Suppose the government passes a new law that sets a limit on the interest rate that credit card companies can charge on overdue balances. As a result, the nominal interest rate charged by credit card companies falls from 12 percent a year to 8 percent a year. If the average income tax rate is 20 percent, explain how the real after-tax interest rate on overdue credit card balances changes. >>> Answer to 1 decimal place. Before the new law is passed, the real after-tax interest rate on credit card balances is 9.6 percent minus After the new law is passed, the real after-tax interest rate on credit card balances is percent the inflation rate. the inflation rate.

Suppose the government passes a new law that sets a limit on the interest rate that credit card companies can charge on overdue balances. As a result, the nominal interest rate charged by credit card companies falls from 12 percent a year to 8 percent a year. If the average income tax rate is 20 percent, explain how the real after-tax interest rate on overdue credit card balances changes. >>> Answer to 1 decimal place. Before the new law is passed, the real after-tax interest rate on credit card balances is 9.6 percent minus After the new law is passed, the real after-tax interest rate on credit card balances is percent the inflation rate. the inflation rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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