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Suppose that you are conducting a cost-benefit analysis over a period when, as is the case now, inflation is rising. In your analysis, all the
Suppose that you are conducting a cost-benefit analysis over a period when, as is the case now, inflation is rising. In your analysis, all the costs occur in period 1, and the benefits are dispersed in equal increments across the next five years. If you forget to adjust benefits for inflation and you use the real discount rate, you will ___________ net benefits. (a) understate (b) correctly measure (c) overstate
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