Some economists feel inflation is bad
A) Because it reduces real GDP so much.
B) Only if it is persistent.
C) Because it redistributes income arbitrarily.
D) Only if it is anticipated.

Question

Quizplus · Accepted Answer

Some economists argue that inflation is bad because it leads to an arbitrary redistribution of income. This is because inflation erodes the purchasing power of money, which adversely affects people on fixed incomes or those who are unable to quickly adjust their wages or prices. Inflation can also lead to a shift in relative prices, which may benefit some groups while harming others.

Some Economists Feel Inflation Is Bad