Solve the Application Problem

question 1

Multiple Choice

Solve the application problem. If no interest rate is given, assume % interest compounded daily. Round to the nearest
cent.
-Kerry and Andy Zell are retired and after saving their entire life, they have $290,000 in a savings account paying 3% compounded daily. What is their gain or loss in purchasing power in a year in which the CPI is 4%?

• A)Gain of $2,768.55
• B)Loss of $301,600.00
• C)Gain of $301,600.00
• D)Loss of $2,768.55

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Definitions:

Reaction Formation

Disguising unconscious content by turning it into its opposite.

Repression

A psychological defense mechanism where unpleasant thoughts, feelings, or desires are excluded from conscious awareness.

Denial

A psychological defense mechanism where a person refuses to accept reality or facts, effectively protecting themselves from uncomfortable or painful emotions.

Projection

Seeing one’s own unconscious content in others rather than oneself.