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 2 percent a year. If the average income tax rate is 30 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 percent divided by plus the inflation rate. multiplied by minus

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 2 percent a year. If the average income tax rate is 30 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 percent divided by plus the inflation rate. multiplied by minus

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Money Growth And Inflation

Section: Chapter Questions

Problem 6PA

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