Given a Nominal Interest Rate of 12 Percent, When Would

question 133

Multiple Choice

Given a nominal interest rate of 12 percent, when would you earn the highest after-tax real interest rate?

• A) Inflation is 2 percent, and the tax rate is 50 percent.
• B) Inflation is 3 percent, and the tax rate is 30 percent.
• C) Inflation is 4 percent, and the tax rate is 20 percent.
• D) Inflation is 5 percent, and the tax rate is 40 percent.

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