The cost incurred when individuals reduce their money holdings because of inflation is termed as the:

Question

Quizplus · Accepted Answer

The cost incurred when individuals reduce their money holdings because of inflation is called the shoe-leather cost. This cost refers to the inconvenience and expense of holding less cash, such as more frequent trips to the bank and the opportunity cost of time spent. This cost is a direct result of inflation, as it reduces the purchasing power of money, leading individuals to hold less cash on hand. The other choices are not directly related to this concept.

The Cost Incurred When Individuals Reduce Their Money Holdings Because