If the Nominal Interest Rate Is 10 Percent, the Inflation

question 169

Multiple Choice

If the nominal interest rate is 10 percent, the inflation rate is 6 percent, and the tax rate on interest income is 25 percent, what is the after-tax real interest rate?

• A) 4.0 percent
• B) 6.0 percent
• C) 3.0 percent
• D) 1.5 percent
• E) 3.5 percent

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Definitions:

Insomnia

A sleep disorder characterized by difficulties in falling asleep, staying asleep, or obtaining restorative sleep.

In-

A prefix used to indicate negation or absence.

Retro-

A prefix meaning "backwards" or "behind," used in various contexts including medical terminology to denote location or time.

Backward

Denotes a movement or action directed towards the rear or in reverse.