Suppose that in 2014,all prices in the economy double and that all wages and salaries also double.In 2014 you
A)are worse off than you were in 2013 as you can no longer afford to buy as many goods and services.
B)are better off than you were in 2013 as your salary is higher than it was in 2013 and you can now buy more goods and services.
C)are no better off or worse off than you were in 2013 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 2013,because the purchasing power of your salary cannot be determined.

Question

Quizplus · Accepted Answer

Since both prices and wages have doubled, the ratio of prices to wages has remained the same. Therefore, the purchasing power of your salary, or the amount of goods and services you can buy with your salary, has remained the same. Therefore, you are neither better off nor worse off than you were in 2013.

Suppose That in 2014,all Prices in the Economy Double and That