Answer;
= $ 682
Solution and explanation;
-We can calculate the buying power loss in three steps.
Step 1 - Interest made in a year.
-Interest in a year = savings amount * interest rate * time
-Interest in a year = $55,000 * 2% * 1 year
-Interest in a year = $1,100
Step 2- Amount needed to be made to keep up with inflation in that year;
-Amount to keep up with inflation = $55,000 * 3.24% * 1 year
-Amount to keep up with inflation = $ 1,782
Step 3- Buying power loss that year;
-Buying power loss = Amount needed to keep up with inflation - interest
-Buying power loss = $1,782 - $1,100
Buying power loss = $682
