Which of the Following Best Explains Why Governments May Prefer

question 153

Multiple Choice

Which of the following 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.

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Definitions:

Expectancy Theory

A motivational theory positing that individuals are motivated to act in certain ways based on their expectations of future outcomes and the attractiveness of those outcomes.

Motivation

The psychological processes that arouse and direct goal-directed behavior.

Work

A physical or mental effort done in order to achieve a purpose or result, often associated with employment or tasks.

Telecommuting

A work arrangement in which employees do not commute to a central place of work, instead working via electronic communications from a different location, often their home.