1. If inflation is up by 5% and nominal rates go from 5 to 6% and real interest increases from 4% to a new real rate, what do you expect the change in real interest rates to be? (Short answer please.)
2. You are saving for retirement. To live? comfortably, you decide you will need to save $ 1$1 million by the time you are 6565. Today is your 32 nd32nd ?birthday, and you? decide, starting today and continuing on every birthday up to and including your 65 th65th ?birthday, that you will put the same amount into a savings account. If the interest rate is 7 %7%?, how much must you set aside each year to make sure that you will have $ 1$1 million in the account on your 65 th65th ?birthday?