You have to pay costs for your business now,but you also have to enter into contracts to pay wages and supply costs in the future.If inflation occurs,the best term for the problem that arises in this case is
A) menu costs.
B) price confusion.
C) future price uncertainty.
D) deflationary price pressures.
E) present value/future value uncertainty.

Question

Quizplus · Accepted Answer

The problem that arises in this case is future price uncertainty, as inflation can cause the costs of wages and supplies to increase in the future, which may not have been accounted for in the initial contracts. Menu costs refer to the costs incurred by a firm when it changes its prices, price confusion and deflationary price pressures are not relevant to this scenario, and present value/future value uncertainty relates to the time value of money and is not specifically related to inflation.

You Have to Pay Costs for Your Business Now,but You