An increase in expected inflation is likely to cause

Name: An increase in expected inflation is likely to cause
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Question

Quizplus · Accepted Answer

An increase in expected inflation means that the value of money is expected to decrease in the future. As a result, individuals will want to hold less money in their wallets and bank accounts and instead spend it on goods and services that have a fixed price. Therefore, there will be a decline in the demand for real balances (money adjusted for inflation).

An Increase in Expected Inflation Is Likely to Cause