Business, 31.12.2020 18:50 cschellfamily

Consider the effects of inflation in an economy composed of only two people: Jacques, a bean farmer, and Kyoko, a rice farmer. Jacques and Kyoko both always consume equal amounts of rice and beans. In 2016 the price of beans was $1, and the price of rice was $4. Suppose that in 2017 the price of beans was $2 and the price of rice was $8. Indicate whether Jacques and Kyoko were better off, worse off, or unaffected by the changes in prices.

Better Off Worse Off Unaffected
Jacques
Kyoko

Now suppose that in 2017 the price of beans was $2 and the price of rice was $4.80. Indicate whether Jacques and Kyoko were better off, worse off, or unaffected by the changes in prices.

Better Off Worse Off Unaffected
Jacques
Kyoko

Now suppose that in 2017, the price of beans was $2 and the price of rice was $1.60. Indicate whether Jacques and Kyoko were better off, worse off, or unaffected by the changes in prices.

Better Off Worse Off Unaffected
Jacques
Kyoko

What matters more to Jacques and Kyoko?

Answers: 2

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Consider the effects of inflation in an economy composed of only two people: Jacques, a bean farmer,...

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