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If the tax rate is 40%, compute the before-tax real interest rate and the aftertax real interest rate in each of the following cases: a)
If the tax rate is 40%, compute the before-tax real interest rate and the aftertax real interest rate in each of the following cases:
a) The nominal interest rate is 10%, and the inflation rate is 5%.
b) The nominal interest rate is 10%, and the inflation rate is 2%.
c) Given your answers above, explain why countries with lower rates of inflation might have higher economic growth rates compared to countries with higher rates of inflation.
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