Hyperinflation Causes

question 94

Multiple Choice

Hyperinflation causes:

• A) nominal interest rates to fall, leading to unproductive investment decisions by firms.
• B) real interest rates to fluctuate, leading to uncertainty in investment decisions.
• C) nominal interest rates to rise, but leaves the real interest rate constant.
• D) nominal interest rates to fluctuate, leading to lower nominal wages.

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Definitions:

Incremental Overhead

The additional indirect costs incurred due to a change in business activities, such as an increase in production volume.

Income Taxes

Taxes levied by a government directly on income, especially an annual tax on personal or corporate earnings.

Sunk Costs

Sunk costs are expenses that have already been incurred and cannot be recovered.

Opportunity Costs

The forfeiture of possible benefits from different options when selecting one option over the others.