Inflation is
A) not a factor in most capital-budgeting decisions because it tends to be very low in Canada.
B) equal to the amount of interest (or nominal rate) charged for most loans.
C) the increase in the general purchasing power of the monetary unit.
D) the decrease in the general purchasing power of the monetary unit.

Question

Quizplus · Accepted Answer

Inflation is the decrease in the general purchasing power of the monetary unit. Option A is incorrect as inflation can vary and needs to be considered while making capital budgeting decisions. Option B is incorrect as interest rate and inflation are not the same. Option C is incorrect as it refers to deflation which is the opposite of inflation.

Inflation Is