Q510
Nominal interest rates and nominal cash flows are usually reflected the
A.
inflation effects
AnswerB.
opportunity effects
C.
equity effects
D.
debt effects
Answer: Option A
Solution
Answer: Option A
Solution:
Nominal interest rates and nominal cash flows are usually reflected the inflation effects. Inflation has the following effects on production activities: Inflation may or may not result in an increase in production. As long as the economy does not reach the full employment stage, inflation has a favorable effect on production. Usually, as the price level increases, profits increase too.