The costs of inflation include I. wasted resources in association with price confusion. II. higher tax burdens. III. wealth redistribution from private citizens to the government.
A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Inflation can lead to wasted resources as businesses and consumers spend time and effort adjusting to changing prices (I). It can also result in higher tax burdens if tax brackets are not adjusted for inflation, leading to bracket creep (II). Additionally, inflation can redistribute wealth from private citizens to the government if the government benefits from inflation through mechanisms like seigniorage (III).

The Costs of Inflation Include I