One Effect of Inflation Is That It Is a Tax

question 134

Multiple Choice

One effect of inflation is that it is a tax that redistributes goods and services from

• A) government to households.
• B) investors to savers.
• C) government to businesses.
• D) households and businesses to the government.
• E) businesses to households.

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Definitions:

Marginal Revenue Product

The extra income obtained by employing an additional unit of a production factor.

Total Losses

The complete financial loss amount suffered by an entity, typically used in insurance when referring to a loss where the insured item is totally damaged or destroyed.

Security Guards

Personnel employed to protect property, assets, or people, often found in various establishments or public areas.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one good for another more or less expensive one.