Declines in the general purchasing power of the dollar will inflate future cash flows above what they would have been without inflation.

Question

Quizplus · Accepted Answer

This is true because when there is inflation, the value of money decreases over time, making future cash flows worth less in terms of purchasing power. This means that the nominal cash flows may increase due to inflation, but their real value has declined.

Declines in the General Purchasing Power of the Dollar Will