Which of the Following Is Consistent with Constant Inflation: Expected

question 12

Multiple Choice

Which of the following is consistent with constant inflation: expected future inflation of , output- gap inflation of , and supply- shock inflation .

• A)2%; 2%; 2%
• B)1%; 1%; 1%
• C)2%; 0%; 0%
• D)2%; 0%; - 2%
• E)0%; 0%; - 2%

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Definitions:

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds, used as a benchmark in lease accounting to determine the present value of lease payments.

Net Income

The total earnings or profit of a company after all expenses and taxes have been deducted from revenue.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction, primarily in the United States.

Expense Recognition

The accounting principle that dictates the timing of reporting an expense in the financial statements, ensuring expenses are recorded when incurred.