The costs of inflation are
A)shoeleather costs and menu costs.
B)arbitrary redistributions of wealth.
C)increased variability of relative prices.
D)All of the above.

Question

The costs of inflation are
A)​shoeleather costs and menu costs.
B)​arbitrary redistributions of wealth.
C)​increased variability of relative prices.
D)​All of the above.

Quizplus · Accepted Answer

Inflation can lead to shoeleather costs (the cost of managing cash), menu costs (the cost of changing prices), arbitrary redistributions of wealth (due to unexpected inflation affecting borrowers and lenders), and increased variability of relative prices (as not all prices adjust at the same rate).

The Costs of Inflation Are