Asked by Kimberly Beltran on Jun 17, 2024
Verified
Inflation induces people to spend more resources maintaining lower money holdings. The costs of doing this are called shoeleather costs.
Inflation
The speed at which the overall price level for goods and services increases, thereby diminishing the buying power.
Shoeleather Costs
The resources wasted when inflation encourages people to reduce their money holdings.
Money Holdings
The amount of cash or liquid assets that a person or entity possesses at any given time.
- Recognize the economic costs associated with inflation and how they affect behavior.
Verified Answer
SE
Selina EllenJun 17, 2024
Final Answer :
True
Explanation :
Shoeleather costs refer to the increased costs of transactions caused by inflation, including the time and effort (resources) spent to keep less money on hand and make more frequent transactions to avoid the devaluation of money held.
Learning Objectives
- Recognize the economic costs associated with inflation and how they affect behavior.