Answer to Question #260918 in Macroeconomics for manuewrz

Question

Choose the correct answer

1)The Tanzi-Oliveira effect of inflation arises because:

a. The public pays more taxes in real terms .

b. There are lags in tax collection.

c. The real value of tax receipts increases. d.Inflation pushes tax payers into higher income tax brackets.

e. Inflation reduces the budget deficit.

2) If the economy unexpectedly went from inflation to deflation,

a. Debtors and creditors would both have reduced real wealth.

b. Debtors and creditors would both have increased real wealth.

c. Debtors and creditors would both have reduced real wealth

d. Debtors would gain at the expense of creditors.

e Creditors would gain at the expense of debtors

3) One of the following is a temporary method of financing budget deficits:

a. Issuance of bonds to the public

b. Sale of government assets

c. issuance of bonds to the central bank d. Borrowing from the banking system

e. Transforming short term bonds to long term bonds

Answer 1

1.

b. There are lags in tax collection.

2.

e Creditors would gain at the expense of debtors

3.

d. Borrowing from the banking system