What could the government do to decrease the costs of inflation without lowering the inflation rate?
A) avoid unexpected changes in the inflation rate
B) rewrite the tax laws so that nominal gains were taxed instead of real gains
C) make policy that would discourage firms from issuing indexed bonds
D) pass legislation to discourage inflation-adjusted work contracts

Question

Quizplus · Accepted Answer

Avoiding unexpected changes in the inflation rate can help decrease costs associated with inflation without necessarily lowering the overall inflation rate. This can provide more stability and predictability for economic actors in planning and making decisions. Choices B, C, and D would all likely have the effect of increasing costs associated with inflation, rather than decreasing them.

What Could the Government Do to Decrease the Costs of Inflation