Which of the following is a cost of anticipated inflation?
A)the real interest rate differs from what borrowers and lenders expected
B)the risk associated with lending decreases
C)the value of cash held by consumers falls
D)economics classes become harder
E)workers nominal income will rise

Question

Quizplus · Accepted Answer

Anticipated inflation will cause the value of cash held by consumers to fall. This is because prices of goods and services will increase, and the same amount of money will be able to purchase fewer goods and services than before. The other choices are not costs of anticipated inflation, as the real interest rate differing from expectations is a result of inflation, the risk associated with lending may decrease or increase depending on the context, economics classes becoming harder is not a direct cost, and workers' nominal income rising may actually be a benefit for them.

Which of the Following Is a Cost of Anticipated Inflation