The nominal interest rate is 3 percent, but people expect prices to fall by 4 percent. What is the real interest rate? If the tax rate is 20 percent, what is the real after- tax return? “The Fed...

The nominal interest rate is 3 percent, but people expect prices to fall by 4 percent. What is the real interest rate? If the tax rate is 20 percent, what is the real after- tax return?

“The Fed should do everything it can to eliminate infl ation.” Do you agree? Explain.