Unanticipated Inflation, economics homework help


Unanticipated Inflation leads to more economic issues than anticipated inflation (McEachern, W. A. (2015). If
actual inflation exceeds anticipated inflation the result could be
companies needing to give unexpected raises to employees which weren’t
included in the budget.  For example, my organization does a yearly
market analysis and will give employees additional market adjustments
for cost of living in addition to merit raises.  This year the raise was
2% across the board for all staff.  Personally, I benefit when given a
raise as my purchasing power increases and results in increased cash
flow if its more than inflation.  If my raise is the same as inflation,
it’s a win win for the company and me.  For my company which is a
hospital organization, inflation means the necessity to also increase
prices for services performed due to the impact on increasing costs
whether it’s from labor, supplies, or cost.  If inflation exceeds the
raise given, then it’s the employees loss and their purchasing power is
decreased.  If inflation is less than the employee’s raise, then the
employee has increased purchasing power and has the advantage.  When
inflation is expected, companies and the government can plan on it such
as workers getting higher wages, businesses raise prices, interest rates
may rise also.  When unanticipated inflation occurs, it impacts
individuals with fixed incomes, and businesses raise prices quickly in
response without adjusting wages which hurts the workers and benefits
the business. 

agree with 2 – 3 sentences

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