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Author Question: Explain whether you agree or disagree with the following statement: The reason that inflation is bad ... (Read 28 times)

Metfan725

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on: Jun 29, 2018
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?

Question 2

What is a risk premium?
 
  What will be an ideal response?


sultansheikh

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Reply #1 on: Jun 29, 2018
Answer to Question 1

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.

Answer to Question 2

The maximum price a risk-averse person will pay to avoid taking a risk.


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