Suppose the nominal interest rate is 10 percent, the tax rate on interest income is 28 percent, and the inflation rate is 6 percent. Then the after-tax real interest rate is -3.2 percent
a. True
b. False
Indicate whether the statement is true or false
False
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The liquidity premium theory holds that investors
A) always choose the bond with the highest expected return, regardless of maturity. B) require a term premium to compensate them for investing in a less preferred maturity. C) view bonds of different maturities as perfect substitutes. D) view bonds of different maturities as completely unsubstitutable.
When the quantity of a good bought and sold is below the market equilibrium quantity, the loss of total surplus that results is called:
A. deadweight loss. B. producer surplus. C. consumer surplus. D. total surplus.
In the aggregate demand/aggregate supply model, an increase in a country's sustainable potential output is represented by
a. an increase in aggregate demand. b. a decrease in aggregate demand. c. an increase in long-run aggregate supply. d. an increase in the general level of prices.
If land and labor are complementary resources and the price of capital goes up, the employment of labor _________.
Fill in the blank(s) with the appropriate word(s).