Question: How does inflation interact with the tax system to affect the after-tax expected real interest rate? Under what circumstances does the effective tax rate on

How does inflation interact with the tax system to affect the after-tax expected real interest rate? Under what circumstances does the effective tax rate on real income differ from the government's stated tax rate? Why does it differ? Explain how the expected real interest rate must adjust when the expected inflation rate changes if market conditions are such that the after-tax expected real interest rate is unchanged.

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