Which of the following about inflation is true?
A) Anticipated inflation is an increase in the price level that comes as a surprise, at least to most individuals.
B) Unanticipated inflation is a change in the price level that is widely expected.
C) Decision makers are generally able to anticipate slow steady rates of inflation with a fairly high degree of accuracy.
D) Inflation will increase the prices of goods and services that households purchase but not the wage rates of workers.

Question

Quizplus · Accepted Answer

Decision makers such as businesses, investors and lenders are generally able to make some predictions about slow and steady inflation rates. However, unexpected and rapid inflation is difficult for them to predict accurately. Option A is incorrect because anticipated inflation is something that individuals can foresee and prepare for. Option B is incorrect because unanticipated inflation is a surprise and not something that is widely expected. Option D is incorrect because inflation affects both the prices of goods and services as well as the wage rates of workers.

Which of the Following About Inflation Is True