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INFLATION INTRODUCTION:
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Read the Story from Time Magazine about Jani the Giraffe (you can skim read the second half). Think about the following questions:
1. What was the previous price of the toy giraffe, what is the new price? 2. Identify 5 causes of inflation from the article? 3. Identify 5 consequences to society of inflation? |
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HAND OUT REQUIRED FOR INFLATION TOPICS
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| inflation chp. |
Fig 1: Fred CPI data 12 month rolling:
| inflation_updated.docx |
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activity TWO: mEASURING INFLATION |
- Distinguish between inflation, disinflation and deflation.
- Explain how inflation and deflation are typically measured by calculating a consumer price index (CPI).
- Explain how different income earners may experience a different rate of inflation when their pattern of consumption is not accurately reflected by the CPI.
- Explain how inflation figures may not accurately reflect changes in consumption patterns and the quality of the products purchased.
- Explain how economists measure a core/underlying rate of inflation.
- Explain how a producer price index measuring changes in the prices of factors of production may be useful in predicting future inflation.
- HL Only Construct a weighted price index, using a set of data.
- HL Only Calculate the inflation rate from a set of data.
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ACTIVITY 1: Constructing your own consumer prices index (CPI). Using the handout below construct your own CPI.
How accurate is it to the year on year CPI data? What issues in your methodology would you need to ensure an accurate figure? |
| construct_your_own_consumer_prices_indices.docx |
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ACTIVITY THREE: consequences of inflATION |
- Discuss the possible consequences of a high inflation rate.
- Discuss the possible consequences of deflation.
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ACTIVITY : Causes of inflation |
- Explain demand-pull inflation.
- Explain cost-push inflation.
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GOVERNMENT POLICIES TO DEAL WITH INFLATION
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- Evaluate government policies to deal with the different types of inflation.
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INFLATION INQUIRY
Read the article from this weeks news:
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| why_is_inflation_in_the_us_so_high__-_bbc_news.pdf |
Answer each of the questions in turn to understand whether there is anything that can be done in the USA to reduce inflation:
1. What is the rate of inflation in the USA and according to the article why has this led to higher rates of inflation than elsewhere around the world?
2. Looking at the data in the linked table below can it be said that the government response to covid-19 was exclusively responsible for the high rate of inflation? www.bbc.com/news/business-52450958
3. What possible solutions are there for reducing the cost-push/supply -side casues of inflation?
4. What possible solutions are there for reducing the demand pull/demand -side casues of inflation?
5. What other considerations must the goverment make before deciding on its response to high inflation, in other words what may be the potential trade - offs when tackling high inflation.
1. What is the rate of inflation in the USA and according to the article why has this led to higher rates of inflation than elsewhere around the world?
2. Looking at the data in the linked table below can it be said that the government response to covid-19 was exclusively responsible for the high rate of inflation? www.bbc.com/news/business-52450958
3. What possible solutions are there for reducing the cost-push/supply -side casues of inflation?
4. What possible solutions are there for reducing the demand pull/demand -side casues of inflation?
5. What other considerations must the goverment make before deciding on its response to high inflation, in other words what may be the potential trade - offs when tackling high inflation.
| the_inflation_game_-_roles.pptx |