SHOELEATHER COSTS

SHOELEATHER COSTS As we have discussed, inflation is like a tax on the holders of money. The tax itself is not a cost to society. It is only a transfer of resources from households to the government. Yet most taxes give people an incentive to alter their behavior to...

MENU COSTS

MENU COSTS Most firms do not change the prices of their products every day. Instead, firms often announce prices and leave them unchanged for weeks, months, or even years. One survey found that the typical u.s. firm changes its prices about once a year. Firms change...

SHOELEATHER COSTS

SHOE LEATHER COSTS As we have discussed, inflation is like a tax on the hiders of money. The tax itself is not a cost to society:It is only a transfer of resources from households to the government. Yet most taxes give people an incentive to alter their behavior to...

THE COSTS OF INFLATION

THE COSTS OF INFLATION In the late 1970s, when the U.S. inflation rate reached about 10 percent per year, inflation dominated debates over economic policy. And even though inflation has been low over the past decade, it remains a closely watched macroeconomic...