Comments on: Surprise! Product prices have been falling for decades! http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/ for students and teachers of Economics Wed, 23 May 2012 04:39:58 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Samantha Kim http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22784 Samantha Kim Sun, 01 Apr 2012 15:51:17 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22784 @Bahar Couldn't these government policies actually have a negative impact. Improving health and education would take potential investment into other industries away and an increase in minimum wage could result in inflation. Perhaps the government should take a hands off approach and instead of attempting to alter policies that will eventually have to be altered anyways, allow people and companies to provide these services. @Bahar
Couldn't these government policies actually have a negative impact. Improving health and education would take potential investment into other industries away and an increase in minimum wage could result in inflation. Perhaps the government should take a hands off approach and instead of attempting to alter policies that will eventually have to be altered anyways, allow people and companies to provide these services.

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]]> By: Samantha Kim http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22783 Samantha Kim Sun, 01 Apr 2012 15:49:22 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22783 @Kansu I think it is interesting that real wages would increase as a result of the countries being able to obtain goods at cheaper prices, but wouldn't this could also result in a dropping of real wages as goods from other nations might make the demand and therefore supply of that good decrease and make many who relied on that good to lose jobs. @Kansu
I think it is interesting that real wages would increase as a result of the countries being able to obtain goods at cheaper prices, but wouldn't this could also result in a dropping of real wages as goods from other nations might make the demand and therefore supply of that good decrease and make many who relied on that good to lose jobs.

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]]> By: Samantha Kim http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-3/#comment-22782 Samantha Kim Sun, 01 Apr 2012 15:39:50 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22782 •Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario? If average prices rise by 2% a year, but average incomes rise by 3% then real income is actually rising. In such situations, the average household is actually better off for they are making more money than the prices of products are rising. •How have trade and globalization contributed to rising real wages in America and Switzerland? Trade and globalization have contributed to rising real wages in America and Switzerland as American and Swiss goods are shipped overseas, creating additional markets for the once largely national economy. This has resulted in more white-collared jobs and in turn a more education population. As more Americans hold more white-collared (typically higher paying) jobs than before, the real wages in America and Switzerland has risen. •How have trade and globalization contributed to falling nominal wages in America and Switzerland? Trade and globalization have contributed to falling nominal wages in America and Switzerland as labor, skills, and technologies overseas are cheaper and sometimes superior to those in America or Switzerland. As a result, businesses will look to these nations for manual labor instead of their own countries. •How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education? Improvements in technology contribute to rising real wages in both developed and developing economies as people more labor is needed in order to build these technologically advanced machines. This will provide jobs for those in developing countries, as the manual labor in these areas is actually cheaper. This will also provide more efficiency in developed nations that will be using these machines in order to work more quickly; travel further, or whatever other advances that technology can provide us. It will allow the people in these developed nations to move and work more quickly and in effect increase real wages for them as well. More jobs will also be provided in the developed nations as more people will be needed to develop and further these advances. •What types of policies can government pursue to help raise the real wages of the nation’s workers? Some policies that governments can pursue to help raise the real wages of the nation’s workers by allowing an independent central bank manage the finances of the nation. This would insure that the banks will only raise the money supply by whatever amount the economy is growing by and thereby limit inflation. If politicians were left to make these monetary decisions, they would have to find a compromise between the inflationary policies and other policies and as a result decisions would take a long time to pass. Furthermore, these politicians would likely worry more about being reelected than the actually monetary policies. A central bank would have no need to ever be reelected and therefore would make decisions that adhere with the economic needs. •Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario?
If average prices rise by 2% a year, but average incomes rise by 3% then real income is actually rising. In such situations, the average household is actually better off for they are making more money than the prices of products are rising.
•How have trade and globalization contributed to rising real wages in America and Switzerland?
Trade and globalization have contributed to rising real wages in America and Switzerland as American and Swiss goods are shipped overseas, creating additional markets for the once largely national economy. This has resulted in more white-collared jobs and in turn a more education population. As more Americans hold more white-collared (typically higher paying) jobs than before, the real wages in America and Switzerland has risen.
•How have trade and globalization contributed to falling nominal wages in America and Switzerland?
Trade and globalization have contributed to falling nominal wages in America and Switzerland as labor, skills, and technologies overseas are cheaper and sometimes superior to those in America or Switzerland. As a result, businesses will look to these nations for manual labor instead of their own countries.
•How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?
Improvements in technology contribute to rising real wages in both developed and developing economies as people more labor is needed in order to build these technologically advanced machines. This will provide jobs for those in developing countries, as the manual labor in these areas is actually cheaper. This will also provide more efficiency in developed nations that will be using these machines in order to work more quickly; travel further, or whatever other advances that technology can provide us. It will allow the people in these developed nations to move and work more quickly and in effect increase real wages for them as well. More jobs will also be provided in the developed nations as more people will be needed to develop and further these advances.
•What types of policies can government pursue to help raise the real wages of the nation’s workers?
Some policies that governments can pursue to help raise the real wages of the nation’s workers by allowing an independent central bank manage the finances of the nation. This would insure that the banks will only raise the money supply by whatever amount the economy is growing by and thereby limit inflation. If politicians were left to make these monetary decisions, they would have to find a compromise between the inflationary policies and other policies and as a result decisions would take a long time to pass. Furthermore, these politicians would likely worry more about being reelected than the actually monetary policies. A central bank would have no need to ever be reelected and therefore would make decisions that adhere with the economic needs.

