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econ162b_4908 - 10:55:00 AM Costs of Unanticipated...

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09/04/2008 09:55:00 Costs of Unanticipated Inflation 1)Harms savers 2) Harms lenders o r=  i-  pi 3) Harms those with fixed incomes 4) Harms payees (landlords) of fixed-price contracts  Tend to harm those with wealth Unanticipated Inflation 1) Benefits spenders.  2) Benefits borrowers.  o Benefits borrowers same reason it harms lenders.  3) Benefits owners of resources whose prices are increasing the most.  4) Payers of fixed price contracts  o Ex: Tenants o Inflation= Purchasing power is less and less Tend to benefit those without wealth. Unanticipated deflation has the opposite effects. Price reflects people’s  income. o Deflation can be much more disruptive.  o Also think Shay’s Rebellion.
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Causes of Inflation: Aggregate Demand Inaggregate Supply Model.  o Our demand in economy is basically looking at desire spending.  o
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