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Suppose you allocated some of your income in a savings account that pays annual nominal interest rate of 2%. Assuming a 25% tax on nominal
Suppose you allocated some of your income in a savings account that pays annual nominal interest rate of 2%. Assuming a 25% tax on nominal interest rates earned, calculate your after-tax real interest rate earned on your savings account in the following two scenarios:
Scenario A Scenario B Real interest rate 2% 2% Inflation rate 0% 6% After-tax real interest rate
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