You Put Money in an Account and Earn a Real

question 34

Multiple Choice

You put money in an account and earn a real interest rate of 10 percent. Inflation is 4 percent, and your marginal tax rate is 40 percent. What is your after-tax real interest rate?

• A) 1.8 percent
• B) 2.4 percent
• C) 3.2 percent
• D) 4.4 percent

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Definitions:

Single Entity

A business or organization that is legally recognized as a single unit, distinct from its owners or shareholders.

Exporting

The act of sending goods or services to another country for sale.

Foreign Markets

Markets outside the domestic borders where companies can expand their operations and sales.