The Problem With Inflation

Money is still a pretty good unit of account when inflation's only running two % a year. But sellers do have to keep up with inflation and change their prices. Economists refer to the costs associated with changing all those prices as menu costs. This takes time and energy from them being able to actually produce things. An inflationis not just a hassel for sellers - it's a real hassel for buyers too. When money's losing its value, you end up spending your time and energy trying to withdraw your money or putting it into something else that will keep its value. We call these shoe leather costs because running around to spend your money before it loses value causes you to wear out the