If inflation were always completely unanticipated, then
A)the real rate of return on interest-bearing assets could not be easily predicted
B)real interest rates would always be negative
C)menu costs would not occur
D)there would not be a need for wage indexation
E)all of the above

Question

Quizplus · Accepted Answer

Unanticipated inflation makes it difficult to predict the real rate of return on interest-bearing assets because the future purchasing power of the returns is uncertain.

If Inflation Were Always Completely Unanticipated, Then