See Hint Inflation imposes many costs on the economy: shoe-leather costs, money
ID: 1141409 • Letter: S
Question
See Hint Inflation imposes many costs on the economy: shoe-leather costs, money illusion, menu costs, future price level uncertainty, wealth redistribution, price confusion, and tax distortions. For each of the following statements, determine the associated cost. Be careful! Some of the statements may not go into any of the categories because two categories are missing. Items (7 items) (Drag and drop into the appropriate area below) The CEO of GM worries that his revenue received in the future won't cover the expenses he incurs t A jeweler observes the price of gold riseof donuts and wonders if there is a shortage ofgold. last week. Jim is reluctant to sell his stocks at the end of theNYC will increase Kallie is takin more trips to ATM now tha the past. Carson is angry because the pricegrandmother's Your John thinks his new salary in savings account pays 2% interest, but inflation is 5% increased from $1 to $2 since his standard of living. ar. Categories Shoe-leather costs Money illusion Menu costs Wealth redistribut'n Price confusion Drag and drop here Drag and drop here Drag and drop here Drag and drop here Drag and drop hereExplanation / Answer
1) Shoe- Leather costs : Kallie is taking more trips to ATM now than the past .
2) Money illusion : John thinks his new salary at NYC will increase his standard of living .
3) Menu costs : Carson is angry because the price of donuts increased from1$ to 2$ .
3) Wealth Redistribution : Ypur grandmother's savings account pays 2% interest , inflation is 5% .
4) Price confusion : Jim is reluctant to sell his stocks at the end of the year .