Question

Yakov manages a grocery store in a country experiencing a high rate of inflation. He is paid in cash twice per month. On payday, he immediately goes out and buys all the goods he will need over the next two weeks in order to prevent the money in his wallet from losing value. What he can't spend, he converts into a more stable foreign currency for a steep fee. This is an example of the

Answer 1

Answer: Shoe leather cost

Explanation: Shoe leather cost can be defined as the opportunity cost that individuals bore while saving themselves from the effects of inflation by visiting banks on more frequent basis or by holding lesser amount of cash than in general.

In the given case, Yakov purchases all the goods he need in once as if he will wait for future purchase then the value of his money will decline since there is inflation running in the economy.

So, from above explanation we can conclude that it is an example of shoe leather cost.