Answer to Question #94854 in Macroeconomics for Machyar Hadi Azra

Question

during the revolutionery war, the american colonies could not raise enough fax revenue difference, the colonies decided to print more money. printing money to cover ecpenditures is sometimes referred to s an "inflation tax". who do you think is being "faxed" when more money is printed?why

Answer 1

The common man is taxed when government prints more money. It is caused by diminishing of the purchasing power of money and increase the overall level of prices in the economy. As a result, customers have to spend more money for their usual set of products.