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Suppose that in 2011 all prices in the economy double and that all wages and salaries have also doubled. In 2011 you cannot determine whether

Suppose that in 2011 all prices in the economy double and that all wages and salaries have also doubled. In 2011 you

cannot determine whether you are better off or worse off than you were in 2010, because the purchasing power of your salary cannot be determined.

are better off than you were in 2010 as your salary is higher than it was in 2010 and you can now buy more goods and services.

are worse off than you were in 2010 as you can no longer afford to buy as many goods and services.

are no better off or worse off than you were in 2010 as the purchasing power of your salary has remained the same.

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