Economic Awareness - Sectors of Indian Economy
Which of the following is NOT an effect of inflation on investment decisions?
Which of the following is NOT an effect of inflation on investment decisions?
easy Q3 of 15
Step-by-Step Solution
Step 1: Understand inflation's impact on investment
Inflation creates uncertainty, affects expected returns, and reduces the real value of fixed returns.Step 2: Analyze options
Increased uncertainty can lower investment, and fixed returns lose real value during inflation. Nominal returns may rise but do not ensure real gains.Step 3: Identify the incorrect statement
Inflation does NOT guarantee an increase in real investment value.Final Answer:
Guaranteed increase in real investment value → Option DQuick Check:
Inflation does NOT guarantee an increase in real investment value ✅
Quick Trick: Inflation may raise nominal returns, not guaranteed real returns.
Common Mistakes:
- Confusing nominal gains with real gains during inflation.
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