savings account * 1 point beginning balance $1,000 apr 5% annual inflation rate 8% account balance $1,050…

savings account * 1 point beginning balance $1,000 apr 5% annual inflation rate 8% account balance $1,050 did the purchasing power rise or fall? rise fall on the handout look at the amortization schedule. what can you say about the pattern? payment on the interest decreases over time payment on the interest increases over time payment on the interest doesnt change

savings account * 1 point beginning balance $1,000 apr 5% annual inflation rate 8% account balance $1,050 did the purchasing power rise or fall? rise fall on the handout look at the amortization schedule. what can you say about the pattern? payment on the interest decreases over time payment on the interest increases over time payment on the interest doesnt change

Answer

Explanation:

Step1: Analyze purchasing - power change

The account has an APR of 5% and an inflation rate of 8%. Inflation reduces the value of money. If inflation is higher than the interest rate on the account, the purchasing - power falls.

Step2: Analyze amortization schedule pattern

In an amortization schedule for a loan, as the principal is paid down over time, the interest payment (which is calculated as a percentage of the remaining principal) decreases over time.

Answer:

  1. B. fall
  2. A. payment on the interest decreases over time