Kevin 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 ination rate. The government taxes nominal interest income at a rate of 10%. The following table shows two scenarios: a lowinflation scenario and a high- inflation scenario. Given the real interest rate of 2.5% per year, nd the nominal interest rate on Kevin's bonds, the after-tax nominal interest rate, and the after-tax real interest rate under each ination scenario. Inflation Rate Real Interest Rate Nominal Interest Rate After-Tax Nominal Interest Rate After-Tax Real Interest Rate (Percent) (Percent) (Percent) (Percent) (Percent) 2 . 0 2 . 5 7 . 5 2. 5 Compared with higher ination rates, a lower ination rate will V the after-tax real interest rate when the government taxes nominal interest income. This tends to V saving, thereby V the quantity of investment in the economy and V the economy's longrun growth rate