Heavy Use of Long-Term Debt May Be Beneficial in an Inflationary

question 48

Multiple Choice

Heavy use of long-term debt may be beneficial in an inflationary economy because

• A) the debt may be repaid in more "expensive" dollars.
• B) nominal interest rates exceed real interest rates.
• C) inflation is associated with the peak of a business cycle.
• D) the debt may be repaid in "cheaper" dollars.

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