Asked by Destiny Marsh on May 06, 2024
Verified
Which of the following is true about inflation?
A) Inflation promotes social harmony by uniting people against the government.
B) Inflation is more damaging if it is unanticipated.
C) Accurate anticipation of inflation is possible for everyone who is well informed about economic events.
D) Those who lend money at a rate above the rate of inflation suffer economic losses.
E) If people accurately anticipate inflation,their actions will prevent it.
Inflation
The rate at which prices for general goods and services increase, lessening the ability to buy.
Economic Losses
Financial detriment or the reduction in economic value as a result of events such as natural disasters, market downturns, or policy changes.
Social Harmony
A state of peaceful coexistence and cooperation among individuals and groups in a society.
- Comprehend the impact of anticipated and unanticipated inflation on borrowers, lenders, and the overall economy.
Verified Answer
LA
Lauren AvilaMay 07, 2024
Final Answer :
B
Explanation :
Unanticipated inflation can cause uncertainty and instability in the economy, making it more difficult for both individuals and businesses to plan and make decisions. This can lead to reduced investment, lower economic growth, and increased unemployment. Anticipated inflation, on the other hand, allows individuals and businesses to adjust their behavior accordingly, mitigating some of the negative effects.
Learning Objectives
- Comprehend the impact of anticipated and unanticipated inflation on borrowers, lenders, and the overall economy.