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If there are no unexpected changes in money supply in an economy, can there still be...

If there are no unexpected changes in money supply in an economy, can there still be unexpected inflation in the economy?

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Answer #1

Yes, even if there is no unexpected changes in money supply in an economy, there can still be an unexpected inflation in the economy.

This is because, inflation not only depends upon the money supply changes within the economy but it also depends upon the changes in the growth rate of an economy.

When the growth rate of an economy is very high, then the inflation rate will unexpectedly decline and when the growth rate of an economy is very low, then the inflation rate will unexpectedly rise very fast.

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