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Suppose That a Consumer's Increase in Nominal Income from the Base

Question 109

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Suppose that a consumer's increase in nominal income from the base year is exceeded by the inflation level given by a Paasche cost of living index for their level of purchases Suppose that a consumer's increase in nominal income from the base year is exceeded by the inflation level given by a Paasche cost of living index for their level of purchases Show that this information implies that the consumer is strictly worse-off as compared to the base year.(HINT: Use a revealed preference argument) Show that this information implies that the consumer is strictly worse-off as compared to the base year.(HINT: Use a revealed preference argument)

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