One cost of a perfectly anticipated inflation is that it
A)transfers wealth from lenders to borrowers.
B)transfers wealth from borrowers to lenders.
C)increases menu costs.
D)damages the role of prices as signals in the economy.

Question

Quizplus · Accepted Answer

Perfectly anticipated inflation leads to increased menu costs, which are the costs associated with changing prices frequently to keep up with inflation.

One Cost of a Perfectly Anticipated Inflation Is That It