Question

Shen manages a grocery store in a country experiencing a high rate of inflation. He is paid in cash. On payday, he immediately goes out and buys as many goods as he can for himself for the next two weeks in order to prevent the money in his wallet from losing value. What he can't spend, he converts into a more stable foreign currency for a steep fee. This is an example of the of _______? inflation.a. menu costsb. shoe-leather costsc. unit-of-account costs

Answer 1

Answer:

b. shoe-leather costs

Explanation:

The shoe leather cost refer to the cost of time and effort to reduce the amount of cash you have with the idea of not losing the value of the money because of a high inflation. So, what people do immediately after they receive the money is to change it to a foreign currency or make purchases as its value is lost quickly. Acording to this, the situation explained is an example of shoe-leather costs.