The existence of inflation does which of the following?
A) Eliminates money illusion.
B) Reduces the costs associated with money illusion.
C) Reduces shoe- leather costs.
D) Reduces tax distortions.
E) Facilitates the downward adjustment of real wages.

Question

Quizplus · Accepted Answer

Inflation facilitates the downward adjustment of real wages, as nominal wages can remain constant while prices increase, leading to a decrease in the real value of wages. The other options are not directly related to the existence of inflation.

The Existence of Inflation Does Which of the Following