Unpredictable inflation can lead businesses to:
A) experience difficulty when planning future production.
B) cease production until they know how to adjust for inflation.
C) restrict output and stockpile inventory.
D) increase production due to expected price level changes.

Question

Quizplus · Accepted Answer

Unpredictable inflation makes it difficult for businesses to plan for the future since they don't know what prices they will be paying for their inputs, what their competitors will be charging, or how much demand there will be for their products. This uncertainty can make it challenging to make decisions about how much to produce, what to charge, and what resources to invest in. Restricting output or stockpiling inventory may not be viable options, as it can lead to increased costs and decreased profits. Rather, businesses may have to adjust their production processes to accommodate the changing prices of their inputs and outputs.

Unpredictable Inflation Can Lead Businesses To