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

What do you meant by informal economy, Q. What do you meant by Informal Eco...

Q. What do you meant by Informal Economy? Informal Economy:Informal sector of the economy represents the production of services and goods for the own-use of the producers or fo

Risk premium, Risk Premium - The risk premium is amount of money which ...

Risk Premium - The risk premium is amount of money which a risk averse person would pay to keep away from taking a risk. *  Risk Premium: A Scenario - The person has a 5%

#theory of consumer., Ask question #what is an indifference curveMinimum 10...

Ask question #what is an indifference curveMinimum 100 words accepted#

What is hyper inflation, What is hyper inflation? How it can be reduced?  ...

What is hyper inflation? How it can be reduced?   Hyper inflation means that prices of the consumable goods are very high. Prices can be decreased by supplying more goods in th

Comparative advantage, Comparative Advantage:A theory of international trad...

Comparative Advantage:A theory of international trade which originated with David Ricardo in early 19th Century and is maintained (in revised form) within neoclassical economics. T

Why is it considered well to bring all bop to zero, Why is it considered we...

Why is it considered well to bring all BOP's to zero?   If BOP of any country is zero, it reflects that the present account of that country has sufficient balance to meet the n

Illustrate clearly the concept of dummy variable trap, Problem: (a) Co...

Problem: (a) Consider the Classical Linear Regression Model (CLRM) Y i = α + βX i + ε i (i) Using the method of ordinary least squares (OLS), derive an expression for

Rational producer, would a rational producer be concerned with the average ...

would a rational producer be concerned with the average or marginal product of an input in dec

Calculate the price of a forward contract, Commodities A) It i...

Commodities A) It is well documented that commodity prices are very volatile when compared to other asset classes.  Discuss factors that cause volatility in the commod

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