Suppose the rate of profit is 20%, profit income is taxed at the rate of 30% and the rate of inflation is 5%. The real post-tax profit rate is
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1 mark, −0.25MacroeconomicsDemand for money and monetary theoriesReal and nominal interest rates, and seigniorageEasyabout 1 min
JNU SSS 2011 Question 29: Demand for money and monetary theories
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Suppose the rate of profit is 20%, profit income is taxed at the rate of 30% and the rate of inflation is 5%. The real post-tax profit rate is (A) 9% (B) 10·5% (C) -15% (D) None of the above
Demand for money and monetary theories has come up 82 times in 7 exams since 2005.
What this question tests
This question is on Real and nominal interest rates, and seigniorage, part of Demand for money and monetary theories in Macroeconomics.
How inflation separates real from nominal returns, and the revenue the government earns by printing money.
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