You Put Money into an Account and Earn a Real

question 178

Multiple Choice

You put money into an account and earn a real interest rate of 4 percent. Inflation is 2 percent, and your marginal tax rate is 25 percent. What is your after-tax real rate of interest?

• A)1.5 percent
• B)2.5 percent
• C)5.0 percent
• D)4.5 percent