In Periods of High Inflation

question 50

Multiple Choice

In periods of high inflation,

• A) people want to hold on to as much money as possible.
• B) the purchasing power of money is decreasing.
• C) nobody wants to work and earn income.
• D) low nominal interest rates are likely to result.
• E) nobody wants to buy goods and services.

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Definitions:

Days Payable Outstanding

A financial ratio that measures the average number of days a company takes to pay its suppliers; an indicator of how efficiently a company manages its payables.

Cash Receipts

The collection of money, including coins, currency, checks, and electronic transfers, received by a business or organization.

Default Risk

The possibility that a debtor will fail to fulfill their financial liabilities as agreed upon.

Financial Ratios

Financial ratios are quantitative measures derived from financial statement analysis to evaluate the financial performance, condition, and valuation of a company.