Regarding inflation, which of the following 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) When the inflation rate is high and variable, decision makers will generally be able to anticipate year-to-year changes in inflation quite accurately.
D) Inflation will tend to increase the nominal values of both prices and wages.

Question

Quizplus · Accepted Answer

Inflation tends to increase nominal values of prices and wages as prices and wages rise along with inflation. Option A is incorrect because anticipated inflation is an increase in the price level that is expected by individuals beforehand. Option B is incorrect because unanticipated inflation is a change in the price level that is not expected by individuals. Option C is incorrect because when the inflation rate is high and variable, decision-makers will find it difficult to anticipate year-to-year changes in inflation accurately.

Regarding Inflation, Which of the Following Is True