Question

Inflation can impose significant costs and adversely distort economic systems. Identify whether costs and distorting, effects the menu costs, shoe leather costs or unit of account costs.

Answer 1

Answer:

Inflation is the consistent increase in the price level of goods and services.

Shoe Leather Cost, inflation discourages people from keeping money, as the value of money is fast reducing.

Unit of Account Costs, during inflation money reduces it's value as a measurement of value, hence is not dependable store of value.  

Explanation:

Inflation is the consistent increase in the price level of goods and services.

Shoe Leather Cost, inflation discourages people from keeping money, as the value of money is fast reducing.

Unit of Account Costs, during inflation money reduces it's value as a measurement of value, hence is not dependable store of value.