Q. One year ago, you bought a bond for $10,000. You received interest of $400 at the end of the year, as well as your $10,000 principal. If the inflation rate over the last year was five percent, compute the real return. Show your work.
Q. As a result of increased tensions in the Middle East, oil production is down by 1.21 million barrels per day-a 5 percent reduction in the world's supply of crude oil. Elucidate the likely impact of this event on the market for gasoline and the market for small cars.