When a central bank prints money to pay government debts, causing rising prices that erode the purchasing power of money held by the public, it is called a(n) _____ tax.

Question

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When a central bank prints money to pay government debts, causing rising prices that erode the purchasing power of money held by the public, it is called inflation tax. This is because inflation behaves like a tax on everyone who holds money, as the value of their money decreases over time.

When a Central Bank Prints Money to Pay Government Debts