For a given real interest rate, an increase in the inflation rate reduces the after-tax real interest rate.

Name: For a given real interest rate, an increase in the inflation rate reduces the after-tax real interest rate.
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Question

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The real interest rate is adjusted for inflation, so if the inflation rate increases, the purchasing power of the interest earned decreases, effectively reducing the after-tax real interest rate.

For a Given Real Interest Rate, an Increase in the Inflation