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 " (2024)

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?

Money Printing:

Changes in the supply of money can have large effects on the economy in the short term. The most dangerous threat is that of inflation, which can spiral out of control if too much money is printed and consumers rush to spend their money. This increases the velocity of money and, if it leads to hyperinflation, a currency risks total collapse.

Answer and Explanation:1