When There Is Inflation

question 120

Multiple Choice

When there is inflation,

• A) average prices fall.
• B) the value of money rises.
• C) your standard of living rises if your income rises faster than the prices of what you buy.
• D) the purchasing power of your savings rises.
• E) your standard of living falls if your income rises faster than the prices of what you buy.

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Definitions:

Leased Assets

Items of property or equipment that a company or individual rents under a lease agreement, rather than owns outright.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Operating Activities

Activities that relate to the day-to-day functions of a company involved in producing and selling its goods and services.

Cash Flow From Financing

This represents the net flows of cash that are used to fund a company, including debt, equity, and dividend payments.