Question

Typically, salaries do not increase or increase very little from year to year; however, the prices of things are steadily increasing (which is often quite a pain) Why do you think this happens? How do we deal with this? Do you you have any thoughts on how we could correct this? Do you have any personal examples you can provide regarding this

Answer 1

FIRST QUESTION-

CAUSES OF INCREASE IN PRICE-

• increase in the price of goods and services are due to inflation in the economy.it implies that the competition among buyers increases over time due to increase in income and they bid higher prices to obtain goods and services.

SECOND QUESTION-

HOW DO WE DEAL WITH THIS?

• when inflation increases more than increase in income then people use greater portion out of their income for consumption and maintain the level of consumption.

THIRD QUESTION-

HOW TO CORRECT IT?

• people can increase their efficiency and skills to get better employment opportunities so their income can rise and they would be able to meet the inflation rate.
• government can adapt the price ceiling method to control the level of inflation.

FOURTH QUESTION-

PERSONAL EXAMPLE-

• suppose when John was working in a bank as clerk and the major portion of his income was consumed by the rent and food.his increment was low so his saving was getting lesser.John provided education to  himself and enhanced his skills,efficiency and capability and was promoted as head cashier with increased salary and thus he was able to meet his previous expenses along with saving out of his current salary.