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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