- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 4. Monetary Policy
- Subject 3. Monetary Policy Objectives
CFA Practice Question
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
Correct Answer: A
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! |