People go to the bank more frequently to reduce currency holdings when inflation is high,the cost of their time to do this would be counted as

Question

Quizplus · Accepted Answer

The cost that is incurred when people go to the bank more frequently to reduce currency holdings when inflation is high is known as shoeleather cost. This cost arises due to the inconvenience and time involved in making trips to the bank. Thus, the option that represents this cost is C - shoeleather costs. The other options are not relevant to this situation. Inflation-induced tax distortions relate to the distortionary effects of taxes due to inflation. Relative-price variability costs refer to the costs incurred due to inflation causing changes in relative prices. Menu costs relate to the costs of changing prices due to inflation.

People Go to the Bank More Frequently to Reduce Currency