Answer to Question #80992 in Macroeconomics for Joyce

Question

2. Do you think that inflation imposes a net cost to the economy after considering the gains and loss? If so, which type of cost? Discuss each scenario below.
a) (1 mark) Nobu gets paid more frequently and thus has to make more trips to the banks down the road, when inflation is expected to be high.

b) (1 mark) Nobu gets reimbursed by RMIT for his work-related expenses. However, sometimes it takes longer time to reimburse him (quite often in reality). When inflation is expected to be high, he is less willing to travel for his job.
Answer:

c) (1 mark) Responding to unexpectedly high inflation, the manager of the Sofitel Hotel must reprint and resend expensive coloured brochures correcting the price of the accommodation in this season.

Answer 1

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