You Put Money into an Account and Earn a Real

question 51

Multiple Choice

You put money into an account and earn a real interest rate of 5 percent. Inflation is 2 percent, and your marginal tax rate is 40 percent. What is your after-tax real rate of interest?

• A)1 percent
• B)1.8 percent
• C)2.2 percent
• D)4.2 percent

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Definitions:

Use Fee

Use fee is a charge for using a particular service or facility, typically applied in contexts like public utilities, recreational areas, or software services.

Congestion

The state of being crowded or overloaded, often causing delays or inefficiencies, particularly in transportation or network systems.

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.

Cross Dock Distribution Center

A warehouse where incoming shipments are directly transferred to outgoing trucks or trailers, minimizing storage time and accelerating distribution.