Measuring the price level and inflation - Unexpected Redistribution of Wealth
3 important questions on Measuring the price level and inflation - Unexpected Redistribution of Wealth
What does unexpected inflation mean?
It refers to actual inflation differing from planned rates. This can affect contracts and fixed payments.
How does unexpected inflation affect contracts?
Contracts made in advance become unfair due to unanticipated changes in inflation.
What happens to fixed payments during unexpected inflation?
Fixed payments like salaries or loans lose fairness when inflation differs from expectations.
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