Given a Nominal Interest Rate of 7 Percent,in Which of the Following

question 71

Multiple Choice

Given a nominal interest rate of 7 percent,in which of the following cases would you earn the lowest after-tax real interest rate?

• A) Inflation is 1 percent,and the tax rate is 10 percent.
• B) Inflation is 2 percent,and the tax rate is 15 percent.
• C) Inflation is 3 percent,and the tax rate is 20 percent.
• D) Inflation is 4 percent,and the tax rate is 25 percent.

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Definitions:

Tranquilizers

Medications used to reduce tension or anxiety; also known as anxiolytics.

Barbiturates

A class of drugs that act as central nervous system depressants, often used as sedatives or sleeping aids.

Opium Poppy

A flowering plant from which opium and many other opiates are extracted, known scientifically as Papaver somniferum.

Pain

A subjective feeling often caused by bodily injury or disease, characterized by physical discomfort or suffering.