Recall from Chapter 5: Other things constant, when households lower their time preferences, and demonstrate a willingness to postpone some present consumption for future consumption,

Suppose a country has a real interest rate of 4 percent and an inflation rate of 3 percent. If the income tax rate is 20 percent, then the after-tax real interest rate is

A) 2.6 percent. B) 7.0 percent. C) 5.6 percent. D) 4.0 percent. E) 1.4 percent.

Factors that led to worsening conditions in Mexico's 1994-1995 financial markets include

A) failure of the Mexican oil monopoly. B) the ratification of the North American Free Trade Agreement. C) increased uncertainty from political shocks. D) decline in interest rates.