Menu Costs of Inflation

question 103

Multiple Choice

Menu costs of inflation

• A) literally mean that restaurants are the most affected by inflation because they are constantly printing new menus.
• B) are best described as the costs firms incur by having to change prices either on paper or in the computer.
• C) are the costs one incurs when shopping for lower prices.
• D) are the costs involved with only those goods whose prices are rising faster than inflation; this basket of goods represents the "menu."
• E) mean that because we can choose what goods we consume,we have a menu of inflation from which to choose and we can "opt out" by consuming a different "basket" of consumer goods.

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Definitions:

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Diathesis-Stress Model

A psychological theory that explains behavior as a result of a predispositional vulnerability together with stress from life experiences.

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