When interest income is taxed and the inflation rate rises, the tax revenue collected by the government

Name: When interest income is taxed and the inflation rate rises, the tax revenue collected by the government
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Question

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When the inflation rate rises, nominal interest rates tend to increase. Since interest income is taxed on a nominal basis, higher nominal interest rates lead to higher taxable income, thus increasing tax revenue.

When Interest Income Is Taxed and the Inflation Rate Rises