Quick Q - Inflation and Int Competitiveness (1 Viewer)

[Lordsion]

How does inflation effect International Competitiveness?

And
How does taxation effect income distribution, economic growth and inflation?

Thank you for any answers. I need more detail on both of these questions, I can only think of some detail.

 

[S.T.P]

Simply, rising domestic inflation will make Australian exports and import competing goods more expensive in relation to foreign competition, therefore reducing international compeitiveness.

and the other one would take to long to type. surely you have a textbook? i know the leading edge and riley discuse these questions directly!

 

[mcs-one]

1. inflation targeting helps improve IC'iveness as it allows investors and business to be able to predict costs and determine how much profit business is earnign for it to be a good investment
2. todo with taxation brackets. in Aus, we have progressive tax system, meaning u get taxed more for higher wages. therefore, reducing gap between high and low income earners. u can give tax cuts to increase EG, or use it in government projects. effec inflation by reducing disposable income of individuals

 

[munchiecrunchie]

inflation means that prices within the economy rise.

so exporting firms now have to pay more for their inputs into production.

as a result, they have to raise their export prices in order to recover these increased costs.

and now their international competitiveness declines, as their products are more expensive.



check the textbook for the other ones - its in there.