The shoe leather costs of inflation include all of the following except:
A. the cost of more frequent trips to the bank.
B. the installation of a new cash management system.
C. the extra costs incurred to avoid holding cash.
D. the lost purchasing power of cash.
Answer: D
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In perfect competition, at all levels of output the market price is the same as the firm's ________
A) marginal revenue B) normal profit C) average variable cost D) fixed cost
Workers and firms are currently expecting the price level to increase from 110 to 114. The Federal Reserve then announces that it will be reducing the growth rate of the money supply
If the Fed's announcement is credible, and firms and workers have rational expectations, describe how the expectations of firms and workers will be affected and how the change in expectations will affect the unemployment rate.
In the short run, suppose average total cost is a straight line and marginal cost is positive and constant. Then, we know that fixed costs must:
A) be declining with output. B) be positive. C) equal zero. D) We do not have enough information to answer this question.
A perfectly competitive firm can continue to earn above-normal profit in the long run
a. if it has a continued technical advantage over other firms in the market and it is able to keep that advantage a secret b. if it has employees that are substantially more efficient than other firms' workers c. if its centralized location reduces its transportation costs below those of other firms d. if it has easier access to necessary raw materials e. under no circumstances