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]]> By: aaxler2 http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22466 aaxler2 Thu, 15 Mar 2012 05:50:29 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22466 I completely agree without that technology helps innovate production. However, I'm not sure that the government reducing taxes on products would necessary increase the real wages of the nation's workers. This might actually cause a spike in demand that then triggers a price increase which leads into inflation. I completely agree without that technology helps innovate production. However, I'm not sure that the government reducing taxes on products would necessary increase the real wages of the nation's workers. This might actually cause a spike in demand that then triggers a price increase which leads into inflation.

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]]> By: Aaxler http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-3/#comment-22465 Aaxler Thu, 15 Mar 2012 05:46:57 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22465 •Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario? oThe Real income increases in this scenario because the rise in income is greater than the rise in prices. The average household would be better off. •How have trade and globalization contributed to rising real wages in America and Switzerland? oTrade and globalization has made the world market larger. This allows for people to create individuals markets that haven’t existed before. Additionally the additional injections into the circular flow increase the aggregate demand. In general as demand rises wages rise. •How have trade and globalization contributed to falling nominal wages in America and Switzerland? oTrade and globalization has in some ways contributed to falling nominal wages in that it has been the markets more competitive. What used to be manufactured in America is now manufactured in places like China where it can be made for a fraction of the cost. •How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education? oIt’s somewhat hard to say because to calculate real wages one has to know real inflation. The increase in technology makes it difficult to truly judge the value of the new product versus the old product. The advantage of technology is that it can reduce the costs of production. This in turn can allow employers to hire more people or increase people’s salaries. Health and education are often improved by technology. Technology offers opportunities to communicate information to so many people so quickly that it is making the world safer and more enriched. •What types of policies can government pursue to help raise the real wages of the nation’s workers? oGovernments can try to keep inflation low. They can do this by lowering interest rates and printing less money. •Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario?
oThe Real income increases in this scenario because the rise in income is greater than the rise in prices. The average household would be better off.
•How have trade and globalization contributed to rising real wages in America and Switzerland?
oTrade and globalization has made the world market larger. This allows for people to create individuals markets that haven’t existed before. Additionally the additional injections into the circular flow increase the aggregate demand. In general as demand rises wages rise.
•How have trade and globalization contributed to falling nominal wages in America and Switzerland?
oTrade and globalization has in some ways contributed to falling nominal wages in that it has been the markets more competitive. What used to be manufactured in America is now manufactured in places like China where it can be made for a fraction of the cost.
•How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?
oIt’s somewhat hard to say because to calculate real wages one has to know real inflation. The increase in technology makes it difficult to truly judge the value of the new product versus the old product. The advantage of technology is that it can reduce the costs of production. This in turn can allow employers to hire more people or increase people’s salaries. Health and education are often improved by technology. Technology offers opportunities to communicate information to so many people so quickly that it is making the world safer and more enriched.
•What types of policies can government pursue to help raise the real wages of the nation’s workers?
oGovernments can try to keep inflation low. They can do this by lowering interest rates and printing less money.

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]]> By: skalra2 http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22463 skalra2 Thu, 15 Mar 2012 03:12:31 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22463 I thought your response was quite thorough and good. I could see you understand the topic well and have put effort into answering these questions. I thought your analysis of why workers in America and Switzerland will be forced to work for lower wages was quite good. I thought your response was quite thorough and good. I could see you understand the topic well and have put effort into answering these questions. I thought your analysis of why workers in America and Switzerland will be forced to work for lower wages was quite good.

