Which Statement Best Explains Why Governments May Prefer an Inflation

question 107

Multiple Choice

Which statement best explains why governments may prefer an inflation tax to some other kind of tax?

• A) The inflation tax is easier to impose.
• B) The inflation tax reduces inflation.
• C) The inflation tax falls mainly on high-income individuals.
• D) The inflation tax reduces the real cost of government expenditure.

---

Definitions:

Romantic Relationship

A personal and intimate relationship between individuals characterized by love, commitment, and emotional bonding.

Memory

The mental faculty by which information is encoded, stored, and retrieved when needed, allowing for learning and retention over time.

Reconstructive Process

The method by which memories are not merely retrieved but reconstructed, often influenced by various factors like biases and new information.

Short-Term Memories

The component of memory that temporarily holds a small amount of information for a short period of time, from seconds to minutes.