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Basic Question 2 of 15
Inflation has a tendency to ______ revenue and ______ plants and equipment.
B. understate; overstate
C. not affect; overstate
A. overstate; understate
B. understate; overstate
C. not affect; overstate
User Contributed Comments 4
| User | Comment |
|---|---|
| moma20 | what is the meaning of understate plant and equipments? |
| gsuwp | Understate the VALUE of fixed assets that are on the books at historical costs. |
| bobert | The value or plant and equip will not be inflated, and in some cases depreciated, which will understate the value. Revenue on the other hand will be overstated because inflation will lower the value of the money, but not the amount of it. This is an overstatement of revenue. |
| erinelize | Thank you, bobert! |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
describe qualities of effective central banks; contrast their use of inflation, interest rate, and exchange rate targeting in expansionary or contractionary monetary policy; and describe the limitations of monetary policy
CFA® 2025 Level I Curriculum, Volume 1, Module 4.