When the rate of inflation is high, people usually transfer money from interest-bearing accounts into checking accounts more often than when inflation is low. This is an example of a menu cost.

Question

Quizplus · Accepted Answer

This statement is incorrect. Transferring money from interest-bearing accounts to checking accounts in response to high inflation is not an example of a menu cost, which refers to the cost of updating prices in response to inflation.

When the Rate of Inflation Is High, People Usually Transfer