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The inflation rate, an increase in the real money supply the inflation tax. please choose the correct answer from the following choices, and then or have no effect.
An inflation tax is the economic disadvantage suffered by holders of currency cash and cash equivalents due to the effects of inflation acting as a hidden tax that deducts the value of the currency.
Fiscal inflation exists because when a government prints money to cause inflation, it usually benefits because it can generate more real revenue and reduce the real value of debt. Inflation also helps governments balance their finances without officially raising taxes.
Governments that print money to finance deficits use inflation taxes. Taxes are paid by individuals who own nominal assets such as currency. The cause of inflation is a matter of nexus for central banks that want to use inflation to stimulate production.
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