One cost of unanticipated inflation is
A) both lenders and borrowers lose.
B) arbitrary redistributions of income.
C) nominal income falls below real income.
D) people cannot repay their debts.

Question

Quizplus · Accepted Answer

Unanticipated inflation creates arbitrary redistributions of income because certain groups in society may be negatively impacted (e.g. savers) while others may benefit (e.g. borrowers). This creates an unfair and unpredictable distribution of wealth.

One Cost of Unanticipated Inflation Is