According to the Inflation-Caused Depreciation Effect

Multiple Choice

According to the inflation-caused depreciation effect:

A) The true cost of using up existing capital equipment is understated when there is deflation
B) The true cost of using up existing capital equipment is overstated when there is deflation
C) After-tax profits are higher with inflation
D) Depreciation methods understate the true replacement cost of capital goods
E) None of the above