The cost of inflation to society includes I. The opportunity costs of resources used by people to protect themselves against inflation
II) The costs associated with recalculating prices
A) I only
B) II only
C) Both I and II
D) Neither I nor II

Question

Quizplus · Accepted Answer

Both I and II are costs of inflation to society. The opportunity costs of resources used to protect against inflation include individuals spending time researching and monitoring prices, negotiating contracts with inflation-escalation clauses, and investing in inflation-protected assets. Recalculating prices involves firms adjusting their prices to account for changes in input costs and inflation, which can be costly in terms of time and resources.

The Cost of Inflation to Society Includes I