McqMate
| Q. |
During periods of inflation, tax rates should - |
| A. | increase |
| B. | decrease |
| C. | remain constant |
| D. | fluctuate |
| Answer» A. increase | |
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Explanation: In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. In other words, inflation means continuously decrease in the value of money due to excess supply ofmoney in the market. There are two types of inflation demand pull and cost push inflation. Causes behind inflation are reduced taxes, rate de-crease in saving, increase in supply of goods, increase in the number of producers in the market. To control inflation there should be an increase in the tax rate and increase in the interest rate. |
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