Which of the Following Is Not a Cost Posed by Inflation

question 190

Multiple Choice

Which of the following is not a cost posed by inflation?

• A)Inflation reduces the affordability of goods and services to the average consumer.
• B)The money that consumers and firms hold loses its purchasing power.
• C)Firms must pay for changing prices on products and printing new catalogues.
• D)Banks can lose if they under predict inflation and charge an interest rate that does not completely compensate for inflation.
• E)Firms must hire experts to predict inflation more accurately.

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Definitions:

Like-kind Exchange

A tax-deferred transaction allowing for the exchange of similar types of property without generating a tax liability from the sale.

Involuntary Conversion

An event where property or assets are destroyed, stolen, confiscated, or condemned, forcing the owner to replace them or receive compensation, often with tax implications.

Adjusted Basis

is the original cost of a property adjusted for factors such as depreciation or improvements, used to calculate capital gains or losses.

Non-recognition of Gain

A tax principle that allows taxpayers to defer recognition of capital gains taxes if the gains are reinvested in similar property or under certain qualifying exchanges.