Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 1 - Part I - Ten Principles of Economics - Problems and Applications - Page 18: 12

Answer

People are taxed when the government prints more money. This happens because inflation leads to higher prices and a drop in the value of money over time. People retain less of their own money, which cause them to withdraw more from the banks.

Work Step by Step

When the government prints too much money, this leads to inflation or a drop in overall prices. This negatively affects people because they lose purchasing power.
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