Why expected inflation may be better than surprise inflation


Problem: During a lunch meeting with your boss he says, "I also don't believe the Fed is really going to do whatever it takes to bring down inflation. This guy Powell talks tough but he knows inflation is no big deal-2% or 10%, as long as everyone knows what to expect, it's not that big a deal." Explain why, while it is true that an expected inflation may be better than surprise inflation, it may still be a problem.

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Macroeconomics: Why expected inflation may be better than surprise inflation
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