Last year you bought a house for $200,000, and you sell the house this year for $230,000. Unfortunately, the government makes you pay taxes on your capital gains. Assume that the capital gains tax rate is 20%. Over the year, the CPI increased from 110 to 121.

Suppose that the CPI increased from 110 to 126.5. What is your after-tax real return now?

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Answer 7 Explanation A change in the CPI refers to a change in price levels fo... View the full answer