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Solved: Because dollars are used as the basis for contracts, inflation leads to which
Chapter 0, Problem 4(choose chapter or problem)
Because dollars are used as the basis for contracts, inflation leads to which type of cost? a. price level b. shoe-leather c. menu d. unit-of-account e. none of the above
Questions & Answers
QUESTION:
Because dollars are used as the basis for contracts, inflation leads to which type of cost? a. price level b. shoe-leather c. menu d. unit-of-account e. none of the above
ANSWER:Step 1 of 2
Inflation is the rise in the general price level in the economy. During inflation prices of goods and services rise and the cost of living increases. An inflationary economy is characterized by instability of price levels.
Inflation is the increase of price level for goods and services in an economy. During inflation, the price level rises which makes the cost of living higher. The instability of price levels leads to change in nominal value of money.