In instances of hyperinflation, the delays involved in collecting taxes often result in:
A) decreased real government tax revenue.
B) large capital gains for creditors.
C) higher shoeleather costs of inflation.
D) higher ex ante real interest rates.

Question

Quizplus · Accepted Answer

Hyperinflation often causes a decrease in the real value of government tax revenue as the value of the currency rapidly declines. Delays in collecting taxes exacerbate this problem as the government may not receive the full amount owed to them due to the devaluation of the currency.

In Instances of Hyperinflation, the Delays Involved in Collecting Taxes