Economic Awareness - Sectors of Indian Economy
Which of the following best explains the term 'menu costs' in the context of inflation?
Which of the following best explains the term 'menu costs' in the context of inflation?
medium Q15 of 15
Step-by-Step Solution
Step 1: Define 'menu costs'
Menu costs refer to the expenses businesses face when they have to update prices frequently due to inflation.Step 2: Evaluate options
Costs to businesses for changing prices match the definition. Other options relate to consumers, currency printing, or government actions, which are unrelated.Final Answer:
Costs to businesses for frequently changing prices → Option AQuick Check:
Menu costs = Business costs of changing prices ✅
Quick Trick: Think of restaurants changing menus often during inflation.
Common Mistakes:
- Confusing menu costs with consumer or government costs.
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