Uncertainty Costs Arise from Inflation Because Inflation Makes Long-Term Planning

question 137

Multiple Choice

Uncertainty costs arise from inflation because inflation makes long-term planning ________ so people respond by ________ investment.

• A) more difficult; increasing
• B) more difficult; decreasing
• C) less difficult; not changing
• D) more difficult; not changing
• E) less difficult; increasing

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Definitions:

Tax Rate

The percentage of income or value that is collected by the government as tax.

MACRS Depreciation

A method of depreciation in the U.S. that allows for a faster write-off of assets under the tax code.

Incremental Annual Cash Flow

The additional cash flow generated by a company from taking on a new project, calculated as the difference between the project's cash inflows and outflows.

Tax Rate

The rate at which taxes are levied on the income of a person or business.