People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power. If inflation and income grow at the same rate, is this complaint valid? Explain carefully
What will be an ideal response?
If inflation and income grow at the same rate, real income will be constant as inflation increases both total expenditures and total income by the same amount. All of the money that a business receives on the sale of its product must be paid out as income to the owners of the factors of production. If the prices of final goods and services increase (inflation), then there is more money for the businesses to pay out as income. Therefore, on average, the buying power of income will remain constant. The complaint is not valid.
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A) rent. B) market equilibrium rent that would prevail in the absence of a rent ceiling. C) value of the time and resources spent searching plus the rent. D) consumer surplus.
When there is only one buyer in a market, there is a
A) buyer's monopoly. B) monopoly. C) monopsony. D) buyer's cooperative.
The 1994 book by Murray and Herrnstein, The Bell Curve, was about
a. government debt. b. the intelligence factor. c. capital growth. d. military readiness.
Refer to Figure 18.4. With a tariff, how much does the government collect for each glove imported into Duckland?
A. $0 B. between $2 and $3 C. between $8 and $10 D. more than $10