Why does unanticipated inflation create problems for society?
A) because it increases the wealth of people who hold cash
B) because it promotes social cooperation by encouraging self-restraint
C) because it reduces the desire to plan and the complexity of planning
D) because it redistributes wealth and income

Question

Why does unanticipated inflation create problems for society?  
A) because it increases the wealth of people who hold cash 
B) because it promotes social cooperation by encouraging self-restraint 
C) because it reduces the desire to plan and the complexity of planning 
D) because it redistributes wealth and income

Quizplus · Accepted Answer

Unanticipated inflation creates problems for society because it redistributes wealth and income. This means that some individuals or groups in society will benefit from the inflation while others will suffer. Those who hold fixed income assets (such as savings accounts or bonds) will see their real income decrease, while borrowers (who can pay back loans with inflated dollars) will benefit. This can create tensions and inequalities in society. Furthermore, inflation undermines the predictability of the economic environment, making it more difficult for businesses and individuals to plan for the future.

Why Does Unanticipated Inflation Create Problems for Society