Last year you bought a house for $200,.000, and you sell the house this year for $230.000, Unfortunately, the government makes you pay taxes on your capital gains. Assume that the capital gains tax rate is 20%. Over the year, the CPI increased from 110 to 115.5. Your after-tax real return is

Last year you bought a house for $200,.000, and you sell the house this year for $230.000, Unfortunately, the government makes you pay taxes on your capital gains. Assume that the capital gains tax rate is 20%. Over the year, the CPI increased from 110 to 115.5. Your after-tax real return is

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 2SQP

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Question

Last year you bought a house for $200,000, and you sell the house this year for $230.000. Unfortunately, the government makes you
pay taxes on your capital gains. Assume that the capital gains tax rate is 20%. Over the year, the CPl increased from 110 to 115.5.
Your after-tax real return is
%.
See Hit
Part 2 (1 point)
%
Suppose that the CPI increased from 110 to 121. What is your after tax real return now?

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