Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 33, Problem 2CYU
To determine
If there will still be an inflation tax if all wages and prices are indexed to inflation.
Expert Solution & Answer
Explanation of Solution
Inflation tax will still prevail even if all wages and prices are indexed to inflation. This is because tax is levied by the government from the public who is holding money irrespective of prices or wages being indexed to inflation.
Economics Concept Introduction
Inflation: Inflation refers to the situation where the prices of commodities in the market are traded at increased prices.
Indexed Inflation: It refers to the inflations where wages and prices are increased at a similar level.
Chapter 33 Solutions
Krugman's Economics For The Ap® Course
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