1. Describe the difference between the menu costs and the shoe leather costs of inflation. If inflation is rapid, firms will have to increase their prices frequently. This will cost money because customers have to be told. New brochures will have to be printed, websites updated and sales staff informed. These are called menu costs because, for a restaurant, when prices are increased a new menu has to be printed. When prices are changing frequently, consumers and firms will have to spend more time looking for the lowest prices or the best value for money. This involves 'shopping around' which is a cost because it takes time and wears out the leather on your shoes. Hence, these are called the shoe leather costs of inflation.

2. Assess the impact that inflation in Venezuela might have on business confidence and investment.