Which of the following is a true statement? (1) Unanticipated inflation is a change in the general level of prices that catches most decision makers by surprise. (2) High and variable rates of inflation can increase GDP by reducing investment. (3) When decision-makers are able to anticipate slow, steady rates of inflation, prices become more unstable and there is a negative impact on the level of prosperity. (4) High and variable rates of inflation are easy for decision makers to forecast accurately.

The correct statement is: **(1) Unanticipated inflation is a change in the general level of prices that catches most decision makers by surprise.** **Explanation of Each Statement:** 1. **True.** Unanticipated inflation refers to unexpected changes in the overall price level, which can disrupt economic decision-making for businesses, consumers, and investors because they cannot adjust their behavior in advance. 2. **False.** High and variable rates of inflation generally discourage investment because they create uncertainty about future costs and returns. This uncertainty can lead to reduced investment, which typically **decreases** GDP rather than increasing it. 3. **False.** When inflation is slow and steady and can be anticipated, it provides a predictable environment that can actually enhance economic stability and prosperity. It allows businesses and consumers to make informed decisions, reducing uncertainty rather than increasing instability. 4. **False.** High and variable inflation rates are difficult to predict accurately. The unpredictability of such inflation creates uncertainty, making it challenging for decision-makers to plan effectively. Therefore, **Statement (1)** is the true statement among the options provided. **Answer:** All statements are false except statement (1), which is a true statement.