Inflation, Disinflation, and Deflation – End of Chapter Problem Country Inflation in 2019 Money supply in 2019 (billions) Central government receipts in 2019 (billions) India 7.66% Rp36,883 Rp12,828 United States 1.81% $3,981 $3,331 Data from: Bureau of Economic Analysis; Controller General of Accounts (India); Reserve Bank of India; International Monetary Fund; The World Bank. The inflation tax is often used as a significant source of revenue in developing countries, where tax collection and reporting systems are not well-developed, and tax evasion may be high. a. Use the numbers in the accompanying table to calculate the inflation taxes in the United States and India (Rp = rupees). Enter your answers in billions of dollars or rupees, and round all answers to the nearest tenth. U.S. inflation tax: $ billion Indian inflation tax: Rp billio b. How large is the inflation tax for each country when calculated as a percentage of government receipts? United States: % India:

Inflation, Disinflation, and Deflation – End of Chapter Problem Country Inflation in 2019 Money supply in 2019 (billions) Central government receipts in 2019 (billions) India 7.66% Rp36,883 Rp12,828 United States 1.81% $3,981 $3,331 Data from: Bureau of Economic Analysis; Controller General of Accounts (India); Reserve Bank of India; International Monetary Fund; The World Bank. The inflation tax is often used as a significant source of revenue in developing countries, where tax collection and reporting systems are not well-developed, and tax evasion may be high. a. Use the numbers in the accompanying table to calculate the inflation taxes in the United States and India (Rp = rupees). Enter your answers in billions of dollars or rupees, and round all answers to the nearest tenth. U.S. inflation tax: $ billion Indian inflation tax: Rp billio b. How large is the inflation tax for each country when calculated as a percentage of government receipts? United States: % India:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Inflation, Disinflation, and Deflation – End of Chapter Problem
Country
Inflation in 2019
Money supply in 2019 (billions)
Central government receipts in 2019 (billions)
India
7.66%
Rp36,883
Rp12,828
United States
1.81%
$3,981
$3,331
Data from: Bureau of Economic Analysis; Controller General of Accounts (India); Reserve Bank of India; International Monetary Fund; The World Bank.
The inflation tax is often used as a significant source of revenue in developing countries, where tax collection and
reporting systems are not well-developed, and tax evasion may be high.
a. Use the numbers in the accompanying table to calculate the inflation taxes in the United States and India (Rp =
rupees). Enter your answers in billions of dollars or rupees, and round all answers to the nearest tenth.
U.S. inflation tax: $
billion
Indian inflation tax: Rp
billion
b. How large is the inflation tax for each country when calculated as a percentage of government receipts?
United States:
%
India:
%

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