Tax distortions refer to the cost of inflation that comes from:
A)the money,time,and opportunity used to change prices to keep pace with inflation.
B)the time,money,and effort one has to spend managing cash in the face of inflation.
C)being penalized via taxes for making more money in dollars,even though real purchasing power hasn't changed at all.
D)None of these statements is true.

Question

Quizplus · Accepted Answer

Tax distortions occur when inflation causes nominal income to rise, pushing taxpayers into higher tax brackets even though their real income or purchasing power hasn't increased.

Tax Distortions Refer to the Cost of Inflation That Comes