Menu costs in relation to inflation refer to
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Menu costs refer to:
a. the money, time, and opportunity used to change prices to keep pace with inflation.
b. the time, money, and effort one has to spend managing cash in the face of inflation
c. being penalized via taxes for making more money in dollars, even though real purchasing power hasn't changed at all
d. None of these statements is true
A permanent reduction in inflation would:
A. permanently reduce menu costs and permanently lower unemployment.
B. It would permanently reduce menu costs and temporarily raise unemployment.
C. It would temporarily reduce menu costs and temporarily lower unemployment.
D. It would temporarily reduce menu costs and temporarily raise unemployment.
Even perfectly anticipated inflation imposes costs. Why?
A) Menu costs.
B) Some wages will fail to keep up with anticipated inflation.
C) Paper money loses its purchasing power by the rate of inflation.
D) All of the above.
E) A and C only.
