Factors That Affect Income

The video tutorial explains how prices of goods and services change over time due to inflation and deflation. Inflation leads to higher prices and decreased money value, affecting income and business profits. Deflation results in lower prices, reduced income, and increased unemployment. The video also covers the importance of capital goods and human capital in enhancing business productivity and economic growth.

What is one effect of inflation on businesses?

• Businesses can pay workers less.

• Businesses need to pay workers more.

• Businesses make more profit.

• Businesses can reduce prices.

How does deflation impact consumer spending?

• It increases consumer spending.

• It decreases consumer spending.

• It stabilizes consumer spending.

• It has no effect on consumer spending.

What is a potential consequence of deflation for businesses?

• Laying off employees.

• Increased hiring of employees.

• Higher demand for goods.

• Increased expenses.

What are capital goods?

• Goods used for personal consumption.

• Goods that are intangible.

• Goods like machinery and buildings used in production.

• Goods that are perishable.

How can businesses increase their profits through human capital?

• By reducing employee training.

• By investing in employee education and skills.

• By hiring fewer employees.

• By cutting salaries.