The Existence of Inflation Does Which of the Following

question 47

Multiple Choice

The existence of inflation does which of the following?

• A) Eliminates money illusion.
• B) Reduces the costs associated with money illusion.
• C) Reduces shoe- leather costs.
• D) Reduces tax distortions.
• E) Facilitates the downward adjustment of real wages.

---

Definitions:

Net Income

The company's earnings post all deductions, including expenses and taxes, from its overall revenues.

Deferred Tax Liability

This is a tax obligation that a company owes but can pay at a future date due to timing differences between its financial accounting and tax filing.

Deferred Tax Asset

An accounting asset representing the amount of taxes payable in future periods due to deductible temporary differences and carryforwards.

Capital Cost Allowance

A tax deduction in some tax systems for businesses, representing depreciation on capital assets.