Suppose that in 2019, all prices in the economy double and that all wages and salaries have also doubled.In 2019 you
A)are worse off than you were in 2018 as you can no longer afford to buy as many goods and services.
B)are better off than you were in 2018 as your salary is higher than it was in 2018 and you can now buy more goods and services.
C)are no better off or worse off than you were in 2018 as the purchasing power of your salary has remained the same.
D)cannot determine whether you are better off or worse off than you were in 2018 because the purchasing power of your salary cannot be determined.
E)are better off as an increase in your income always increases your options.

Question

Quizplus · Accepted Answer

Since both prices and wages have doubled, the purchasing power of your salary remains the same. This means that you can still afford to buy the same amount of goods and services that you could in 2018. Therefore, you are neither better nor worse off than you were in 2018.

Suppose That in 2019, All Prices in the Economy Double