The table below shows the nominal interest rate and the inflation rate for two different years in the economy of Abudhabi. In both years, the Abudhabian government taxed nominal interest income from saving at a rate of 30%.
Year 1
Nominal Interest Rate 7%
Inflation Rate 2%
Year 2
Nominal Interest Rate 12%
Inflation Rate 6%
*****The higher inflation rate in year 2 reduced the incentive to save in Abudhabi. True or False?
2007-11-25
16:40:44
·
4 answers
·
asked by
Anonymous
in
Social Science
➔ Economics