Suppose That, Because of Inflation, a Business in Russia Must

question 51

Multiple Choice

Suppose that, because of inflation, a business in Russia must calculate, print, and mail a new price list to its customers each month. This is an example of

• A) Shoeleather costs.
• B) Costs due to confusion and inconvenience.
• C) Arbitrary redistributions of wealth.
• D) Costs due to inflation induced tax distortions.
• E) Menu costs.

---

Definitions:

Nominal Exchange Rate

The rate at which currencies are traded in the foreign exchange market, not considering differences in price levels between countries.

Domestic Price

The price of a good or service within a specific country, distinct from its price in international markets.

Depreciate

The process by which an asset's value decreases over time due to use, wear and tear, or obsolescence.

Euros/Dollar

The exchange rate between the euro and the U.S. dollar, indicating how much one euro is worth in U.S. dollars or vice versa.