Menu costs refers to
A)resources used by people to maintain lower money holdings when inflation is high.
B)resources used to price shop during times of high inflation.
C)the distortion in incentives created by inflation when taxes do not adjust for inflation.
D)the cost of more frequent price changes induced by higher inflation.

Question

Quizplus · Accepted Answer

Menu costs refers to the cost of more frequent price changes induced by higher inflation. These costs include the expense of changing price tags, updating computer systems, printing new menus or catalogs, and communicating new prices to customers. When inflation is high, businesses are forced to change their prices more frequently, which increases their menu costs.

Menu Costs Refers to