0
Inflation affects low income earners more than high income earners. This is because low income earners' income tends not to rise as quickly as prices, therefore, their purchasing power decreases. Also, low income earners do not have the skills to demand higher wages. It should be noted that high inflation generally leads to interest rate increases. This affects low income earners' cost of living and compounds the other affects of inflation. So, inflation decreases purchasing power of low income earners relative to high income earners, whose income increase as quick as inflation. Ultimately, income distribution becomes less equal.
What else can I help you with?
How does the exchange rate affect the five macroeconomic objectives?
The exchange rate influences the five macroeconomic objectives—economic growth, unemployment, inflation, and balance of payments—by affecting trade competitiveness and capital flows. A weaker currency can boost exports by making them cheaper for foreign buyers, potentially stimulating economic growth and reducing unemployment. Conversely, it can increase import costs, leading to inflation. Additionally, fluctuations in exchange rates can impact foreign investment and the balance of payments, as they affect the value of international transactions.
What are the problems of having a surplus balance of payments?
a. it will cause inflation b. It will lead to domination of foreign companies in the domestic market
Can a nation have a favorable balance of trade and an unfavorable balance of payments?
Yes, as the balance of trade is only one part of the balance of payments
How will inflation affect hospitality industry in Nigeria?
how does inflation affect hospitality in nigeria industry
How does a country balance of payments affect the value of its currency?
can cause fluctuations in the exchange rate between its currency and foreign currencies.
When calculating a country's balance of payments do you use foreign aid?
foreign inflation rates
How does the exchange rate affect the five macroeconomic objectives?
The exchange rate influences the five macroeconomic objectives—economic growth, unemployment, inflation, and balance of payments—by affecting trade competitiveness and capital flows. A weaker currency can boost exports by making them cheaper for foreign buyers, potentially stimulating economic growth and reducing unemployment. Conversely, it can increase import costs, leading to inflation. Additionally, fluctuations in exchange rates can impact foreign investment and the balance of payments, as they affect the value of international transactions.
What are the problems of having a surplus balance of payments?
a. it will cause inflation b. It will lead to domination of foreign companies in the domestic market
Balance of payments deficit?
A balance of payments deficit means there is an imbalance in the balance of payments of a country where the payments the country makes are more than the payments they received. It means the balance of payments is negative. A balance of payments deficit is,when government expenditure is more than government revenue
Does Brazil have a balance of payments surplus or deficit?
It has a balance of payments deficit.
What are the effects of balance of payments in relation to Zimbabwe?
If your country has higher level of inflation than major trading countries, the exports will be expensive and imports will be cheaper. Country's balance of trade will be affected and ultimate effect will be on the rate of exchange.
Can a nation have a favorable balance of trade and an unfavorable balance of payments?
Yes, as the balance of trade is only one part of the balance of payments
How does paying off principal affect monthly payments?
Paying off principal reduces the amount you owe, which can lower your monthly payments by decreasing the interest charged on the remaining balance.
How will inflation affect hospitality industry in Nigeria?
how does inflation affect hospitality in nigeria industry
How does a country balance of payments affect the value of its currency?
can cause fluctuations in the exchange rate between its currency and foreign currencies.
What would a multinational company do to affect a country's balance of payments?
Change prices is the most important factor a multinational company can do.
Does the balance of payment always balance?
International Balance of Payments
