Given U.S.tax laws,persistently high inflation may result in
A)slower economic growth because the after-tax real interest rate is lower.
B)faster economic growth because the after-tax real interest rate is higher.
C)slower economic growth because the after-tax nominal interest rate is lower.
D)faster economic growth because the after-tax nominal interest rate is higher.

Question

Given U.S.tax laws,persistently high inflation may result in
A)​slower economic growth because the after-tax real interest rate is lower.
B)faster economic growth because the after-tax real interest rate is higher.
C)​​slower economic growth because the after-tax nominal interest rate is lower.
D)​​faster economic growth because the after-tax nominal interest rate is higher.

Quizplus · Accepted Answer

Persistently high inflation can erode the real value of interest income, leading to a lower after-tax real interest rate, which can discourage savings and investment, potentially slowing economic growth.

Given U.S.tax Laws,persistently High Inflation May Result in