Assuming the Fisher Effect holds, and given U.S. tax laws, an increase in inflation
a. increases the real interest rate and the after-tax real rate of interest.
b. increases the real interest rate and the after-tax real rate of interest.
c. does not change the real interest rate but raises the after tax real rate of interest.
d. does not change the real interest rate but reduces the after-tax real rate of interest.
d
You might also like to view...
Investment in human capital is very similar to investing in physical capital. True or false? Explain your answer
What will be an ideal response?
The risk premium on corporate bonds reflects the fact that corporate bonds have a higher default risk and are ________ U.S. Treasury bonds
A) less liquid than B) less speculative than C) tax-exempt unlike D) lower-yielding than
The two major reasons for the tremendous growth in output in the U.S. economy over the last 125 years are
A) population growth and low inflation. B) population growth and increased productivity. C) low unemployment and low inflation. D) low inflation and low trade deficits.
When a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that the
a. demand for the good will decline. b. consumers of the good will have less and less incentive to economize on its use. c. suppliers of the good will have a stronger incentive to provide the good at low prices. d. prices of the good will tend to decline with the passage of time.