If the Rate of Inflation Decreases from 5% to 3

question 260

Multiple Choice

If the rate of inflation decreases from 5% to 3%, the economy is undergoing:

• A) deflation.
• B) hyperinflation.
• C) disinflation.
• D) stagflation.

---

Definitions:

Common Stockholders' Equity

The portion of equity ownership in a corporation held by common stock investors, reflecting their claim on the company's assets.

Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue.

Profit Margin

A financial ratio that measures the amount of net income earned with each dollar of sales by comparing profit to revenue.

Times Interest Earned

A financial ratio that measures a company's ability to meet its interest obligations based on its current earnings.