Inflation Affects Production Decisions Because It

question 136

Multiple Choice

Inflation affects production decisions because it

• A)Decreases input costs.
• B)Reduces speculation.
• C)Causes businesses to focus more on the future.
• D)Causes businesses to be more cautious since the future appears more uncertain.

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Definitions:

Spot Exchange Rate

The current exchange rate at which a currency can be bought or sold for immediate delivery.

Forward Exchange Rate

An agreed-upon exchange rate for a currency transaction that will occur at a future date, used for hedging or speculation in foreign exchange markets.

Future Rate

The anticipated interest rate or currency exchange rate applicable to financial transactions that will occur in the future.