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Difference between inflation and unexpected inflation

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What is the difference between inflation and unexpected inflation?

Mayor

Government official

Hello there. I'm the mayor. I know some people don't like inflation. I'm not crazy about it -makes me look bad to the voters. You know, when prices go up, everyone seems to blame the government. And I don't want to look bad to voters because I need to get re-elected. But ssshhh. I'll tell you a secret. Overall, higher prices for everything people buy result in higher sales-tax receipts. And this gives the city more money to spend on things the voters want, like recreation programs and road improvements. Not only this, remember that skateboard park the town built and financed with municipal bonds? Well, inflation means that we'll pay back those bonds with cheaper dollars. So, inflation actually helps us a bit. I just hope those voters don't blame me for the higher prices.

Reference no: EM132291001

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