Given a Nominal Interest Rate of 5 Percent,in Which Case

question 57

Multiple Choice

Given a nominal interest rate of 5 percent,in which case below would you earn the highest after-tax real rate of interest?

• A)Inflation is 3 percent; the tax rate is 20 percent.
• B)Inflation is 2 percent; the tax rate is 40 percent.
• C)Inflation is 1 percent; the tax rate is 60 percent.
• D)The after-tax real interest rate is the same for all of the above.

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Definitions:

REM Sleep

A stage of sleep characterized by rapid eye movements, increased respiratory rate, and a high level of brain activity; often associated with vivid dreams.

Dreaming

The experience of envisioned images, sounds, or other sensations during sleep, particularly during the rapid eye movement (REM) stage.

Alpha Waves

Brain rhythms detectable by EEG, typically associated with relaxed, wakeful states, and indicating a lack of arousal in most individuals.

EEGs

Short for electroencephalograms, these are tests that measure the electrical activity of the brain and are used to diagnose and monitor neurological disorders.