# Purchasing power theory

- Canonical URL: https://www.gerhardmerk.de/purchasing-power-theory
- Post ID: 589494
- Modified: 2023-07-25T21:12:55+00:00
- Language: en

## Definition

The opinion that an increase in wages and salaries by EUR 100 would increase domestic demand by the same amount, i.e. by EUR 100. - The fact is, however, that (mid-2010) less than EUR 29 of this amount will have an impact on domestic demand. This is because - slightly more than half of the amount is absorbed by social security contributions (pension insurance, health insurance, unemployment contribution, nursing care insurance) and taxes, - EUR 8 is saved and - EUR 12 is used to purchase imported goods or import components of domestic goods. Despite these statistically clearly demonstrable facts, the purchasing power theory is still persistently advocated - especially by trade union functionaries. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

- Generator: Merk Knowledge 1.1.1