Question

Inflation = 3%,Opportunity cost=3%.How that affects our invesmtent decision?

Inflation = 3%,Opportunity cost=3%.How that affects our invesmtent decision?

Homework Answers

Answer #1

Inflation = 3%

Opportunity Cost = 3%

Opportunity cost is the loss of 3% from other alternative when one alternative is chosen. Additionally there is inflation rate of 3% which means there is 3% fall in your purchasing capacity. If you invest wisely such that there is no opportunity cost from other alternative, inflation rate of 3% will leave you with no change in real purchasing capacity while if the money invested by you have opportunity cost of 3% and inflation rate of 3%, you will suffer from double loss.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Economists tell us that the true cost of a decision is opportunity cost. What is opportunity...
Economists tell us that the true cost of a decision is opportunity cost. What is opportunity cost? What is the difference between opportunity cost and money cost? How are the two related? Why is opportunity cost considered as the true cost of a decision?
Time affects the value of financial transactions because: Select one: A. there is an opportunity cost...
Time affects the value of financial transactions because: Select one: A. there is an opportunity cost to a lender when he/she lends money B. inflation makes money worth more over time. C. it takes time to gather information about financial transactions. D. very wealthy people require compensation for holding their money.
Assess how our socialization affects our views of gender roles
Assess how our socialization affects our views of gender roles
How does the opportunity cost enter into a make and buy decision? Explain and provide an...
How does the opportunity cost enter into a make and buy decision? Explain and provide an example.
Explain Opportunity costs. Give a comprehensive example of the opportunity cost of a decision.
Explain Opportunity costs. Give a comprehensive example of the opportunity cost of a decision.
How does opportunity cost reflect scarcity? What does it have to do with decision-making?
How does opportunity cost reflect scarcity? What does it have to do with decision-making?
Use the cost-benifit model to discuss how incentives and opportunity costs affect the decision-making of individuals....
Use the cost-benifit model to discuss how incentives and opportunity costs affect the decision-making of individuals. You should use your own examples to explain.
Define opportunity cost. Give an example of a personal decision you made within the past year....
Define opportunity cost. Give an example of a personal decision you made within the past year. What explicit costs were involved? What opportunity costs were involved? Explain how youarrived at your decision. Include the role of opportunity costs in your explanation and describecriteria you used to evaluate your options.
What is inflation and explain how inflation impacts a savers decision regarding the interest rate they...
What is inflation and explain how inflation impacts a savers decision regarding the interest rate they will demand of borrowers?
What is/are the opportunity cost(s) of the policy decision by politicians and certain segment of       the...
What is/are the opportunity cost(s) of the policy decision by politicians and certain segment of       the medical profession to shutdown the US economy?