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...
Since 1305, of the following centuries the inflation rate has been the highest during the
A) 17th century. B) 16th century. C) 20th century. D) 14th century. E) 15th century.
Suppose the demand for Pepsi is qp = 50 - 2pp + 1pc. The firm faces a constant marginal cost of m, and denotes the price of Coke
Assuming Bertrand behavior, derive Pepsi's best-response function and explain how the firm changes price in response to changes in its own marginal cost and changes in Coke's price.
High (but not perfect) correlation between two or more independent variables is called _____.
A. heteroskedasticty B. homoskedasticty C. multicollinearity D. micronumerosity
In the long run, a firm in a perfectly competitive industry will supply output only if its total revenue covers its
A) explicit costs plus its implicit costs. B) fixed costs. C) implicit costs. D) explicit costs.