Given a Nominal Interest Rate of 6 Percent,in Which of the Following

question 69

Multiple Choice

Given a nominal interest rate of 6 percent,in which of the following cases would you earn the lowest after-tax real rate of interest?

• A)Inflation is 4 percent;the tax rate is 5 percent.
• B)Inflation is 3 percent;the tax rate is 20 percent.
• C)Inflation is 2 percent;the tax rate is 30 percent.
• D)The after-tax real interest rate is the same for all of the above.

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