When Haley states that inflation by itself always reduces the real return on her saving,she
A)has expressed the idea of the inflation tax.
B)has expressed the idea behind menu costs.
C)has committed the inflation fallacy.
D)has expressed the idea behind shoeleather costs.

Question

Quizplus · Accepted Answer

Haley has committed the inflation fallacy, which is the mistaken belief that inflation itself reduces the real value of money or goods. While inflation can have negative effects on the economy, such as reducing purchasing power and leading to higher interest rates, it does not always necessarily lead to a decrease in the real return on saving or investment. Other factors, such as interest rates and the performance of the economy, also play a role.

When Haley States That Inflation by Itself Always Reduces the Real