MC Help :) (1 Viewer)

[BanterQueen]

Shouldn't a greater portion of their wages being placed in to superannuation reduce demand pull inflation?

 

[malcolm21]

"most likely", it will 100% affect cost inflation since this is results in an increased cost for the firm, which they pass on to consumers by increasing the price of the product

 

[BanterQueen]

If superannuation increases from 9 to 12% does that mean they pay their staff more or do they take it out of their wage and put more into superannuation?

 

[milkman007]

Labour is factor of production, therefore an increase in the minimum rate of employer superannuation contributions will lead to an increase in costpush inflation. Their wage remains the same regardless of the rate increase.

This is according to my understanding. Correct me if I'm wrong.

 

[sy37]

The superannuation is payed by the employer. Initially, it was 9% of the salary of the employee. Now, it is 12% of the salary of the employee. This 3% increase gets passed on to consumers. Thus, in a situation where the cost of the factors of production increases (i.e. labour in this case), and this cost becomes passed on to consumers in the form of price rises (inflation) we have cost-push inflation.

 

[rowcache]

You are correct, superannuation is paid on top of wages/salaries and thus their wage/salary remains the same.

 

[turnerloos]

The superannuation is payed by the employer. Initially, it was 9% of the salary of the employee. Now, it is 12% of the salary of the employee. This 3% increase gets passed on to consumers. Thus, in a situation where the cost of the factors of production increases (i.e. labour in this case), and this cost becomes passed on to consumers in the form of price rises (inflation) we have cost-push inflation.

Deach me economics goddess

 

[sy37]

Deach me economics goddess

Step 1: Be economic god

Step 2: Don't not be step one

Step 3: ????

Step 4: Profit