Annie's credit union charges a fee for transferring funds from her money market account to her chequing account.The rate of inflation has been 12% lately,so Annie has transferred funds from her money market account to her chequing account more often than usual.This cost is an example of the _____ cost of high inflation.

Question

Quizplus · Accepted Answer

The cost mentioned is related to the shoe-leather cost of high inflation. This cost refers to the increased time and effort individuals spend on managing their cash balances due to inflation. In this case, Annie is transferring funds more often from her money market account to her chequing account to avoid losing the value of her money to inflation. The credit union's fee for this transfer is an additional cost that she has to bear due to inflation.

Annie's Credit Union Charges a Fee for Transferring Funds from Her