Inflation can impose significant costs and adversely distort economic systems. Identify whether the costs and distorting effects listed are as a result of menu costs, shoe leather costs or unit of account costs.

Menu costs

Shoe Leather costs

Unit of Account costs

causes costs associated

with changing prices in stores

can lead to stores listing prices

in more stable currencies.

can cause distortion

to the tax system

discourages people from

holding money

can reduce the quality of

economic decisions

spending time converting money

into something that better holds value

makes money a less

reliable source of measurement

causes difficulty in firms and

individuals financial planning