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]]> By: skalra2 http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-3/#comment-22462 skalra2 Thu, 15 Mar 2012 03:04:53 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22462 1.Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario? In this scenario is better off as despite the increase in prices they can now afford to buy much more than they used as a result of the higher increase in income 2.How have trade and globalization contributed to rising real wages in America and Swizerland? Trade and globalization allows for more job opportunities leading to higher employment. Higher employment rates cause real wages to rise as supply of labor decreases. Also, trade and globalization work to bring down the price of goods allowing workers to buy more than they used to with their wages, thus causing their ‘real wage’ to increase. 3.How have trade and globalization contributed to falling nominal wages in America and Switzerland? Often globalization leads to outsourcing production to developing countries in search for lower costs. This means that the workers in America and Switzerland lose their jobs and as a result nominal wages decrease as supply of labor increases. 4.How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education? Improvement in technologies lead to faster and more efficient production, as well as increased communication between businesses causing prices of goods to go down, thus increasing real wages both in developed and developing countries. Proper health and education allows individuals to grow up to be healthy educated citizens of a country than can work well in jobs and earn money. 5.What types of policies can government pursue to help raise the real wages of the nation’s workers? Government can pursue this goal by reducing cost of health care and education as these things will lead to healthy educated individuals. This will increase the real wages of the nation’s workers. Decreasing on goods would also work to increase real wages of the nation’s workers. 1.Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario?
In this scenario is better off as despite the increase in prices they can now afford to buy much more than they used as a result of the higher increase in income

2.How have trade and globalization contributed to rising real wages in America and Swizerland?
Trade and globalization allows for more job opportunities leading to higher employment. Higher employment rates cause real wages to rise as supply of labor decreases. Also, trade and globalization work to bring down the price of goods allowing workers to buy more than they used to with their wages, thus causing their ‘real wage’ to increase.

3.How have trade and globalization contributed to falling nominal wages in America and Switzerland?
Often globalization leads to outsourcing production to developing countries in search for lower costs. This means that the workers in America and Switzerland lose their jobs and as a result nominal wages decrease as supply of labor increases.

4.How do improvements in technology contribute to rising real wages in both developed and developing economies? What about health and education?
Improvement in technologies lead to faster and more efficient production, as well as increased communication between businesses causing prices of goods to go down, thus increasing real wages both in developed and developing countries. Proper health and education allows individuals to grow up to be healthy educated citizens of a country than can work well in jobs and earn money.

5.What types of policies can government pursue to help raise the real wages of the nation’s workers?
Government can pursue this goal by reducing cost of health care and education as these things will lead to healthy educated individuals. This will increase the real wages of the nation’s workers. Decreasing on goods would also work to increase real wages of the nation’s workers.

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]]> By: epaul http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22453 epaul Wed, 14 Mar 2012 12:42:35 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22453 Muhammet_Murat_Sekba - How can the government increase real wages? There are different ways of doing this - longer-term policies such as subsidising education, and shorter-term policies such as decreasing tax, for example. Muhammet_Murat_Sekba – How can the government increase real wages? There are different ways of doing this – longer-term policies such as subsidising education, and shorter-term policies such as decreasing tax, for example.

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]]> By: epaul http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-3/#comment-22452 epaul Wed, 14 Mar 2012 12:36:55 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22452 4.On the supply side, technology makes manufacturing more efficient and therefore cheaper, lowering the price of production. In terms of the factors of production, less manual labour is needed as much of it is automated; in terms of land better technology tends to take up less space; and in terms of capital as the technology improves it gets cheaper. This means products are cheaper, prices overall fall and households have more real income in comparison. As new technology - such as new phones and computers etc - is developed, they become cheaper to manufacture and therefore buy. Technology has improved education in many ways. The internet has made more information more readily available - university/school courses can now be taken online - and communication has become a vast amount more efficient. Better equipment has also improved healthcare, and meant that various life saving pieces of equipment are now widespread. 5.Subsidising education means it is more available, particularly to students with lower income backgrounds, so more people can be educated and get higher paid jobs. (In theory, until they run out) They can invest in new technology, or as a short-term solution, they can reduce taxes. 4.On the supply side, technology makes manufacturing more efficient and therefore cheaper, lowering the price of production. In terms of the factors of production, less manual labour is needed as much of it is automated; in terms of land better technology tends to take up less space; and in terms of capital as the technology improves it gets cheaper. This means products are cheaper, prices overall fall and households have more real income in comparison. As new technology – such as new phones and computers etc – is developed, they become cheaper to manufacture and therefore buy.
Technology has improved education in many ways. The internet has made more information more readily available – university/school courses can now be taken online – and communication has become a vast amount more efficient.
Better equipment has also improved healthcare, and meant that various life saving pieces of equipment are now widespread.
5.Subsidising education means it is more available, particularly to students with lower income backgrounds, so more people can be educated and get higher paid jobs. (In theory, until they run out)
They can invest in new technology, or as a short-term solution, they can reduce taxes.

