Unanticipated inflation creates problems for society because
A)it increases the wealth of people who hold cash
B)it promotes social cooperation by encouraging self-restraint
C)it reduces the desire to plan and reduces the complexity of planning
D)it redistributes wealth and income
E)it requires buyers to spend less time acquiring information about prices

Question

Quizplus · Accepted Answer

Unanticipated inflation redistributes wealth and income because it creates winners and losers among different groups in society. Those who hold assets such as stocks or property will see the value of their holdings increase, while those who hold mainly cash or fixed-income assets like bonds will see the value of their holdings decrease. This can lead to an increase in economic inequality and may cause social unrest.

Unanticipated Inflation Creates Problems for Society Because