If Expected Inflation Is 12 Percent and the Publicly Regulated

question 184

Multiple Choice

If expected inflation is 12 percent and the publicly regulated electric utility company is legally limited to a 10 percent rate of return, then we should expect

• A)increased investment by the utility.
• B)expansion of electric power generating capacity.
• C)future power shortages.
• D)excess investment by the electric utility.

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Definitions:

Function

A function is a relation between a set of inputs and a set of permissible outputs with the property that each input is related to exactly one output.

Simplify

To reduce a mathematical expression or equation to its simplest form by performing all operations and simplifying all terms.

Evaluate

To calculate the numerical value of an expression, equation, or function when certain values are known or substituted for variables.

Simplify

To reduce a mathematical expression to its simplest form by performing operations and combining like terms.