Hedging against inflation means:
A)making oneself knowledgeable about the costs of inflation.
B)purchasing financial investments with returns that are protected against inflation.
C)holding cash during periods of high inflation.
D)purchasing goods and services only when prices are low.

Question

Quizplus · Accepted Answer

Hedging against inflation involves investing in financial instruments that offer protection against inflation, such as Treasury Inflation-Protected Securities (TIPS) or stocks of companies with pricing power. Holding cash during periods of high inflation (option C) would actually result in losses in purchasing power, while purchasing goods and services only when prices are low (option D) may not be a feasible strategy for all goods and services. Option A is not a definitive hedging strategy.

Hedging Against Inflation Means