The Costs of Unexpected Inflation, but Not of Expected Inflation

question 104

Multiple Choice

The costs of unexpected inflation, but not of expected inflation, are:

• A) menu costs.
• B) the arbitrary redistribution of wealth between debtors and creditors.
• C) unintended distortions of individual tax liabilities
• D) the costs of relative price variability.

---

Definitions:

CD

Compact Disc, a digital optical disc data storage format used for storing digital data, traditionally audio recordings.

California Edison

A major public utility company serving much of California, primarily involved in the generation and distribution of electricity.

Investment

The allocation of resources, usually financial, into assets with the expectation of generating income or profit in the future.

Saving Rate

The proportion of disposable income that is saved by individuals or households over a period, rather than being spent.