Describe three costs of inflation
There are several costs of inflation. Shoeleather costs are the resources people spend to economize on their money holdings when inflation is high. Menu costs are the costs created by changing price tags and prices in menus and catalogs. Increased relative price variability from higher inflation distorts signals provided by relative price changes and so misallocates resources. Distortions created by inflation in the tax code discourage saving and so may lower the standard of living. Unexpected inflation arbitrarily redistributes wealth. In general a changing value of the unit of account creates inconvenience.
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The term "quantity demanded" refers to the
A) total amount of a good that is actually purchased during a given period of time. B) total amount of a good that people wish to buy, regardless of price. C) total amount of a good that purchasers wish to purchase at a given price during a given period of time. D) product of advertising, and is unrelated to price. E) entire relationship between desired purchases and possible prices.
The physical and mental talents people bring to production processes comprise the resource called
A) entrepreneurship. B) natural resources. C) capital. D) labor.