Which of the following is a direct economic consequence of a high rate of inflation?
A redistribution of real wealth from debtors to creditors as the real value of debt repayments rises.
An increase in fiscal drag, whereby individuals are pushed into higher marginal tax brackets as their nominal incomes rise with inflation.
A reduction in 'shoe-leather costs' because consumers hold larger real cash balances to purchase goods before prices rise further.
An improvement in the international competitiveness of domestic goods due to the rising nominal cost of production.
