The text states,"inflation is a type of tax." This tax refers to _____ when inflation occurs.
A) the lower purchasing power of money
B) a higher tax rate that the government must impose
C) a higher nominal interest rate of a typical loan
D) a special tax on taxpayers in order for the government to balance its budget

Question

Quizplus · Accepted Answer

Inflation reduces the purchasing power of money, meaning that money can buy less than it could before. This is similar to a tax in that individuals are required to spend more money to maintain the same standard of living.

The Text States,"inflation Is a Type of Tax