Due to inflationary tendency in the market, the prices of goods have increased. Debra now needs more money to buy the same amoun
t of inventory for her business than what she needed earlier. What is the best action Debra could take to deal with the situation? hold less money in form of cash
hold more money in form of cash
take out a loan to buy inventory
not take any action at all since it will not have any impact on her buying inventory
Whenever inflation is there we find that too much money will chase too few goods. Because of this, prices rise and money values decline. For the same amount of inventory Debra has to put more cash because of inflation.
Hence to meet the adverse effects of inflation, the money value in future would be less than the money value at present.
This must be kept in mind and hence Debra should hold more money in the form of cash.
