If Your After-Tax Expected Real Interest Rate Is 3 Percent

question 44

Multiple Choice

If your after-tax expected real interest rate is 3 percent and your expected inflation rate is 2 percent, what was the nominal interest rate on your one-year bond if you faced a tax rate of 20 percent?

• A)5.0 percent
• B)5.75 percent
• C)6.0 percent
• D)6.25 percent

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Definitions:

Counterirritation

A method for managing pain or discomfort by intentionally inducing a second, less severe pain or irritation, to distract from the original pain.

Chronic Pain

A persistent pain that continues for weeks, months, or even years beyond the usual recovery period or occurs along with a chronic health condition.

Gate Control Theory

The proposal that pain sensations must pass through a neural “gate” in order to reach the brain and can be blocked at that gate by neurons that inhibit signals from the nociceptors.

Nocioception

The sensory nervous system's response to certain harmful or potentially harmful stimuli.