A Major Problem with Inflation Is That After It Starts

question 27

Multiple Choice

A major problem with inflation is that after it starts:

• A) it always stops quickly because the economy always corrects itself naturally.
• B) it is easy to stop as long as it is fully expected.
• C) it is difficult to stop without experiencing high unemployment.
• D) it can never be stopped with any government policy.

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Definitions:

Year-End

The end of an accounting period, typically culminating in the closing of books and preparation of financial statements.

Deferral

An accounting principle where revenue or expenses are recognized at a later date than when they were initially incurred.

Nominal Accounts

Accounts that are closed at the end of every accounting period, which include revenues, expenses, gains, and losses.

Real Accounts

Permanent accounts in accounting that show the ongoing financial state of a company's assets, liabilities, and shareholders' equity.