Business, 28.11.2019 03:31 kookharakura

Let's consider the effects of inflation in an economy composed of only two people: bob, a bean farmer, and rita, a rice farmer. bob and rita both always consume equal amounts of rice and beans. in 2013, the price of beans was $1, and the price of rice was $3. suppose that in 2014 the price of beans was $2 and the price of rice was $6. what was inflation? was bob better off, worse off, or unaffected by the changes in prices? what about rita?

b. now suppose that in 2014 the price of beans was $2 and the price of rice was $4. what was inflation? was bob better off, worse off, or unaffected by the changes in prices? what about rita?

c. finally, suppose that in 2014 the price of beans was $2 and the price of rice was $1.50. what was inflation? was bob better off, worse off, or unaffected by the changes in prices? what about rita?

d. what matters more to bob and rita�the overall inflation rate or the relative price of rice and beans?

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Let's consider the effects of inflation in an economy composed of only two people: bob, a bean farm...

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