Consider the effect of prices on everything doubling

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Please consider the effect of prices on everything doubling.

Suppose all prices doubled while you slept. A soft drink that sold for a dollar now sells for two dollars; a car that sold for $20,000 now sells for $40,000. The price of labor doubled as well, so a job paying $6 an hour now pays $12; a $30,000 annual salary becomes a $60,000 annual salary.

The value of all assets doubled as well. Stock prices are twice what they were at yesterday's closing. A $1,000 bond becomes a $2,000 bond. A $35 balance in a checking account becomes $70, and so on. Debts have also doubled. The $5 borrowed from a roommate becomes $10.The $3000 in student loans becomes $6000. A $75,000 home mortgage becomes a $150,000 mortgage. And even cash balances double. The inflation fairy sneaks in at night and replaces the $10 bill in your wallet with a new $20 bill. The inflation fairy even doubles the coins in your penny jars. If the prices of everything doubled overnight, what would happen?

Reference no: EM13977083

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