What costs do firms incur when they repeatedly change prices during inflation?
A
Menu costs are the costs of repricing goods and services as prices change.
B
Search costs are the costs of comparing different goods and services when prices become uncertain.
C
Fiscal drag is the cost of paying higher taxes as inflation raises nominal incomes.
D
Shoe-leather costs are the costs of withdrawing cash and making extra journeys to avoid inflation.
4.6.5 consequences of inflation Flashcards
20 flashcards on CIE Intl A Level Economics 4.6.5 consequences of inflation: the key terms and definitions you need to recall.