Shoe-leather costs arise from inflation because the velocity of circulation of money _{--------------------} as the inflation rate_{--------------------} .

Question

Quizplus · Accepted Answer

Shoe-leather costs refer to the increased costs of transactions due to people holding less cash and making more frequent trips to the bank to withdraw money. This happens because, as inflation rises, the velocity of circulation of money increases since people want to spend their money quickly before it loses value.

Shoe-Leather Costs Arise from Inflation Because the Velocity of Circulation