During times of high inflation, people hold ________ and must incur ________.
A) less savings; lower interest rates
B) more money; lower interest rates
C) less money; higher shoe-leather costs
D) more savings; shoe-leather costs
E) less savings; higher transaction costs

Question

Quizplus · Accepted Answer

During times of high inflation, people tend to hold less money because its value decreases quickly. They make more frequent trips to the bank or ATM to withdraw smaller amounts of money as needed, incurring higher shoe-leather costs, which metaphorically refers to the cost of managing cash holdings, such as the effort and time spent going to the bank.

During Times of High Inflation, People Hold ________ and Must