Author Question: Suppose you place 10,000 in a retirement fund that earns a nominal interest rate of 8 percent. If ... (Read 31 times)

student77 · **on:** Jun 30, 2018

Suppose you place 10,000 in a retirement fund that earns a nominal interest rate of 8 percent. If you expect inflation to be 5 percent or lower, then you are expecting to earn a real interest rate of at least:
a. 1.6 percent.
b. 3 percent.
c. 4 percent.
d. 5 percent.

Question 2

The Laffer curve is based on the idea that if the tax rate is sufficiently high, then raising it even more will actually reduce total tax revenues. According to Laffer, this happens because the growing tax rates reduce economic activity at an even faster rate.
a. True
b. False
Indicate whether the statement is true or false