Given a nominal interest rate of 6 percent,in which of the following cases would you earn the highest after-tax real rate of interest?
A)Inflation is 3 percent;the tax rate is 25 percent.
B)Inflation is 1 percent;the tax rate is 50 percent.
C)Inflation is 1 percent;the tax rate is 55 percent.
D)Inflation is 4 percent;the tax rate is 10 percent.

Question

Quizplus · Accepted Answer

The after-tax nominal rate is highest in option B (3%) compared to others, and with lower inflation (1%), the real rate is maximized.

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