Compute the real mortgage interest rate.
Nancy buys a house in 2000. He obtains a fixed 10% mortgage interest rate also makes payments of $1,000 per month. The 2000 CPI is 90, the 2001 CPI is 90, the 2002 CPI is 100, the 2003 CPI is 110 also the 2004 CPI is 120.
a) Illustrate what is the real mortgage interest rate in 2001, 2002, 2003 also 2004?
b) Illustrate what are the values in 2000 dollars of Nancy's monthly mortgage payments in 2001, 2002, 2003 also 2004?