When inflation is relatively high and unstable, firms tend to invest more in _____ and less in _____.
A) productive assets; real estate
B) shares; real estate
C) real estate; productive assets
D) real estate; consumption

Question

Quizplus · Accepted Answer

When inflation is high and unstable, firms often invest more in real estate because it is considered a tangible asset that can potentially hold or increase in value, providing a hedge against inflation. Conversely, they might invest less in productive assets, such as machinery or technology, due to the uncertainty about future costs and returns.

When Inflation Is Relatively High and Unstable, Firms Tend to Invest