Write the way for answer: Suppose the expected inflation rate is 0.01, the tax rate on interest income is 0.3, and the expected real after-tax interest rate is 0.0145. What is the nominal interest rate?   A) 0.035   B) 0.030   C) 0.025   D) 0

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A: True

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A: please find the answer below.

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A: Option B is correct i.e 5%

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A: After tax return before inflation = Nominal return ×(1-tax rate)= 6% × (1-50%)=0.03=0.03×100=3%

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A:

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