The inconvenience associated with reducing money holdings to avoid the inflation tax is called:
A) menu costs.
B) shoeleather costs.
C) variable yardstick costs.
D) fixed costs.

Question

Quizplus · Accepted Answer

Shoeleather costs refer to the inconvenience associated with reducing money holdings to avoid the inflation tax. Option A, menu costs, refer to the costs associated with changing prices to reflect changes in the inflation rate. Option C, variable yardstick costs, refer to the costs associated with interpreting nominal values when the inflation rate is variable. Option D, fixed costs, refer to costs that do not vary with changes in the inflation rate.

The Inconvenience Associated with Reducing Money Holdings to Avoid the Inflation