One Cost of an Unanticipated Inflation Is That It

question 11

Multiple Choice

One cost of an unanticipated inflation is that it

• A)transfers wealth from lenders to borrowers.
• B)transfers wealth from borrowers to lenders.
• C)decreases menu costs.
• D)increases the purchasing power of money.

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Definitions:

NPV

A financial metric that calculates the total value of a project or investment by discounting future cash flows back to their present value and subtracting initial investment cost.

Scenario Analysis

A business planning technique in which the implications of variations in planning assumptions are explored. Also known as “what-if-ing.”

Abandonment Option

A financial decision allowing companies to cease a project or investment to avoid further losses.

NPV

Net Present Value; a calculation used to assess the profitability of an investment, considering the present value of its cash flows.