Question: Task 5 3P1, 3P2, 3P3, 3P4, 3P5. Solve the task You deposit $1000 in the bank for one year. CASE 1: inflation = 0%, nom
Task 5 3P1, 3P2, 3P3, 3P4, 3P5. Solve the task You deposit $1000 in the bank for one year. CASE 1: inflation = 0%, nom interest rate = 10% CASE 2: inflation = 10%, nom. interest rate = 20% a. In which case does the real value of your deposit grow the most? Assume the tax rate is 25%. b. In which case do you pay the most taxes? c. Compute the after-tax nominal interest rate, then subtract off inflation to get the after-tax real interest rate for both cases
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