Costs of Unanticipated Inflation. Please respond to th
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Costs of Unanticipated Inflation. Please respond to the following: Question: Unanticipated inflation has three major c
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Costs of Unanticipated Inflation. Please respond to the following:
Question: Unanticipated inflation has three major costs. First, prices are set wrong because some prices and wages must be set in advance before the inflation rate is known. Second, wealth is redistributed between borrowers and lenders who have agreed to a fixed nominal interest rate. Third, higher inflation leads to greater uncertainty about the future inflation rate, which may change economic decisions. Present examples from your own life experience illustrating the three costs of unanticipated inflation.
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