Asked by Jesse Mad3329 on May 01, 2024
Verified
The inflation tax falls mostly heavily on those who hold
A) a lot of currency and accounts for a large share of U.S.government revenue.
B) a lot of currency but accounts for a small share of U.S.government revenue.
C) little currency and accounts for a large share of U.S.government revenue.
D) little currency but accounts for a small share of U.S.government revenue.
Inflation Tax
An implicit tax that results from the erosion of purchasing power due to inflation, effectively reducing the real value of money held by the public.
U.S. Government Revenue
The total income received by the government from taxes and non-tax sources like tariffs, fees, and government-owned enterprises income.
- Acquire knowledge about the principle of monetary neutrality and its importance to economic theory and policy.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
B
Explanation :
The inflation tax primarily affects those who hold a significant amount of currency because the value of their money decreases as prices increase. However, it constitutes a small portion of U.S. government revenue compared to other sources like income taxes and corporate taxes.
Learning Objectives
- Acquire knowledge about the principle of monetary neutrality and its importance to economic theory and policy.