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.
b
You might also like to view...
See table below. Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings? Saturn Rings Machines 30 0 20 5 10 8 0 10
What will be an ideal response?
An unexpected rise in the Producer Price Index should send bond prices __________ and stock prices __________
A) up; up B) up; down C) down; up D) down; down
"The second glass of zinfandel was very good," said Ian McDonald. "May I have another?" Which of the following is true with respect to Ian's comment and his request for another glass?
a. The MU of the second glass is negative. b. The MU of the second glass is less than the MU of the first glass. c. The MU of the third glass is positive. d. The MU of the third glass is negative. e. The MU of the fourth glass is positive.
When a firm in a competitive market is earning profits, this indicates that the firm is
a. exploiting consumers. b. increasing the value of resources. c. blocking the entry of competing firms. d. reducing overall wealth in the market.