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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.
Wiki User
∙ 11y ago
Wiki User
∙ 12y agoThis affects it because inflation rises and them things become more expensive, also then more money is produced which means it starts becoming devalued. Due to this the BOP (Balance of Payment) reduces so the currency is not devalued and more.
Wiki User
∙ 15y agoIt leads to an arbitrary redistribution of income and difficulties in the baqlance of payment
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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.
Can India push for growth against inflation or not?
Yeah Sure If it is a slight rate of inflation. it also depends on what kind of growth, if the country grows in one factor it decreases on the other. For example A Decrease is Unemployment rate Might effect the BOP(Balance of payments) or the Price levels or the demand.
When calculating a country's balance of payments do you use foreign aid?
foreign inflation rates
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.
How will weather affect the inflation of giant balloons?
how will the weather affect the inflation of the ballooons
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
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.
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.
Does the balance of payment always balance?
International Balance of Payments
Can India push for growth against inflation or not?
Yeah Sure If it is a slight rate of inflation. it also depends on what kind of growth, if the country grows in one factor it decreases on the other. For example A Decrease is Unemployment rate Might effect the BOP(Balance of payments) or the Price levels or the demand.
