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When does the purchasing power parity theory work well?
EncofBizandFinance
The PPP theory seems to work well in the long run when the differences in inflation rates between two countries are relatively large.
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∙ 13y ago
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Why might an increase in income result in a decrease in demand?
The Giffen's paradox explains this theory very well .When a person's income rises his purchasing power obviously rises.This leads him to substitute his earlier consumption commodities (inferior goods in the theory) to something more superior. In this case when the income rises the demand for inferior goods falls. But this also proves that when income rises the demand for superior goods also rises
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The role of children in the market place is to be targeted by adds and they have economic power. Children have a lot of purchasing power indirectly as well as directly. They can persuade parents to buy things.
