7. Money neutrality states that a change in the money supply affects variables o

Question

7. Money neutrality states that a change in the money supply affects variables only. Most economists believe that money neutrality is a good description of how money affects the economy in the 8. In the long run inflation is explained by of inflation arose primarily because the government For countries that had hyperinflation this source 9, If the inflation rate was 8%, and the tax rate was 20%, and you deposited money in a bank account that pays 12%, what is your after tax real interest rate? Show you work.

Explanation / Answer

Ans 9)

After Tax real interest rate will be calculated as below

After tax interest rate= 12%(1-0.2)=9.6%

After tax real interest rate=1.096/1.08=1.481

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