If the Inflation Rate Is 6 Percent,what Is the Real

question 55

Multiple Choice

If the inflation rate is 6 percent,what is the real interest rate paid on a loan bearing 7 percent nominal interest per year?

• A)1 percent
• B)6 percent
• C)7 percent
• D)13 percent

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Definitions:

Tax Burden

the measure of the total taxes imposed on individuals or businesses by the government.

Payroll Tax

Taxes imposed on employers and/or employees, typically based on the wages or salaries that employees earn.

Workers

Individuals engaged in a form of employment or labor, contributing their skills and efforts in exchange for financial compensation or wages.

Gas Tax

A tax imposed on the sale of gasoline, typically used to fund transportation and infrastructure projects.