Inflation is undesirable because it:
A)arbitrarily redistributes real income and wealth.
B)always is cumulative; that is, creeping inflation invariably causes hyperinflation.
C)always increases everyone's standard of living.
D)reduces everyone's standard of living.

Question

Quizplus · Accepted Answer

Inflation arbitrarily redistributes real income and wealth by benefiting debtors and hurting creditors, as well as causing uncertainty and inefficiency in the economy. It does not always lead to hyperinflation and does not increase everyone's standard of living, but can actually reduce it by decreasing the purchasing power of money.

Inflation Is Undesirable Because It