021 after interest is credited and prices have changed? Give the final amount in 2020‑price terms (rounded to the nearest naira).

Answer Options

A. 5%; 2%; ₦10,150
B. 6%; 2%; ₦10,200
C. 4%; 4%; ₦10,350
Correct Answer D. 5%; 3%; ₦10,286
Correct Answer
D
Correct Option:
5%; 3%; ₦10,286

About This Question

This is Gce Model Questions Vol1 2021 Economics Question 20. It is one of the objective questions from the 2021 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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