Which of the Following Is Not the Cost of Inflation

question 24

Multiple Choice

Which of the following is not the cost of inflation?

• A) Menu costs
• B) Tax distortions
• C) Arbitrary redistributions of wealth
• D) All of the above

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Definitions:

Discount

The reduction in the price of goods or services, usually offered to prompt sales or because the product is damaged, outdated, or in less demand.

Restricted Policy

A policy under which holdings of cash, securities, inventories, and receivables are minimized.

Relaxed Policy

A policy under which relatively large amounts of cash, marketable securities, and inventories are carried and under which sales are stimulated by a liberal credit policy, resulting in a high level of receivables.

Interest Expense

Interest Expense is the cost incurred by an entity for borrowed funds, often reflected in the income statement as a cost of financing activities.