Question

Inflation a. leads people to use more resources to reduce money holdings. There is no way...

Inflation

a.

leads people to use more resources to reduce money holdings. There is no way it can make labor markets work more efficiently.
b.

leads people to use more resources to reduce money holdings. However, it can make labor markets work more efficiently.
c.

leads people to use fewer resources to reduce money holdings. There is no way it can make labor markets work more efficiently
d.

leads people to use fewer resources to reduce money holdings. However, it can make labor markets work more efficiently.

Inflation

a.

leads people to use more resources to reduce money holdings. There is no way it can make labor markets work more efficiently.
b.

leads people to use more resources to reduce money holdings. However, it can make labor markets work more efficiently.
c.

leads people to use fewer resources to reduce money holdings. There is no way it can make labor markets work more efficiently
d.

leads people to use fewer resources to reduce money holdings. However, it can make labor markets work more efficiently.

Inflation

a.

leads people to use more resources to reduce money holdings. There is no way it can make labor markets work more efficiently.
b.

leads people to use more resources to reduce money holdings. However, it can make labor markets work more efficiently.
c.

leads people to use fewer resources to reduce money holdings. There is no way it can make labor markets work more efficiently
d.

leads people to use fewer resources to reduce money holdings. However, it can make labor markets work more efficiently.
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Homework Answers

Answer #1

Answer option B)

inflation leads to reduction in the value of money holdings, so people try to minimise the money holdings, in order to prevent the deterioration in value of money,

So they have to visit banks frequently, so people use more resources to adjust money value.

Like shoeleather costs

So c & d are wrong .

Inflation could make labor market to adjust the wages relatively easy, bcoz wages are rigid downwards, labor generally oppose the nominal wage cuts, but rising inflation erodes real wages , so labor market effeciency could rise

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