People can reduce the inflation tax by
A)reducing savings.
B)increasing deductions on their income tax.
C)reducing cash holdings.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Inflation tax is the reduction in the real value of money due to inflation. By reducing cash holdings, individuals can avoid being subject to high inflation taxes. If they invest in assets that are expected to appreciate along with inflation, they can further reduce the effects of inflation on their finances. Reducing savings or increasing deductions on income tax may provide other benefits, but these actions will not directly reduce the inflation tax.

People Can Reduce the Inflation Tax by