Suppose that, because of inflation, people in Zimbabwe go to the bank each day to withdraw their daily currency needs.This is an example of
A)costs due to inflation induced relative price variability, which misallocates resources.
B)menu costs.
C)shoeleather costs.
D)costs due to inflation induced tax distortions.
E)costs due to confusion and inconvenience.

Question

Quizplus · Accepted Answer

This scenario describes shoeleather costs, which refer to the increased costs of time and effort people must spend to cope with inflation, such as going to the bank daily to withdraw funds to keep up with rising prices.

Suppose That, Because of Inflation, People in Zimbabwe Go to the Bank