Sean receives a portion of his income from his holdings of interest-bearing U.S. government bonds. The bonds offer a real interest rate of 4.5% per year. The nominal interest rate on the bonds adjusts automatically to account for the inflation rate.The government taxes nominalinterest income at a rate of 10%. The following table shows two scenarios: a low-inflation scenario and a high-inflation scenario.

Given the real interest rate of 4.5% per year, find the nominal interest rate on Sean's bonds, the after-tax nominal interest rate, and the after-tax real interest rate 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)
2.0	4.5
9.5	4.5

Compared with lower inflation rates, a higherinflation rate will the after-tax real interest rate when the government taxes nominalinterest income. This tends to saving, thereby the quantity of investment in the economy and the economy's long-run growth rate.