Which of the following best defines menu costs?
A) resources used by people to maintain lower money holdings when inflation is high
B) costs associated with resource misallocation.
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 refer to the cost of changing prices or menus due to inflation, and are often associated with higher inflation rates. This can include the cost of reprinting menus, updating pricing systems, and changing marketing materials to reflect new prices. Therefore, the correct option is D.

Which of the Following Best Defines Menu Costs