Governments may prefer an inflation tax to some other type of tax because the inflation tax
a. is easier to impose.
b. reduces inflation.
c. falls mainly on high-income individuals.
d. reduces the real cost of government expenditure.
a
You might also like to view...
A factory recently added new robots to its production line, increasing productivity. This will likely cause a:
A. rightward shift of the supply curve. B. leftward shift of the supply curve. C. shift downward of the supply curve. D. movement up along the supply curve.
Because the minimum wage is not indexed to inflation, when there is inflation the nominal minimum wage ________, and the real minimum wage ________.
A. increases; decreases B. decreases; remains constant C. remains constant; decreases D. remains constant; remains constant
The downward slope of the Phillips curve suggests that
A. policy makers face a trade-off between inflation and unemployment. B. a decrease in the money supply will stimulate aggregate demand. C. an increase in the price level will depress nominal wages. D. an increase in the price level will increase the money supply.
Related to the Economics in Practice on p. 26: One reason for the increase in sales of frozen foods from $1 billion in 1950 to $53 billion in 2016 is the
A. increased opportunity cost of cooking frozen meals. B. decrease in popularity of the microwave oven. C. increased opportunity cost of preparing home-cooked meals. D. decrease in the number of women in the labor force.