Suppose the tax rate on interest income is 25 percent, the real interest rate is 4 percent, and the inflation rate is 4 percent. The real after-tax interest rate is
A) 0.5 percent.
B) 3.5 percent.
C) 4.0 percent.
D) 2.0 percent.
E) -0.5 percent.
Correct Answer:
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