5. Problems and Applications 25 Consider the effects of inflation in an economy composed of only two people: Yakov, a be

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5 Problems And Applications 25 Consider The Effects Of Inflation In An Economy Composed Of Only Two People Yakov A Be 1 (36.24 KiB) Viewed 56 times

5. Problems and Applications 25 Consider the effects of inflation in an economy composed of only two people: Yakov, a bean farmer, and Ana, a tice farmer. Yakov and Ana both always consume equal amounts of rice and beans. In 2019 the price of bears was 51, and the price of rice was $4. Suppose that in 2020 the price of beans was $2 and the price of rice was $8. Inflation was Indicate whether Yakov and Ane were better or worse or, or unaffected by the changes in prices. Better Off Worse Off Unaffected Yakov Ana O 0 Now suppose that in 2020 the price of beans was $2 and the price of rice was $4.80. In this case, inflation was Indicate whether Yakov and Ana were better off, worse orr, or unaffected by the changes in prices. Better OFF Worse on Unaffected Yakov O Ana Now suppose that in 2020, the price of beans was $2 and the price of rice was $1.60. In this case, inflation was Indicate whether Yakov and Ana were better orr, worse orf, or unaffected by the changes in prices. Better Off Worse Off Unaffected Yakov O Ana What matters more to Yakov and Ana? The overall inflation rate The relative price of rice and beans