Because the inflation rate is so high Wanda refuses to carry cash.Even though it is a bother, she now goes to the ATM twice as often to get the cash she needs.Wanda's actions are an example of the
A) shoe-leather costs of inflation.
B) tax costs of inflation.
C) confusion costs of inflation.
D) uncertainty costs of inflation.
E) tax distorting costs of inflation.

Question

Quizplus · Accepted Answer

Wanda's actions of going to the ATM twice as often to avoid carrying cash is an example of the shoe-leather costs of inflation. This is because the high inflation rate reduces the purchasing power of money, causing people to spend more time and effort in finding ways to hold less cash and avoid losing value due to inflation. This increased cost of finding ways to avoid cash holdings is referred to as shoe-leather costs.

Because the Inflation Rate Is So High Wanda Refuses to Carry