The menu costs of inflation are the:
A)lost interest earnings when holding cash.
B)costs of information search with regards to new inflation rates.
C)overall costs of purchasing more inputs at higher prices.
D)marginal costs of adjusting prices.

Question

Quizplus · Accepted Answer

Menu costs refer to the costs incurred by firms in adjusting their prices due to inflation. The marginal cost of adjusting prices is a key component of menu costs, as firms must spend resources to change their pricing structures in response to changing inflation rates. Lost interest earnings on cash, the costs of information search, and the overall costs of purchasing inputs at higher prices are not direct components of menu costs.

The Menu Costs of Inflation Are The