In the last few decades the car manufacturing sector has found it difficult to compete with foreign car imports. High labor costs is one of the main reasons economist site as the lack of competitiveness for the car manufacturing industry. If there was modest inflation, how could it possibly help the car manufacturing industry in the United States compete with foreign car manufacturers? a. The consumers of the cars have increased purchasing power.
b. Business loans would cost less for the U. S. car manufacturers.
c. It could allow real wages to downwardly adjust more easily.