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(25pts) 9) You deposit $1000 in the bank for one year. CASE 1: Inflation = 0%, nominal interest rate = 10% CASE 2: inflation =

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(25pts) 9) You deposit $1000 in the bank for one year. CASE 1: Inflation = 0%, nominal interest rate = 10% CASE 2: inflation = 10%, nominal interest rate = 20% a. In which case does the real value of your deposit grow the most? Assume the tax rate is 25%. b.in which case do you pay the most taxes? c. Calculate the after-tax real interest rate for case 1. a. b. C

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