Inflation reduces economic efficiency because it does each of the following except:
A)Distort incentives through interaction with the tax laws.
B)Obscure information transmitted by prices.
C)Induce people to minimize cash holdings.
D)Change relative prices.

Question

Quizplus · Accepted Answer

Inflation does not inherently change relative prices; it generally affects all prices proportionally, though it can distort incentives, obscure price information, and lead people to minimize cash holdings.

Inflation Reduces Economic Efficiency Because It Does Each of the Following