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Author Question: Social Security tax is deducted from your paycheck. In the figure above, this will be shown as A) ... (Read 64 times)

Sportsfan2111

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on: Jun 30, 2018
Social Security tax is deducted from your paycheck. In the figure above, this will be shown as
 
  A) taxes flowing from households to firms.
  B) taxes flowing from households to governments.
  C) wages flowing from firms to governments.
  D) wages flowing from firms to households.
  E) taxes flowing from firms to governments.

Question 2

Explain menu costs and shoe leather costs as they relate to inflation.
 
  What will be an ideal response?
Macroeconomics: Principles, Applications and Tools ¦ O'Sullivan, Sheffrin, Perez ¦ 7th Edition
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wshriver

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Reply #1 on: Jun 30, 2018
Answer to Question 1

B

Answer to Question 2

When there is inflation, menu costs refer to the actual physical costs of changing prices, as would be necessary for printed material such as catalogs, price tags and restaurant menus. Shoe leather costs refer to the costs involved with holding less cash. When there is inflation, people will tend to want to hold less cash, since the value of cash being held will decrease. If less cash is held, more frequent trips to banks or ATMs will be necessary when people need cash.


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