Because the Inflation Rate Is So High Wanda Refuses to Carry

question 125

Multiple Choice

Because the inflation rate is so high Wanda refuses to carry cash.Even though it is a bother, she now goes to the ATM twice as often to get the cash she needs.Wanda's actions are an example of the

• A) shoe-leather costs of inflation.
• B) tax costs of inflation.
• C) confusion costs of inflation.
• D) uncertainty costs of inflation.
• E) tax distorting costs of inflation.

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Definitions:

Velocity of Circulation

The rate at which money is exchanged in an economy, often used to represent the activity level in the financial system.

Expected Profit Rate

The anticipated return on an investment, taking into account both the probability of gains and the risk of losses.

Interest Rate

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal.

Velocity of Circulation

The rate at which money exchanges hands in the economy, influencing overall economic activity and inflation.