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Menu costs - the costs of changing prices due to inflation, Shoeleather costs - costs in terms of the extra time and effort involved in reducing money holdings, Inflationary noise - the distortion of price signals caused by inflation, Random redistribution of income - when benefits do not rise with changes in inflation rates, Fiscal drag - people's income being dragged into higher tax brackets, Fall in the value of money - buying power of money reduces, Uncertainty - volatility of rate changes reduces confidence, Inflation causing inflation - people's spending choices as a result of inflation can affect inflation rates, Loss of international competitiveness - high inflation leads to higher prices and a reduction in exports,

Effects of inflation

by Jwoods

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