Question

Carlos manages a grocery store in a country experiencing a high rate of inflation. he is paid in cash twice per month. on payday, he immediately goes out and buys all the goods he will need over the next two weeks in order to prevent the money in his wallet from losing value. what he can't spend, he converts into a more stable foreign currency for a steep fee. this is an example of the of inflation.

Answer 1

Answer:

This is an example of the shoe leather cost

Explanation:

The shoe leather cost refers to the cost of the time and effort put to reduce the amount of cash to avoid losing the value of the money when there is a high inflation. In these circumstances, people try to buy things immediately or change the money to another currency as quick as possible because as time passes the currency loses its value and this is what Carlos is experiencing.

Answer 2

This is an example of the Shoe-leather effect of inflation

Explanation: Here Carols faces a lot of inconvenience in minimizing the cash holdings he has in the fear of it losing its value in the long term. So, he pays a steep fee to convert which we can call as shoe leather costs.