Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living—the costs of goods and services we buy—without increasing income in general."
What will be an ideal response?
Disagree. Inflation, in general, must increase both our cost of living and nominal income. The increases in the prices of goods and services will be paid to the factors of production. Since the payments to the factors of production make up national income, nominal income will increase, in general, along with the cost of living.
You might also like to view...
In Macroland autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, investment is fixed at 50, government expenditures are fixed at 150, and net exports are fixed at 20. Aggregate expenditure equals
A. 290 + 0.25Y. B. 290 + 0.75Y. C. 320 + 0.75Y. D. 320 + 0.25Y.
Refer to Figure 2-4. A movement from ________ could occur because of additional government restrictions toward allowing immigrant labor
A) Y to X B) W to X C) V to W D) X to W
What is shown on a firm's income statement?
A) profits B) revenues C) costs D) All of these are shown on a firm's income statement.
Usury laws interfere with the automatic workings of the market mechanism.
Answer the following statement true (T) or false (F)