Which of the following costs of inflation does not occur when inflation is constant and predictable?
A) Costs due to inflation induced tax distortions.
B) Arbitrary redistributions of wealth.
C) Shoeleather costs.
D) Menu costs.
E) Costs due to confusion and inconvenience.

Question

Quizplus · Accepted Answer

When inflation is constant and predictable, arbitrary redistributions of wealth do not occur because individuals and businesses can plan for the inflation and adjust their contracts and financial arrangements accordingly.

Which of the Following Costs of Inflation Does Not Occur