Royalty for a Day! Who is hurt the most by Unanticipated Inflation?

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Presentation transcript:

Royalty for a Day! Who is hurt the most by Unanticipated Inflation?

Do Now: copy this chart Priscilla: Homeowner/worker Mayor: Government official Peter: Store owner Theresa: Union auto worker Jerry: Real-estate speculator Elmer: Retiree Mr. Sad Class: School teacher Lucy: High school senior Bernie: Bank President Helga: Retiree Jerome: Potential home buyer Lawrence: British business owner

Gains or Hurt by inflation? REASON Priscilla: Homeowner/worker Mayor: Government official Peter: Store owner Theresa: Union auto worker Jerry: Real-estate speculator Elmer: Retiree Mr. Sad Class: School teacher Lucy: High school senior Bernie: Bank President Helga: Retiree Jerome: Potential home buyer Lawrence: British business owner

Gains or Hurt by inflation? REASON Priscilla: Homeowner/worker GainWages increase above inflation rate. Could cause cost-push inflation Mayor: Government official GainHigher tax receipts/ able to repay debt / loan with lower purchasing dollars Peter: Store owner HurtCosts are rising faster than revenue Theresa: Union auto worker GainCOLA matches wages and inflation/ Pay raise wage above inflation Jerry: Real-estate speculator GainMoney borrowed is repaid with dollars having lower purchasing power Elmer: Retiree HurtPurchasing power of fixed-income savings decreases Mr. Sad Class: School teacher HurtWages are not keeping up with inflation Lucy: High school senior HurtSaved dollars have less purchasing power Bernie: Bank President HurtBank loans paid back with inflated dollars, which buy less Helga: Retiree HurtSaved dollars have less purchasing power Jerome: Potential home buyer UncertainWill gain if real interest rate falls. Will be hurt if real interest rate rises Lawrence: British business owner GainSigned contract locked in lower price