Which of the Following Is a LIKELY Response to Inflation

question 38

Multiple Choice

Which of the following is a LIKELY response to inflation?

• A)People choose to carry higher money balances.
• B)People tend to make fewer transactions.
• C)People tend to make more transactions.
• D)People tend to hold on to fewer interest-bearing assets.

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Definitions:

MACRS

The Modified Accelerated Cost Recovery System, a method of depreciation in the U.S. for tax purposes, allowing for accelerated asset expense deductions over time.

5-Year Property

Property that is classified under MACRS (Modified Accelerated Cost Recovery System) as having a recovery period of 5 years for depreciation purposes.

Automobiles

Motor vehicles with four wheels, designed primarily for passenger transportation on roadways.

Home Office Expenses

Costs associated with using a portion of a home for business purposes, potentially deductible for tax purposes.