Why is unanticipated inflation usually viewed as undesirable?
A) because it reduces everyone's nominal wages
B) because it redistributes income and wealth
C) because it is accompanied by reductions in real GDP
D) because it usually results in the public sector growing less rapidly than the private sector

Question

Why is unanticipated inflation usually viewed as undesirable?  
A) because it reduces everyone's nominal wages 
B) because it redistributes income and wealth 
C) because it is accompanied by reductions in real GDP 
D) because it usually results in the public sector growing less rapidly than the private sector

Quizplus · Accepted Answer

Unanticipated inflation can have a negative impact on the economy, as it can redistribute income and wealth in an unpredictable manner. This may result in some individuals or groups benefitting disproportionately, while others may suffer losses. This can lead to social and economic inequality, which is often viewed as an undesirable outcome. Additionally, unanticipated inflation can create uncertainty and volatility in the marketplace, which can make it difficult for businesses and individuals to plan for the future.

Why Is Unanticipated Inflation Usually Viewed as Undesirable