Which of the following about inflation is true?
A) High and variable rates of inflation will be easy for decision makers to forecast accurately.
B) Unanticipated inflation is an increase in the general level of prices that was not expected by most decision makers.
C) In contrast with unanticipated inflation, anticipated inflation implies that the increase in the general level of prices was expected by borrowers but not lenders.
D) Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.

Question

Quizplus · Accepted Answer

Unanticipated inflation is an increase in the general level of prices that was not expected by most decision makers. A and D are both false statements - high and variable rates of inflation are difficult to forecast accurately, and inflation can also affect wage rates. C is also false - in anticipated inflation, both borrowers and lenders expect the increase in the general level of prices.

Which of the Following About Inflation Is True