Higher rates of inflation
A)reduce real marginal tax rates,increasing savings and investment.
B)increase real marginal tax rates,reducing savings and investment.
C)reduce real marginal tax rates,reducing savings and investment.
D)have no effect on real marginal tax rates,and no effect on savings and investment.
E)none of the above.

Question

Quizplus · Accepted Answer

Higher rates of inflation increase the nominal value of assets and incomes, which leads to an increase in real marginal tax rates. This reduces the net return on savings and investment, discouraging such activities.

Higher Rates of Inflation