Inflation Is a Problem When

question 28

Multiple Choice

Inflation is a problem when

• A) it causes resources to be diverted from productive uses.
• B) it is unpredictable.
• C) it causes the value of money to vary unpredictably.
• D) All of the above answers are correct.

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Definitions:

Lockboxes

A service offered by banks to companies for the collection of payment from customers, involving the use of special post office boxes.

Transactions Needs

The requirement for cash or liquid assets for the purpose of meeting immediate expenses or financial obligations.

Collection Float

The time period between when a payment is initiated by a payer and when the funds are available in the payee’s account.

Opportunity Costs

The benefit that is missed or foregone when choosing one alternative over another.