When hyperinflation forces Pedro to change the price stickers on the books in his bookstore very frequently to keep up with the aggregate price level, economists say that Pedro has a:
A) shoe-leather cost.
B) menu cost.
C) unit-of-account cost.
D) debt deflation.

Question

Quizplus · Accepted Answer

The situation described refers to menu costs, which are the costs that firms incur in changing their prices due to changes in the aggregate price level. These include the costs of printing new price lists, changing advertised prices, and updating software systems that track inventory and sales.

When Hyperinflation Forces Pedro to Change the Price Stickers on the Books