First, the cost of leather shoes refers to the decline in the purchasing power of money during inflation. In order to reduce losses, people will be more inclined to hold less cash and deposit more money in banks, and more are forced to exchange it for other countries' currencies.

So when you want to use cash, you need to go to the bank to withdraw money, or you need to pay a certain amount of time and energy when you exchange it. Holding less cash means you need to go to the bank more often. This kind of time and energy spent on going to the bank more often is called the cost of leather shoes by economists-grinding more soles. That is to say, people waste all kinds of resources in order to reduce the amount of money held.

second, menu cost refers to the cost burden generated by retailers when adjusting prices. When a manufacturer changes the price, it needs to reprint its product price list and inform customers of the information and reasons for changing the price; All this will lead to an expense and expense.

Although the value of menu cost is not large, if the menu price list changes a lot, it will also bring some disadvantages to manufacturers, such as making customers feel unhappy and troublesome.

menu costs include printing new lists and catalogues, sending these new price lists and catalogues to middlemen and customers, advertising for new prices, determining new prices, and even dealing with customers' complaints about price changes.

Third, the characteristics of inflation

① Paper money has depreciated sharply due to excessive issuance. When the amount of metal money needed in circulation is fixed, the more paper money is issued, the less metal money can be represented by the unit paper money, and the greater the depreciation of paper money.

② Prices have risen in an all-round way due to the devaluation of paper money. The higher the depreciation rate of paper money, the higher the price increase rate.

Extended information:

When the prices of most goods and services in an economy have generally increased in different forms (including explicit and implicit) for a period of time, macroeconomics says that this economy is experiencing inflation. According to this explanation, if the price of only one commodity rises, it is not inflation. Inflation is only when the prices of most commodities and services continue to rise.

The explanations of inflation in economics are not completely consistent. Usually, the concept recognized by economists is: under the credit currency system, the amount of money in circulation exceeds the actual needs of the economy, which leads to currency depreciation and overall and sustained price increase.

Generally speaking, the circulation of paper money exceeds the amount needed in circulation, which leads to the devaluation of paper money and the rise of prices. We call this phenomenon inflation.

The price increase in the definition does not refer to the price increase of one or several commodities, nor is it a temporary increase of the price level. Generally, it refers to the continuous and general increase of the price level in a certain period, or the continuous decline of the monetary value in a certain period.

It can be seen that inflation does not refer to the price increase of one kind or another of goods and services, but the overall price level.

the general price level or general price level refers to the weighted average of the total transaction prices of all commodities and services. This weighted average is the price index.

There are generally three price indexes to measure the inflation rate: consumer price index, producer price index and GNP price conversion index. Simply put, when the government issues too much money, prices go up.

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