An inflation tax is:
A) the reduction in purchasing power due to inflation.
B) a tax on businesses for raising prices.
C) a tax on people with inflated incomes.
D) an excise tax on new automobile tires.

Question

Quizplus · Accepted Answer

An inflation tax refers to the reduction in purchasing power of a currency due to inflation. This reduces the value of money held by individuals or businesses, as their savings can buy fewer goods and services. It is not a tax imposed by the government.

An Inflation Tax Is