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]]> By: epaul http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-3/#comment-22451 epaul Wed, 14 Mar 2012 12:36:30 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22451 1.What happens to real income in this situation? Is the average household better or worse off in such a scenario? Real income has only increased by 1% (3%-2%), so the average household is better off in this scenario - it has more purchasing power. 2. Better education means people are qualified for jobs needing higher skills and paying higher wages. Globalisation means manual, labour-based jobs are delegated abroad to workers with lower skills and far lower minimal wages (if there are minimal wages at all) and developing countries can take the higher paid jobs, importing the goods created by the manual, unskilled labour. 3.Unemployment (because unskilled jobs are abroad) may mean that overall nominal wages are lower. 1.What happens to real income in this situation? Is the average household better or worse off in such a scenario?
Real income has only increased by 1% (3%-2%), so the average household is better off in this scenario – it has more purchasing power.
2. Better education means people are qualified for jobs needing higher skills and paying higher wages. Globalisation means manual, labour-based jobs are delegated abroad to workers with lower skills and far lower minimal wages (if there are minimal wages at all) and developing countries can take the higher paid jobs, importing the goods created by the manual, unskilled labour.
3.Unemployment (because unskilled jobs are abroad) may mean that overall nominal wages are lower.

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]]> By: Konstantin Frank http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22446 Konstantin Frank Wed, 14 Mar 2012 09:49:35 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22446 I agree with you that the labour market has been hurt to some extent due to outsourcing, but I would like you to consider, that outsourcing has many positive effects. The outsourcing of programming software to India enables software engineers in America to develop their skills and intense their R&D work, so they will still be better off at the end of the day, in my opinion. I agree with you that the labour market has been hurt to some extent due to outsourcing, but I would like you to consider, that outsourcing has many positive effects. The outsourcing of programming software to India enables software engineers in America to develop their skills and intense their R&D work, so they will still be better off at the end of the day, in my opinion.

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]]> By: Konstantin Frank http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-3/#comment-22445 Konstantin Frank Wed, 14 Mar 2012 09:47:20 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22445 1. Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario? If the average prices rise by 2% but the income rises by 3% there is an increase of real wage. This means that people can spend more money, as they have more after their wage got adjusted to inflation. Therefore the average household is slightly better off in such scenario, as they can afford more goods and increase their standard of living. 2. How have trade and globalization contributed to rising real wages in America and Swizerland? They helped to rise real wages in America and Switzerland, as more people are educated in these countries and can sell their expertise easily to the world. This increased the pool of consumers they address. Furthermore they can outsource simple work like manufacturing to other countries and concentrate on developing their own skills and knowledge and do not have to waste time with labour. 3. How have trade and globalization contributed to falling nominal wages in America and Switzerland? It is not only the outsourcing, but also attracting people from poorer countries that work in developed countries for a lower wage and are mainly engaged with labour. This lowers the average nominal wage. 4. How do improvments in technology contribute to rising real wages in both developed and developing economies? Improvement in technology make the production of several goods easier. Therefore the efficiency increases and an economy is able to increase their output per person. This increases the revenue and hence the real wages. 5. What about health and education? Health and education are probably better and cheaper compared to some centuries ago. Health insurances are a very common establishment today and there have never been more students enrolled in universities than these days. 6.What types of policies can government pursue to help raise the real wages of the nation’s workers? The government can help the citizens to increase their real wage by subsidizing education as this seems to be the most important factor when it comes to achieve a job that pays off well. Furthermore a reduction in taxes would cause, that people have left more money. 1. Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario?

If the average prices rise by 2% but the income rises by 3% there is an increase of real wage. This means that people can spend more money, as they have more after their wage got adjusted to inflation. Therefore the average household is slightly better off in such scenario, as they can afford more goods and increase their standard of living.

2. How have trade and globalization contributed to rising real wages in America and Swizerland?

They helped to rise real wages in America and Switzerland, as more people are educated in these countries and can sell their expertise easily to the world. This increased the pool of consumers they address. Furthermore they can outsource simple work like manufacturing to other countries and concentrate on developing their own skills and knowledge and do not have to waste time with labour.

3. How have trade and globalization contributed to falling nominal wages in America and Switzerland?

It is not only the outsourcing, but also attracting people from poorer countries that work in developed countries for a lower wage and are mainly engaged with labour. This lowers the average nominal wage.

