Inflation decreases the growth of capital because
i. when the after-tax real interest rate falls, savings decreases.
ii. velocity increases when inflation increases.
iii. the higher the inflation rate, the higher is the true income tax rate on income from capital.
A) i only B) ii only C) iii only D) i and iii E) i, ii, and iii
D
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The IS curve shifts to the right where there is
A) an increase in current taxes. B) a reduction in expected future taxes. C) a reduction in expected future output. D) all of the above E) none of the above
Which of the following would be expected if the tariff on foreign-produced automobiles were increased?
a. The domestic price of automobiles would fall. b. The supply of foreign automobiles to the domestic market would decline, causing auto prices to rise. c. The number of unemployed workers in the domestic automobile industry would rise. d. The demand for foreign-produced automobiles would increase, causing the price of automobiles to increase in other nations.