Which of the following statements is incorrect under inflationary economy?
A) Borrowers will always come out ahead as they pay back with cheaper dollars.
B) In general, you will pay more taxes in real dollars if you have depreciable assets.
C) In general, there will be more drain in working capital.
D) Bond interest rates will tend to be higher in the financial market, so that it would cost more to finance a new
Project.

Question

Quizplus · Accepted Answer

Borrowers do not always come out ahead in an inflationary economy because the interest rates on loans may also increase, offsetting the benefit of repaying with cheaper dollars.

Which of the Following Statements Is Incorrect Under Inflationary Economy