In the short run, unanticipated inflation typically leads to
A) higher rates of unemployment.
B) decreases in aggregate demand.
C) lower rates of unemployment.
D) workers' thinking the real wage has been reduced.

Question

Quizplus · Accepted Answer

In the short run, unanticipated inflation can lead to lower rates of unemployment because nominal wages are slow to adjust to the inflation, making labor relatively cheaper for employers and potentially increasing hiring.

In the Short Run, Unanticipated Inflation Typically Leads to