Inflation redistributes income from people who do not raise their prices to people who do raise their prices. True / False.

Question

Huber

Social Studies

5 January, 15:04

Inflation redistributes income from people who do not raise their prices to people who do raise their prices. True / False.

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Answers (1)

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Donuts · Answer 1

Answer: it is true.

Explanation:

Let's suppose that inflation is 20%, If someone buys a motorcycle for $1000 and wants to sell the motorcycle to have his original money, that person will have to sell it in $1,200. Otherwise, that person will be receiving less money and giving extra money to the new purchaser thus redistributing income.