Inflation Can Cause a Misallocation of Resources Because

Multiple Choice

Inflation can cause a misallocation of resources because

A) inflation doesn't proceed evenly which means that people have a difficult time determining when a price change signals a change in relative prices.
B) firms have to change their price labels at unusual times.
C) the nominal rate of inflation doesn't equal the real rate of inflation.
D) people are encouraged to borrow too much.