Final answer:
Unexpected inflation can disrupt the allocation of resources by unbalancing the real value of financial transactions, such as loans. If inflation is not anticipated, it can result in lenders receiving less real value back from borrowers, thus redistributing purchasing power and undermining economic stability.
Step-by-step explanation:
The question addresses how unexpected inflation affects the allocation of resources in an economy, particularly through the medium of a loan to a miner. Unexpected inflation may lead to unintended redistributions of purchasing power, harming those with financial assets that do not keep up with the rise in inflation. For instance, consider a miner who expertly mines ore and needs a loan. If the loan is taken out at a fixed interest rate, and inflation unexpectedly rises, the real cost of repaying that loan can decrease for the miner, effectively reducing the burden of the debt. However, if the lender's interest rates do not adjust with inflation, the lender loses purchasing power over time, as the money repaid by the miner will be of less value than when the loan was issued.
Such outcomes make economic rewards appear more arbitrary, potentially undermining the perceived fairness of market outcomes. For the lender, if the nominal return on the loan does not keep up with inflation--similar to having money in a bank account with a 4% interest rate when inflation rises to 5%--the real rate of return becomes negative. On a broader scale, this situation signifies a redistribution of wealth and resources within the economy, affecting long-term planning and investment decisions due to the uncertainty associated with the value of money.