Which of the Following Is a Danger of Inflation

question 10

Multiple Choice

Which of the following is a danger of inflation?

• A) Price changes can affect the people who sign long-term contracts.
• B) Rapid price changes reduce uncertainty.
• C) Anticipated inflation may be greater than unanticipated inflation.
• D) High rates of inflation will reduce interest rates.

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Definitions:

Raw Material Purchases

The acquisition of the basic materials needed for the production of goods, which are typically bought from suppliers and used in the manufacturing process.

Budgeted Sales

The anticipated revenue from goods or services sold, set during the budgeting process for a specific time period.

Credit Sales

Sales made by a business where the customer purchases goods or services on credit and payment is received at a later date.

Finished Goods Inventory

The stock of completed products that are ready for sale but have not yet been sold.