Suppose That, Because of Inflation, People in Zimbabwe Go to the Bank

question 5

Multiple Choice

Suppose that, because of inflation, people in Zimbabwe go to the bank each day to withdraw their daily currency needs. This is an example of

• A) Costs due to inflation induced relative price variability which misallocates resources.
• B) Menu costs.
• C) Shoeleather costs.
• D) Costs due to inflation induced tax distortions.
• E) Costs due to confusion and inconvenience.

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Definitions:

Price of a Resource

The monetary value assigned to a raw material, energy, or other fundamental inputs used in the production of goods and services.

Substitute Inputs

Alternatives that can be used in the production process if the original inputs become too expensive or unavailable.

Consumers

Individuals or groups who use goods and services to satisfy their personal needs and desires.

Unskilled Labor

Workforce with no special training or qualifications, often associated with manual or simple tasks.