A tax on interest income has a _______ impact than the same percentage tax on la

ID: 1177134 • Letter: A

Question

A tax on interest income has a _______ impact than the same percentage tax on labor income.

a. greater

b. smaller

Suppose the real interest rate is 3% a year and the tax rate is 60%. The inflation rate is 2% a year. What is the real after-tax interest rate?

Real after-tax intest rate is ___ percent a year and the true tax rate is ___percent.

A tax on interest ______ the after-tax interest rate, ________savings, and _______investment.

A. lowers; decreases; increases

B. raises; increases; decreases

C raises; increases; increases

D. lowers; decreases; decreases

1, b

2, real after-tax interest rate: 3%-3%*60%=1.2%

3, a

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