Solution :
Given :
The bonds offer a 
of 4.5% per year
Tax rate = 10% = 0.10
Inflation rate = 2
= + 
= 2 + 4.5
= 6.5
= 
= 
= 5.85
After tax real interest rate = 
-
= 5.85 - 2.0
= 3.85
= 7.0
= +
= 7 + 4.5
= 11.5
= 
= 10.35
= 11.5 x (1 - 0.10)
= 11.5 x 0.90
= 10.35
= -
= 10.35 - 7.0
= 3.35
Putting all the value in table :
Real interest Nominal interest After tax nominal After tax
rate rate interest rate interest rate
2.0 4.5 6.5 5.85 3.85
7.0 4.5 11.5 10.35 3.35
Comparing with the 
, a 
will increase the after after tax real interest rate when the government taxes nominal interest income. This tends to encourage saving, thereby increase the quantity of investment in the economy and the increase the economy's long-run growth rate.
Try to find a mortgage to buy a house
Might seem controversial though :) but I am pretty sure that the correct variant that properly shows the converse of given statement is the third one. As you know, the converse (in plane language) has the same meaning of the statement just by replacing two points. This statement has positive tone (if you make - you ll have) so it's directly coincides with C(you have, cause you have made)
CFCs already in the atmosphere will last for many more years.
