Suppose that the government passes a new law that sets a limit on the interest rate that
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Suppose that the government passes a new law that sets a limit on the interest rate that credit card companies can charge on overdue balances. As a result, the nominal interest rate charged by credit card companies falls from 15 percent a year to 7 percent a year. If the average income tax rate is 30 percent, explain how the after-tax real interest rate on overdue credit card balances changes.
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The fall in the nominal interest rate lowers the real a...View the full answer
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Sumit kumar
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QUATERNARY Pursuing M.Tech.(2017-2019) in Electronics and Communication Engg. (VLSI DESIGN) from
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TERTIARY B.Tech. (2012-2016) in Electronics and Communication Engg. from GLBITM Greater Noida
SECONDARY Senior Secondary School Examination (Class XII) in 2012 from R.S.S.Inter College, Noida
ELEMENTARY Secondary School Examination (Class X) in 2010 from New R.J.C. Public School ,Noida
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