4. How do improvments in technology contribute to rising real wages in both developed and developing economies?

Improvement in technology make the production of several goods easier. Therefore the efficiency increases and an economy is able to increase their output per person. This increases the revenue and hence the real wages.

5. What about health and education?

Health and education are probably better and cheaper compared to some centuries ago. Health insurances are a very common establishment today and there have never been more students enrolled in universities than these days.

6.What types of policies can government pursue to help raise the real wages of the nation’s workers?

The government can help the citizens to increase their real wage by subsidizing education as this seems to be the most important factor when it comes to achieve a job that pays off well. Furthermore a reduction in taxes would cause, that people have left more money.

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]]> By: Rory Thornton http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22441 Rory Thornton Wed, 14 Mar 2012 01:18:19 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22441 Your answer to #5 is basically a repeat of the question - just with "who worked for many years" added on. One example of a way in which the government can increase the real wages of the nation's workers is to increase the national minimum wages. Your answer to #5 is basically a repeat of the question – just with "who worked for many years" added on. One example of a way in which the government can increase the real wages of the nation's workers is to increase the national minimum wages.

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]]> By: Rory Thornton http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-3/#comment-22440 Rory Thornton Wed, 14 Mar 2012 01:15:39 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22440 1. Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario? In a situation where the average incomes rise more than the average prices, the consumption would increase, and real income would also increase. The average household would be better off in a scenario such as this. 2. How have trade and globalization contributed to rising real wages in America and Swizerland? Trade and globalization have mostly been modernized and improved due to technological and communication advancements. Trade and globalization have allowed for countries to have access to cheaper products and services from countries abroad. With these products and services, the prices of wages have increased more than the prices of the goods, therefore, real wages in America and Switzerland have risen. 3. How have trade and globalization contributed to falling nominal wages in America and Switzerland? Through globalization, more foreign workers are searching for jobs in countries such as America and Switzerland. These workers would increase the competition for jobs, ultimately lowering the amount of jobs available. With less jobs, the citizens are forced to work for lower wages, decreasing nominal wages in America and Switzerland. 4. How do improvements in technology contribute to rising real wages in both developed and developing economies? Improvements in technology have lowered the production costs, and increased the rate of production, of many goods. This would allow for more pay for the workers in these firms. Improvements in technology have also led to new fields of study and opened up many job opportunities within a society. 5. What types of policies can government pursue to help raise the real wages of the nation’s workers? The government can increase the national minimum wages to help raise the real wages of the nation’s workers. 1. Inflation is bad, right? Well, what if average prices rise by 2% a year but average incomes rise by 3%. What happens to real income in this situation? Is the average household better or worse off in such a scenario?

In a situation where the average incomes rise more than the average prices, the consumption would increase, and real income would also increase. The average household would be better off in a scenario such as this.

2. How have trade and globalization contributed to rising real wages in America and Swizerland?

Trade and globalization have mostly been modernized and improved due to technological and communication advancements. Trade and globalization have allowed for countries to have access to cheaper products and services from countries abroad. With these products and services, the prices of wages have increased more than the prices of the goods, therefore, real wages in America and Switzerland have risen.

3. How have trade and globalization contributed to falling nominal wages in America and Switzerland?

Through globalization, more foreign workers are searching for jobs in countries such as America and Switzerland. These workers would increase the competition for jobs, ultimately lowering the amount of jobs available. With less jobs, the citizens are forced to work for lower wages, decreasing nominal wages in America and Switzerland.

4. How do improvements in technology contribute to rising real wages in both developed and developing economies?

Improvements in technology have lowered the production costs, and increased the rate of production, of many goods. This would allow for more pay for the workers in these firms. Improvements in technology have also led to new fields of study and opened up many job opportunities within a society.

5. What types of policies can government pursue to help raise the real wages of the nation’s workers?

The government can increase the national minimum wages to help raise the real wages of the nation’s workers.

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]]> By: kfletcher2 http://welkerswikinomics.com/blog/2009/09/13/surprise-product-prices-falling-for-decades-across-switzerland-the-united-states/comment-page-2/#comment-22434 kfletcher2 Tue, 13 Mar 2012 23:41:08 +0000 http://welkerswikinomics.com/blog/?p=1096#comment-22434 @smarttikalevi 2 Wouldn't causing deflation lead to a decrease in workers wages, as the firm would make less money, then try to cut back the cost of production by laying off or decreasing the wages of workers? @smarttikalevi 2
Wouldn't causing deflation lead to a decrease in workers wages, as the firm would make less money, then try to cut back the cost of production by laying off or decreasing the wages of workers?

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