Opponents of Using the Inflation Tax to Finance Government Budget

Multiple Choice

Opponents of using the inflation tax to finance government budget deficits argue that:

A) the government can raise taxes to eliminate any budget deficit.
B) inflation is ultimately beneficial in the long run.
C) the inflation tax is a temporary solution that requires ever higher levels of inflation to remain effective.
D) the economic slowdown produced by the inflation tax is more damaging than the hyperinflation that would occur in the absence of the inflation tax.