Question

Suppose the money base is 10 per cent of gdp. Suppose also that the government is considering raising the inflation rate from 0 to 10 per cent per annum and believes that doing so will increase government revenue by 1 per cent of gdp. Explain why the government must be overestimating the revenue it will receive from the resulting inflation tax.

Answer 1

Conditions of Producer's Equilibrium In terms of Marginal .... Explain Marginal Cost and Marginal Revenue approach.