Question

Bob 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.
a. menu costsb. shoe-leather costsc. unit-of-account costs

Answer 1

Answer:

Shoe-leather costs.

Explanation:

Resources wasted when inflation encourages Bob to reduce his money holding for more than 2 weeks incase it does decrease.