Which of the following is an example of the menu 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 menu 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

Menu costs refer to the costs incurred by businesses when they have to change prices frequently due to inflation, such as printing new menus.

Which of the Following Is an Example of the Menu