8. You buy stock and its price rises at a rate of five percent. Inflation for the same period rises at a rate of five percent. Before taxes you made
A. a nominal and real loss, but you pay taxes on the real loss.
B. a nominal and real gain, and you pay taxes on the nominal gain.
C. a nominal and real gain, but you pay taxes only on the real gain.
D. a nominal gain, but no real gain, so you pay no taxes on the capital gain.
E. a nominal gain, but no real gain, yet you pay taxes on the nominal gain.

9. Archie purchases some land for $30,000. He maintains it, but makes no improvements to it. One year later he sells it for $32,000. Betty puts $30,000 in a savings account that pays 6% interest. Archie has to pay a 50% capital gains tax, Betty is in the 30% tax bracket. The inflation rate was 2%. Who had the higher before-tax real gain and who had the higher after-tax real gain?
A. Archie had both the higher before-tax real gain and the higher after-tax real gain.
B. Archie had the higher before-tax real gain but Betty had the higher after-tax real gain.
C. Betty had the higher before-tax real gain but Archie had the higher after-tax real gain.
D. Betty had both the higher before-tax real gain and the higher after-tax real gain.
E. Betty had the higher before-tax real gain but they had the same after-tax real gain.

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The detailed answer for the above question is provided below Question 8 The correct answer is C a no... View the full answer