Given a Nominal Interest Rate of 8 Percent, in Which

Multiple Choice

Given a nominal interest rate of 8 percent, in which of the following cases would you earn the highest after-tax real rate of interest?

A) Inflation is 3 percent; the tax rate is 25 percent.
B) Inflation is 2 percent; the tax rate is 50 percent.
C) Inflation is 1 percent; the tax rate is 75 percent.
D) The after-tax real interest rate is the same for all of the above.