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Suppose you are building an economic model to help decide how to pick the best investment to save for college.The entire proceeds of the investment will be used to pay college tuition.The rate of inflation is expected to be 2 percent a year for three years.The price of college tuition is expected to increase by 5 percent a year.The nominal interest rate on AAA-rated government three-year bonds is 3 percent.Which rates are most appropriate to incorporate into your model?

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Suppose you are building an economic model to help decide how to pick the best investment to save for college.The entire proceeds of the investment will be used to pay college tuition.The rate of inflation is expected to be 2 percent a year for three years.The price of college tuition is expected to increase by 5 percent a year.The nominal interest rate on AAA-rated government three-year bonds is 3 percent.Which rates are most appropriate to incorporate into your model?





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