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ity-ECC × WileyPLUS Nhighered.com × New Tab learning.com/ibiscms/mod/ibis/view.php?id-4978844 de Jumpto... Question 14 of 16 Sapling Learning Inflation can impose significant costs and adversely distort economic systems. Identify whether the costs/distorting affects listed below are as a result of menu costs, shoe-leather-costs or unit-of-account costs Menu Costs Shoe-Leather Costs Unit-of-Account Costs Discourages people neyCanreane the ualiyerog ane economic decisions. into something that better holds Makes money a less Causes costs associated Can lead to stores listing prices with changing prices in stores. in more stable currencies. reliable source of measurement. Can cause distortion to the tax system. Causes difficulty in firms and individuals financial *et Previous Give Up & View Solution e Check Answer 0Neat Hint about us careers privacy policy terms of use contact us help

Solution

ANSWER:

Menu costs:

-- Causes costs associated with changing prices in stores

-- Can lead to stores listing prices in more stable currencies.

Shoe-Leather Costs:

--Discourages people from holding money

--People spend time converting money into something that better holds value

Unit-of-Account Costs:

-- Can reduce the quality of economic decision

-- Makes money a less reliable source of measurement

-- Can cause distortion to tax system

-- Causes difficulty in firms and individual financial planning

Explanation: The amount of goods and services that can be bought by consumers with a unit of currency are termed menu costs: The cost to a firm due to a change its prices is termed as shoe leather costs. The cost of effort and effort that individual spend trying to counter-act the effects of inflation