Which of the following is NOT a cost of inflation? a. Because with inflation fir

ID: 1130214 • Letter: W

Question

Which of the following is NOT a cost of inflation?

a. Because with inflation firms adjust prices more frequently, their cost from printing menus and catalogues are higher

b. because firms adjust prices at different times, with higher inflation prices fluctuates more, leading to misallocation of productive ressources

c. inflation sometimes leads to counterproductive policies like price controls

d. inflation erodes the purchasing power of everyone's wages.

37. suppose that a wave of credit card frauds motivates people to withdraw and hold more cash for their transactions. if the fed does not act, the.

a. federal funds rate will increase

b. the supply of reserves will decrease

c. the federal funds rate will decrease

d. the federal funds rate will stay the same

36. The correct answer is:

c. inflation sometimes leads to counterproductive policies like price controls

Reason: It is actually a policy tool to safeguard against inflation and not a direct cost of inflation. Other all options are cost of inflation.

37. The correct answer is:

b. the supply of reserves will decrease

Reason: As people withdraw money from banks, the total deposits with the banks decreases and thus the supply of reserves also decreases.

Thanks!

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