Which of the following things can a government do to lower the costs of inflation?
A)sell inflation-indexed bonds and rewrite tax laws so that real rather than nominal gains are taxed
B)sell inflation-indexed bonds but not rewrite tax laws so that real rather than nominal gains are taxed
C)rewrite tax laws so that real rather than nominal gains are taxed,but not sell inflation-indexed bonds
D)neither sell inflation-indexed bonds nor rewrite tax laws so that real rather than nominal gains are taxed

Question

Quizplus · Accepted Answer

Selling inflation-indexed bonds helps to lower the costs of inflation by providing a way for investors to protect themselves against the effects of inflation. By rewriting tax laws so that real gains are taxed instead of nominal gains, the government can reduce the incentives for people to invest in assets that are likely to lose value due to inflation, which can help to reduce inflationary pressures. Combining these two measures can be an effective way for the government to lower the costs of inflation. Therefore, Choice A is the best option.

Which of the Following Things Can a Government Do to Lower