Damarion Farmer

Business

12 January, 11:25

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 2.5 percent; the tax rate is 25 percent.

b. Inflation is 3 percent; the tax rate is 20 percent.

c. Inflation is 2 percent; the tax rate is 30 percent.

d. The after-tax real interest rate is the same for all of the above.