High rates of inflation often result in people spending inordinate amounts of time trying to make transactions and finding ways to keep the real value of their money from decreasing.This example illustrates _____ costs.
A) shoe-leather
B) menu
C) efficiency-wage
D) unit-of-account

Question

Quizplus · Accepted Answer

Shoe-leather costs refer to the increased time and effort spent by individuals to conduct transactions in periods of high inflation. The example given in the question describes people spending more time trying to make transactions and finding ways to protect the value of their money, which is a clear example of shoe-leather costs. Menu costs refer to the costs businesses incur to change prices due to inflation, efficiency-wage refers to paying employees above the market rate to improve their productivity and motivation, and unit-of-account costs refer to the confusion and uncertainty caused by inflation in measuring the real value of goods and services.

High Rates of Inflation Often Result in People Spending Inordinate