Question

QUESTION # 2

C. The General Manager (GM) of a car dealership is working on a three-year business plan. The GM expects inflation to rise over the next three years.

• How will higher inflation affect the number of vehicles the dealership can sell?

• Based on the GM’s inflation expectation what type of loan should the dealership arrange with its bank in order finance its inventory of automobiles?

Answer 1

Answer:-

* The General manager ( GM) expects inflation to rise over the next three years which will negative affects on their selling of vehicles. Inflation means rising in prices that will reduce the value of money and reduce the purchasing power of people. so due to higher prices people purchase very less Quantity. so higher inflation will sell very less number of vehicles

* The leadership arrange the loan which have High tenure and very low interest rate because High tenure loan is easy to pay as it's per month instalment amount less. due to inflation the leadership will pay back less amount of loan.