Question

All of the following statements are true, except:a. A firm can make money from inflation by paying bills and wages as late as possible so that it can pay in inflated dollars, while collecting revenues as soon as possible. b. If a firm is currently holding a lot of assets in cash, it would benefit from inflation c. An economy with high inflation rewards businesses that have found clever ways of profiting from inflation. d. In the short term, low or moderate levels of inflation may not pose an overwhelming difficulty for business planning.

Answer 1

Answer:

The incorrect statement is letter "B": If a firm is currently holding a lot of assets in cash, it would benefit from inflation.

Explanation:

Inflation is the economic phenomenon that takes place in the market as a result of a rise in the overall prices. One of the direct causes of inflation is a surplus in demand since it provokes firms to increase the price of the goods or services they offer in an attempt to decrease demand levels but, in given scenarios, the demand continues increasing.

Among the effects of inflation, we can identify the decrease of individuals' and organizations' buying power. The value of money decreases making it inconvenient to have cash handy for both individuals and companies.