Brief Principles of Macroeconomics...
Brief Principles of Macroeconomics...
Suppose that a country’s inflation rate increases sharply. What happens to the inflation tax on the holders of money? Why is wealth that is held in savings accounts not subject to a change in the inflation tax? Can you think of any way holders of savings accounts are hurt by the increase in the inflation rate?
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If the inflation rate of a country increases sharply, it greatly increases the inflation tax on holders of money. The nominal interest rate will increase with the increase in inflation rate; hence, wealth in savings accounts i...
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