Country x is a growing economy located in southeast asia. although it has a large population, it also has a disproportionately high number of working-age people. a large english-speaking workforce and low labor costs make it a competitive outsourcing destination. however, as is the case with most growing economies, inflation is quite high in country x. as a country that is poised to be an economic superpower, country x's stock markets are booming. real estate prices have been increasing by 20 percent every year. salim habib is a guest speaker at a talk organized by one of the leading universities in the country. he states that with high inflation, interest rates are bound to increase. consequently, consumption and investment will fall. ricky cafrall, a student, is not convinced. he claims that the rally in housing and stock prices will actually increase household wealth and consumption. in claiming that household wealth and consumption will increase, ricky is ignoring: a. the fact that stocks and houses form a part of household wealth. b. the fact that employment is increasing. c. a person's marginal propensity to consume. d. the real value of household wealth. e. the fact that disposable income and consumption are positively correlated.
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