Inflation can reduce the burden of debt for a sovereign borrower because
A) High inflation reduces interest payments on existing debt
B) High inflation makes issuing new debt cheaper
C) High inflation raises the nominal value of tax revenues and GDP without raising the value of existing debt
D) High inflation causes foreign currency debt to fall in value in local currency terms
E) High inflation reduces the nominal value of existing debt.

Question

Quizplus · Accepted Answer

The Answer of Inflation can reduce the burden of debt for a sovereign borrower because
A) High inflation reduces interest payments on existing debt
B) High inflation makes issuing new debt cheaper
C) High inflation raises the nominal value of tax revenues and GDP without raising the value of existing debt
D) High inflation causes foreign currency debt to fall in value in local currency terms
E) High inflation reduces the nominal value of existing debt.

Inflation Can Reduce the Burden of Debt for a Sovereign