Becky holds $30,000 as money. After a year during which inflation was 5 percent a year, the inflation tax over that year was
A)$500.
B)$3,000.
C)$5.
D)$1,500.
E)$1,000.

Name: Becky holds $30,000 as money. After a year during which inflation was 5 percent a year, the inflation tax over that year was A)$500. B)$3,000. C)$5. D)$1,500. E)$1,000.
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Question

Quizplus · Accepted Answer

The inflation tax is the loss of purchasing power due to inflation. With 5% inflation, the purchasing power of $30,000 decreases by 5%, which is $1,500.

Becky Holds $30,000 as Money