Let the nominal rate of interest be 15 percent with expected inflation
Running 10 percent. With depreciation pegged at 10 percent and a fixed price of capital, a 50 percent tax on the revenue from capital
A) requires that the rental price of capital increase by 100 percent to maintain the quantity demanded.
B) requires that the rental price of capital increase by 50 percent to maintain the quantity demanded.
C) requires that the rental price of capital increase by 100 percent to maintain the supply of capital at existing quantities.
D) requires that the rental price of capital increase by 50 percent to maintain the supply of capital at existing quantities.
E) none of the above.

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The Answer of Let the nominal rate of interest be 15 percent with expected inflation
Running 10 percent. With depreciation pegged at 10 percent and a fixed price of capital, a 50 percent tax on the revenue from capital
A) requires that the rental price of capital increase by 100 percent to maintain the quantity demanded.
B) requires that the rental price of capital increase by 50 percent to maintain the quantity demanded.
C) requires that the rental price of capital increase by 100 percent to maintain the supply of capital at existing quantities.
D) requires that the rental price of capital increase by 50 percent to maintain the supply of capital at existing quantities.
E) none of the above.

Let the Nominal Rate of Interest Be 15 Percent with Expected