Answer Happy

Question 2 5 pts Suppose you have $10,000 that you can spend today on video game consoles like PlayStation 5 that cost $500 each. Alternatively you can invest this $10,000 in U.S. Treasury Securities such as 10 year T-bond that is expected to earn a 8% nominal rate of interest. If the expected inflation over the coming year is 6%, a) how many PlayStation can you buy today? b) how much money will you have at the end of 1 year if you invested on T-bond instead? c) how much would you expect the PlayStation 5 would cost at the end of one year in light of the inflation? d) using your answer on b) and c) to determine how many (fractions are ok) PlayStation you can purchase at the end of one year? In % terms, how many more or fewer PlayStation 5 can you buy at the end of 1 year? e) what is your real rate of return if you invested in T-bond?