You put money in an account and earn a real interest rate of 10 percent. Inflation is 4 percent, and your marginal tax rate is 40 percent. What is your after-tax real interest rate? 3.2 percent 2.4 percent 1.8 percent 4.4 percent

You put money in an account and earn a real interest rate of 10 percent. Inflation is 4 percent, and your marginal tax rate is 40 percent. What is your after-tax real interest rate? 3.2 percent 2.4 percent 1.8 percent 4.4 percent

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section14.4: Money And Interest Rates

Problem 1ST

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Question

You put money in an account and earn a real interest rate of 10 percent. Inflation is 4
percent, and your marginal tax rate is 40 percent. What is your after-tax real interest rate?
3.2 percent
2.4 percent
1.8 percent
4.4 percent

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