Which of the following statements is NOT true?
A) Inflation is an economy-wide phenomenon that concerns, first and foremost, the value of the economy's medium of exchange.
B) The quantity theory states that the primary cause of inflation is growth in the supply of money.
C) The so-called inflation tax does not affect those people whose incomes do not rise with inflation.
D) Some inflation in any economy is desirable because it is a sign that demand is present, that there is a reason to produce and invest, and that there is reward to be gained from enterprise.

Question

Quizplus · Accepted Answer

The statement "the so-called inflation tax does not affect those people whose incomes do not rise with inflation" is false. The inflation tax affects everyone in the economy, regardless of whether or not their incomes rise with inflation. This is because inflation reduces the real value of money holdings and therefore reduces everyone's purchasing power.

Which of the Following Statements Is NOT True