How does unanticipated inflation harm the economy

Reference no: EM133707620

Question: 1. (Two Sources of Inflation) Using aggregate supply and aggregate demand, demonstrate two sources of inflation. 2. (Sources of Inflation) Using the concepts of aggregate supply and aggregate demand, explain why inflation usually accelerates during wartime. 3. (Inflation and Interest Rates) Using a demand-supply diagram for loanable funds (like Exhibit 10), show what happens to the nominal interest rate and the equilibrium quantity of loans when both borrowers and lenders increase their estimates of the expected inflation rate from 5 percent to 10 percent. 4. (Anticipated Versus Unanticipated Inflation) If actual inflation exceeds anticipated inflation, who will lose purchasing power and who will gain? How does unanticipated inflation harm the economy?

Reference no: EM133707620

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