When deciding how much to save, which of the following interest rates do people usually care most about?
A)after-tax nominal interest rates
B)after-tax real interest rates
C)before-tax real interest rates
D)before-tax nominal interest rates

Question

Quizplus · Accepted Answer

People usually care most about the after-tax real interest rates, as this reflects the actual return on their savings after accounting for inflation and taxes. Before-tax nominal interest rates may be misleading as they do not take into account the effects of inflation or taxes, while after-tax nominal interest rates do not account for inflation rates. Before-tax real interest rates can be useful, but ultimately it is the after-tax real interest rates that will have the most impact on an individual's savings.

When Deciding How Much to Save, Which of the Following