When inflation is low and stable,firms:
A)can easily make judgments about relative real rates of return on alternative investments.
B)can easily make judgments about relative nominal rates of return on alternative investments.
C)tend to invest more in real estate.
D)tend to invest more in tax effective investments

Question

Quizplus · Accepted Answer

When inflation is low and stable, firms can make more accurate judgments about the relative real rates of return on alternative investments. This allows them to make more informed decisions about where to invest their resources, which can ultimately lead to improved performance and profitability. In contrast, when inflation is high and volatile, it can be difficult for firms to accurately assess the true value of different investment opportunities, which can lead to poor investment decisions and financial instability.

When Inflation Is Low and Stable,firms