Q526
Real interest rate and real cash flows do not include
A.
equity effects
B.
debt effects
C.
inflation effects
AnswerD.
opportunity effects
Answer: Option C
Solution
Answer: Option C
Solution:
Real interest rate and real cash flows do not include inflation effects. 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.