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Identify which cost of inflation—menu costs or shoe-leather costs—is illustrated in each of the scenarios.

a. During the German hyperinflation of 1921‐1923, some workers reportedly were paid two to three times per day. They would then rush out to spend their earnings before they became nearly worthless.

This is an example of:_____

1. menu costs.
2. shoe‑leather costs.

b. A hyperinflation in Zimbabwe was so severe that, according to one observer of supermarket employees, they were "running around that store with label makers, changing the prices three, four times a day."

This is an example of:_____

1. menu costs.
2. shoe‑leather costs.

Respuesta :

Answer:

shoe‑leather costs

. menu cost

Explanation:

Inflation is constant price in general price level

Types of inflation

  1. demand pull inflation
  2. cost push inflation

Shoe leather cost is when people try to spend money immediately so they would not be holding money for a long time. This is because money loses its value in an inflation.

Menu costs are the costs of changing price constantly as a result of inflation, When there is inflation, prices increases regularly. As a result prices needs to be updated regularly.

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