question about econ. if you get an increase of 10%, are you better off w/o or w/ it? please explain.?

Question

thanks.

10% increase in the wage.

Answer 1

That all depends on the economy.

If inflation is occuring at a rate higher than 10%, then you will have a lower standard of living as compared with the previous year.

If inflation is occuring at a rate less than 10%, then you will have a higher standard of living as compared with the year before.

For example. Lets say you made $100 last year which bought you a coat. This year, you will make $110, but that same coat is now $150. Your standard of living has gone down because of inflation.

Higher income usually means higher taxes as well, but this epends on the type of government you have.

Now another situation is lets say you depend on welfare or other such things. That 10% increase, might make you illegible for such benefits because they assume you have enough to take care of yourself. To put in perspective, lets say $100 /day is what you make. To qualify for welfare you must be under $105/day. That 10% increase puts you at $110/day. You dont get the welfare money you need, and your barely passing the cutoff, which means your still broke.

Answer 2

You are clearly better off because you can satisfy more or your wants if you have more money. If you move to a higher tax bracket the high tax is only applied to your extra income. The only exception that I can think of is if you have large medical expenses and you no longer meet the income requirements for Medicaid.

Answer 3

If you get a 10% increase, but it puts you in a higher tax bracket, you might be better off without the raise. If it doesn't, you're better off.