Explain the "shoe-leather" costs of inflation
What will be an ideal response?
When prices rise rapidly during anticipated inflation, people with money spend time finding goods to purchase to get rid of money. Households and firms also spend time finding others to barter goods for goods and spend time watching foreign exchange rates to be able to trade falling value domestic currency for constant value foreign currencies. These activities are costly, in part because they force people to spend time dealing with the rapidly falling value of money. The costs that people incur from running around to get rid of money are the shoe-leather costs.
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Those individuals 16 years of age and over who are working in a job or actively seeking employment are called:
A) the labor force. B) the employed. C) the unemployed. D) none of the above.
The price of a new textbook increases from $120 to $160, while the price of used copies of the textbook increased from $80 to $100. Other things being equal, we would expect
A) the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease. B) the quantity demanded of both to fall. C) the demand for the new textbook to increase and the demand for the used textbook to decrease. D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.