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

question 121

Essay

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

---

Definitions:

Equity Method Investments

An accounting technique used by a company to record its investment in another company, where the investment gives the investor a significant influence over the investee.

Account For

Refers to the process of recording financial transactions in the financial statements.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is global in scope.