How Should Engineers Deal with the Fact That Inflation Rates

question 46

Multiple Choice

How should engineers deal with the fact that inflation rates are very difficult to predict?

• A)Avoid any projects that involve cash flows occurring more than two years in the future.
• B)Obtain estimates of inflation from expert economists.
• C)Assume that inflation rates will average out to zero over the project life.
• D)Base project analysis on the highest rates of inflation that have occurred in the last ten years.
• E)Perform a sensitivity analysis on the profitability of the project for different inflation rates.

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Definitions:

Garden Path Sentence

A type of sentence that begins by appearing to mean one thing, but ends up meaning something else, often leading the reader to backtrack and reinterpret the sentence.

Phrase Structure System

A set of rules in linguistics that determines the syntactical structure of sentences in a language by organizing words and phrases hierarchically.

Passive Sentences

In grammar, sentences where the subject receives the action of the verb, often using a form of the verb "to be" followed by a past participle.

Habituated

The process of becoming accustomed to a stimulus or an environment through repeated exposure, leading to a decrease in response.