If inflation is completely anticipated,
A)no one loses in the economy.
B)borrowers lose in the economy.
C)lenders lose in the economy.
D)firms lose because they incur menu costs.
E)income cannot be redistributed.

Question

Quizplus · Accepted Answer

When inflation is completely anticipated, firms may still incur menu costs, which are the costs associated with changing prices (such as reprinting menus, catalogs, or price lists). This does not mean that no one loses, but rather that this specific cost can affect firms.

If Inflation Is Completely Anticipated