Post
Topic
Board Economics
Re: Growth, Interest and Wage Inequality - To the austrian economists here
by
Rassah
on 14/07/2011, 17:41:23 UTC
However, lets say, 10% more produced goods in the long run somehow implies, that 10% more goods are being bought. As an aggregate, this leaves the savings/spendings quota unaffected.
Example: You earn 1000$, save 200, consume 8 goods for 100 each. Now production grows 25% -> money stays the same -> prices are p0*0.75
On average, Joe now buys 10 goods for 75 each = 750 and saves 250 (=200*(1+growth))

This assumes of course an average rate of stock-holding or at least this holds longterm.

don't forget that with a drop in revenue from goods, you'll have a drop in earnings as well. So after that economic growth, Joe will also only be earning $750