Assuming the Fisher Effect holds, and given U.S. tax laws, an increase in inflation
a. increases the real interest rate and the after-tax real rate of interest.
b. increases the real interest rate and the after-tax real rate of interest.
c. does not change the real interest rate but raises the after tax real rate of interest.
d. does not change the real interest rate but reduces the after-tax real rate of interest.
d
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What is meant by the term "rate of interest"? If the nominal rate of interest in an economy is 6%, and the rate of inflation in the economy is 4%, what is the real rate of interest in the economy?
What will be an ideal response?
A decrease in the demand for American-made goods will
A) increase the supply of dollars in the foreign exchange market. B) decrease the supply of dollars in the foreign exchange market. C) decrease the demand for dollars in the foreign exchange market. D) increase the demand for dollars in the foreign exchange market.