Inflation affects the real value of future dollars and can therefore make signing long-term wage and loan agreements seem risky. This illustrates the issue of

future price uncertainty

Explanation:

Inflation is a persistent rise in the general price levels

Types of inflation

demand pull inflation – this occurs when demand exceeds supply. When demand exceeds supply, prices rise

cost push inflation – this occurs when the cost of production increases. This leads to a reduction in supply. Higher prices are the resultant effect

Shoe leather cost is when people try to spend money immediately so they would not be holding money for a long time. This is because money loses its value in an inflation.

Menu costs are the costs of changing price constantly as a result of inflation, When there is inflation, prices increases regularly. As a result prices needs to be updated regularly.

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