Difference between anticipated and unanticipated inflation, Microeconomics

Assignment Help:

Explain inflation, and the difference between anticipated and unanticipated inflation.        

Answer  

Inflation is the persistent rise in the general price level in the economy.      

Anticipated inflation-

1) If the rate of inflation is anticipated then people take steps to make suitable adjustments in their contracts to avoid the adverse effects which inflation could bring to them

2)  Its effects are less substantial and less harmful

3)  Effects of anticipated inflation are avoidable.

Unanticipated inflation

1)  If the rate of inflation is unanticipated then people cannot make necessary adjustments in their contracts as they do not know what will be the rise in price level.

2)  Its effects are more substantial and more harmful

3)  Effects of unanticipated inflation are unavoidable.

 


Related Discussions:- Difference between anticipated and unanticipated inflation

Elasticity, What are the uses of elasticity to the private sector

What are the uses of elasticity to the private sector

Determine the price differential, Severe drought hit the coffee industry ha...

Severe drought hit the coffee industry hard this year; as a result, more people are now switching to tea. The first table below shows the original supply and demand quantities in t

Money creation process, The Money Creation Process is explained below: ...

The Money Creation Process is explained below: We can now study the money supply or the creation process. Suppose the government wishes to buy pencils worth Rs. 10 for the offi

ECON Worksheet, Deadline is 20 Hours... 1. A. Explain how one derives the...

Deadline is 20 Hours... 1. A. Explain how one derives the indifference curves from a 3-dimensional utility function. Draw a graph and explain. Which principle explains the concav

Exceptional demand, how to differentiate the exeptional demand and excepti...

how to differentiate the exeptional demand and exceptional supply?

The demand curve, The owner of the sole stage-theatre in the city of Vorder...

The owner of the sole stage-theatre in the city of Vordervilla has found through   experience that the cost of running his 600-seat theatre remains virtually the same irrespective

Law for diminishing marginal returns, The Law for Diminishing Marginal Retu...

The Law for Diminishing Marginal Returns - As use of an input increases in equal increments, a point will be approched at which the resulting additions to output decreases

What factors shift the aggregate demand curve to right, What factors shift ...

What factors shift the Aggregate demand curve to right and what factors shift the AD curve to left?  AD shifts to the right when any component of AD enhances autonomously; e.g

Elasticity, Five uses of elasticity on the Public Sector and five uses of e...

Five uses of elasticity on the Public Sector and five uses of elasticity on the Private Sector.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd