If inflation is anticipated,some effects of inflation on the redistribution of income can be avoided.

Question

Quizplus · Accepted Answer

If inflation is anticipated, individuals and businesses can adjust their behavior accordingly to offset the effects of inflation on the redistribution of income. For example, they can negotiate wage and price increases in anticipation of higher inflation, invest in assets that are likely to appreciate in value with inflation, or shift their consumption patterns towards goods and services that are less affected by inflation. By taking such actions, the impact of inflation on the distribution of income can be lessened.

If Inflation Is Anticipated,some Effects of Inflation on the Redistribution