Given a Nominal Interest Rate of 12 Percent,when Would You

question 87

Multiple Choice

Given a nominal interest rate of 12 percent,when would you earn the highest after-tax real interest rate?

• A) Inflation is 2 percent,and the tax rate is 50 percent.
• B) Inflation is 3 percent,and the tax rate is 30 percent.
• C) Inflation is 5 percent,and the tax rate is 20 percent.
• D) Inflation is 6 percent,and the tax rate is 40 percent.

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Definitions:

Adjusting Journal Entries

Entries made in the accounting records to correct errors or allocate income and expenses to the correct periods.

Journal Entry Icon

A graphical representation or shortcut in software, used to access the feature where financial transactions are manually recorded.

Trial Balance

A bookkeeping report that lists the balances of all ledgers and accounts to check that debits equal credits in the double-entry accounting system.

Adjustments

Adjustments in accounting refer to entries made in journal accounts at the end of an accounting period to correct and allocate incomes and expenditures accurately.