High and Volatile Inflation Decreases Economic Efficiency Through All of the Following

question 27

Multiple Choice

High and volatile inflation decreases economic efficiency through all of the following channels EXCEPT by

• A) distorting incentives through interaction with the tax laws.
• B) obscuring information transmitted by prices.
• C) inducing people to minimize cash holdings.
• D) reducing the purchasing power of cash holdings.
• E) interfering with long-term planning.

---

Definitions:

Budgeted Purchases

An estimate of the total value or quantity of goods a company plans to purchase over a specific period, typically part of the budgeting process.

Sales Forecast

Sales forecast is an estimate of the expected sales revenue for a particular period, based on historical data, market trends, and analysis.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.