Which of the Following Statements Is Correct

question 4

Multiple Choice

Which of the following statements is correct?

• A)Long-term interest rates are generally higher than short-term interest rates.
• B)Stock market investors are positively affected when inflation rises.
• C)The degree of inflation risk is higher for short-term lending.
• D)During times of high inflation, interest rates on new loans for cars, homes, and credit cards fall.

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Definitions:

Incremental Basis

A method of calculating changes in costs or benefits that result from small variations in the quantity of output or input.

Differential Basis

A method of calculating or analyzing the difference in costs or revenues between two alternative actions.

Sunk Cost

A cost that cannot be changed by any present or future decision.

Book Value

The difference between the cost of a depreciable asset and its related accumulated depreciation.