As people try to avoid the inflation tax, the government must _____ the inflation rate to _____.

Name: As people try to avoid the inflation tax, the government must _____ the inflation rate to _____.
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Question

Quizplus · Accepted Answer

To maintain or raise the same revenue from the inflation tax as people try to avoid it, the government must increase the inflation rate. This is because as inflation increases, the real value of money decreases, leading to higher nominal revenues without necessarily increasing real revenues.

As People Try to Avoid the Inflation Tax, the Government