Which of the following is considered a benefit of inflation?
A) Seignorage.
B) Money illusion.
C) The option of a negative real interest rate.
D) All of the above.
E) Both A and B.

Question

Quizplus · Accepted Answer

Inflation can lead to several benefits, including seignorage (the profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs), the possibility of a negative real interest rate (which can stimulate spending and investment), and money illusion (where people may feel richer due to nominal wage increases, potentially boosting spending). Therefore, all the options listed are considered benefits of inflation.

Which of the Following Is Considered a Benefit of Inflation