When unanticipated inflation occurs regularly, the degree of risk associated with investments in the economy
A) increases.
B) decreases.
C) remains stable.
D) falls to zero.

Question

Quizplus · Accepted Answer

Unanticipated inflation increases uncertainty and risk in the economy, particularly for investors, as it may lead to higher borrowing costs and reduced purchasing power. This can negatively affect the returns on investments, making them riskier. Therefore, the degree of risk associated with investments increases in such a situation.

When Unanticipated Inflation Occurs Regularly, the Degree of Risk Associated