No it does not. I don't understand why people beliefe this to be true.
If you shift consumtion from some luxery goods to more low end goods there might be a slight increase in the price of some of the lower end goods but because of the price elasticity it will only be a very small amount.
The avg price level should remain about the same, some relativ price would be effected but not to any overly large degree.
We have to remember that this is not a overly radical proposal most people will still have about the same amount that they have now. Some people on the lower end will somewhat increase their income but not enougth to change prices significantly.
> No it does not. I don't understand why people believe this to be true.
I'm looking at it from the point of view of a landlord / property manager (something I am not). If this law was enacted, I could most positively think that I could raise rents a fair amount knowing that so many more people could now afford my property.
I could also assume the market would get flooded with new renters (demand up), driving prices up.
I don't see how that wouldn't happen in other markets too.
If you shift consumtion from some luxery goods to more low end goods there might be a slight increase in the price of some of the lower end goods but because of the price elasticity it will only be a very small amount.
The avg price level should remain about the same, some relativ price would be effected but not to any overly large degree.
We have to remember that this is not a overly radical proposal most people will still have about the same amount that they have now. Some people on the lower end will somewhat increase their income but not enougth to change prices significantly.