A Once-And-For-All Increase in the Price of a Raw Material,such

question 126

Multiple Choice

A once-and-for-all increase in the price of a raw material,such as crude oil,will

• A)not be inflationary,because this is,simply,"high prices."
• B)have a short-run inflationary effect and reduces employment.
• C)have no effect on inflation because this is the price of a raw material,not a final good.
• D)both A and C are correct

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Definitions:

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Pre-Merger Market

The financial and economic conditions affecting companies and their stock prices before they undergo a merger.

External Growth

Expansion of a business through acquiring or merging with other companies, as opposed to internal growth through increasing sales, product lines, or efficiencies.

Diversification

In finance, selecting a portfolio of different (diverse) investments to limit the overall risk borne by the investor.