Inflation redistributes income to a greater extent when the inflation is 'unanticipated'.

Question

Quizplus · Accepted Answer

When inflation is unanticipated, it catches people and the markets by surprise, leading to unexpected changes in the distribution of income among producers, consumers, creditors, and debtors. This can result in winners and losers of the inflation, creating a redistributive effect on income which is more prominent as compared to the anticipated inflation.

Inflation Redistributes Income to a Greater Extent When the Inflation