Suppose that a country’s inflation rate increasessharply. What happens to the inflation tax on theholders of money? Why is wealth held in savingsaccounts not subject to a change in the inflationtax? Can you think of any way in which holders ofsavings accounts are hurt by the increase in inflation?
Suppose that a country’s inflation rate increasessharply. What happens to the inflation tax on theholders of money? Why is wealth held in savingsaccounts not subject to a change in the inflationtax? Can you think of any way in which holders ofsavings accounts are hurt by the increase in inflation?
Chapter7: Unemployment And Inflation
Section: Chapter Questions
Problem 7E
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Question
Suppose that a country’s inflation rate increases
sharply. What happens to the inflation tax on the
holders of money? Why is wealth held in savings
accounts not subject to a change in the inflation
tax? Can you think of any way in which holders of
savings accounts are hurt by the increase in inflation?
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