(A) Shoe leather cost associated with reduced money holdings
(B) Menu cost associated with more frequent adjustmental prices
(C) Increased variability of relative prices
(D) Unintended changes in tax liabilities due to no indexation of the tax code
(E) Arbitrary redistribution of wealth associated with debts
Choose the correct answer from the options given below:
Correct Answer: (d) (A), (B), (C), (D), (E)
Solution:The cost of inflation include; reduced purchasing power for individuals, uncertainty in planning for businesses due to fluctuating prices, decreased investment, potential for social unrest, mereased cost of borrowing, and distortions in relative prices, essentially meaning people with fixed incomes are disproportionately affected by rising prices.