A government that generates revenue mostly through an inflation tax faces the risk of ________.
A) hyperinflation
B) mass tax evasion
C) rapidly falling prices
D) a sudden fall in revenue

Question

Quizplus · Accepted Answer

Government relying too much on inflation tax may lead to a vicious cycle of printing money, leading to rising prices, leading to more printing, and ultimately hyperinflation.

A Government That Generates Revenue Mostly Through an Inflation Tax