In January 2017, Tammy Purchased a Bond Due in 24

question 78

Essay

In January 2017, Tammy purchased a bond due in 24 months. The cost of the bond is $857 and its maturity value is $1,000. No interest is paid each year, but the compound interest rate on the bond is 8%. Tammy also purchased a Series EE United States Government bond for $558, with a maturity value in 10 years of $1,000. This is the only Series EE bond she has ever owned. The Series EE bond is sold to yield 6% interest. Tammy is 13 years old and has no other source of income. She is claimed as a dependent by her parents. Compute Tammy's gross income from the bond and Series EE bond for 2017 .

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Definitions:

CPI

The Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Inflation Rate

The velocity at which the broad price level of goods and services climbs, reducing purchasing capability.

Aggregate Demand

The total demand for all goods and services within a particular economy at a given overall price level and in a given period.

Aggregate Supply

The total output of goods and services that producers in an economy are willing and able to supply at a given overall price level in a specified time period.