When gas prices go up, prices of the goods go up.if salaries go up accordingly , would the economy be stable?

Question

When gas prices go up, prices of the goods go up.if salaries go up accordingly , would the economy be stable?

Answer 1

well i suppose you're right but nobody is really going to raise salaries because everyone wants to make money! it all comes down to the money.

Answer 2

We'd be in the same place...gas, food, rent and other things are costing more...If our salaries go up (which is only 1 thing going up)...and other things are still expensive...(more than one) we are still in the hole.....

Answer 3

The economy would remain the same as before if absolutely all salaries went up accordingly.

This is due to the real wealth effect, because the purchasing power parity of people's salaries remain the same. Thus, the economy would be in the same state it was in before prices and salaries increased (ceteris paribus, of course).

Answer 4

you have to factor in inflation. the value of dollar to buy products is important.

increasing salaries might increase inflation