Elizabeth is seeking to expand her rare coin collection. each year, rare coins increase in price at a three percent rate. she believes that if she invests her money for one year, she should be able to buy 26 coins for what 25 coins would cost today. what is the approximate nominal rate necessary to compensate for waiting and to cover inflation?

Brian has just finished college. he wants to set up a small business to make and sell fireworks. he registers his company and acquires a license from the government. he finds that most of his competitors are selling fireworks at an extremely low price. he would like to make more money, so he decides to innovate and develop better fireworks. he sells his fireworks at a higher price, and they are a huge hit with the customers. after a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government’s health and safety regulations. he even starts exporting fireworks overseas. which type of economy does this scenario describe?