Which of the following statements is correct concerning unanticipated inflation?

Question

Quizplus · Accepted Answer

Unanticipated inflation can cause unpredicted changes in the economy, leading to an uneven distribution of income and wealth. People who hold fixed-income securities, such as pensioners or people who live on interest income, will see a reduction in their purchasing power. Conversely, people who hold tangible assets like real estate or stocks, which can appreciate in value during inflation, will enjoy greater wealth. Overall, unanticipated inflation is likely to cause redistributive effects that disproportionately affect some groups of people more than others.

Which of the Following Statements Is Correct Concerning Unanticipated Inflation