answer and explain

12. Inflation-induced tax distortions Bob receives a portion of his income from his holdings of interest-bearing U.S. government bonds. The bonds offer a real interest rate of 2.5% per year. The nominal interest rate on the bonds adjusts automatically to account for the inflation rate. The government taxes nominal interest income at a rate of 10%. The following table shows two scenarios: a low-inflation scenario and a high- inflation scenario. the real interest rate of 2.5%% per year, find the nominal interest rate on Bob's bonds, the after-tax nominal interest rate, and the after-tape cost act gate under each inflation scenario. Inflation Rate Real Interest Rate Nominal Interest Rate After-Tax Nominal Interest Rate After-Tax Real Interest Rate (Percent) (Percent) (Percent) (Percent) (Percent) 25 2.5 a lower inflation rate will w the aftertax real interest rate when the government saving, thereby the quantity of lovest e economy and north tate