Answer to Question #286469 in Macroeconomics for nouman

Question

During the Revolutionary War, the American colonies

could not raise enough tax revenue to fully fund the

war effort. To make up the difference, the colonies

decided to print more money. Printing money to cover

expenditures is sometimes referred to as an “inflation

tax.” Who do you think is being “taxed” when more

money is printed? Why?

To

Answer 1

Anyone who holds money. If the state generates more currency, the average man will be taxed. This is because the price level causes increased rates and currencies to depreciate over time.