Tara Deposits Money into an Account with a Nominal Interest

question 67

Multiple Choice

Tara deposits money into an account with a nominal interest rate of 6 percent.She expects inflation to be 2 percent.Her tax rate is 20 percent.Tara's after-tax real rate of interest

• A)will be 2.8 percent if inflation turns out to be 2 percent;it will be higher if inflation turns out to be higher than 2 percent.
• B)will be 2.8 percent if inflation turns out to be 2 percent;it will be lower if inflation turns out to be higher than 2 percent.
• C)will be 3.2 percent if inflation turns out to be 2 percent;it will be higher if inflation turns out to be higher than 2 percent.
• D)will be 3.2 percent if inflation turns out to be 2 percent;it will be lower if inflation turns out to be higher than 2 percent.

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Definitions:

Cognitive-Behavioral Therapy

A therapeutic method designed to increase happiness and solve problems by reshaping unhealthy behaviors, emotions, and thoughts.

Schizoid Personality Disorder

A personality disorder characterized by a long-term pattern of detachment from social relationships and a restricted range of emotional expression.

Loner

An individual who prefers solitude and does not seek or need social interaction as much as others might, often by personal choice.

Paranoid Personality Disorder

A mental health condition characterized by paranoia and a widespread distrust and suspicion of others without sufficient basis.