Which of the following is an example of the shoeleather costs of inflation?
A)Tito's Restaurant has to print new menus to update its prices compared to other prices in the economy
B)Beto sells stocks and earns a real capital gain of $50, but is taxed for the nominal capital gain of $75
C)During Bolivia's hyperinflation, workers rushed to immediately convert their wages from pesos to black-market dollars
D)The after-tax real interest rate is lower when inflation is higher

Question

Which of the following is an example of the shoeleather costs of inflation?
A)​Tito's Restaurant has to print new menus to update its prices compared to other prices in the economy
B)Beto sells stocks and earns a real capital gain of $50, but is taxed for the nominal capital gain of $75
C)​During Bolivia's hyperinflation, workers rushed to immediately convert their wages from pesos to black-market dollars
D)The after-tax real interest rate is lower when inflation is higher

Quizplus · Accepted Answer

Shoeleather costs refer to the increased costs of transactions caused by inflation, such as the effort to quickly convert money into more stable forms of value, as seen in the example of workers converting wages to dollars.

Which of the Following Is an Example of the Shoeleather