What Is the "Inflation Tax

Multiple Choice

What is the "inflation tax"?

A) the difference between nominal and real interest rates received on financial assets,due to inflation
B) the fact that our tax system is based on nominal incomes and not real incomes,so that the government collects more taxes due to inflation alone
C) the government obtaining goods in exchange for newly created high-powered money that does not add to the real value of private assets due to the resulting inflation
D) the fact that greater government spending leaves fewer goods available to the private sector,thus lowering their prices.