During periods of rapid inflation, people hold less cash and make more frequent trips to banks and ATM machines. The costs associated with this are an example of _____ costs.

Question

Quizplus · Accepted Answer

The costs associated with making more frequent trips to banks and ATM machines during periods of rapid inflation are referred to as "shoe-leather" costs. This term metaphorically describes the cost of the effort and time (symbolized by the wear on one's shoes) involved in reducing cash holdings and managing money in an inflationary environment.

During Periods of Rapid Inflation, People Hold Less Cash and Make