By: Emily Young Hunter Carlen Shea Eichensehr

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Presentation transcript:

By: Emily Young Hunter Carlen Shea Eichensehr Inflation By: Emily Young Hunter Carlen Shea Eichensehr

What do you think inflation means? apply it to your own life

What is inflation? Inflation- is a rise in the general level of prices. ~High rates of inflations makes it harder on families to pay bills and business activities decreases. ~Interest rates on loans can increase, which discourages borrowing and spending by business. ~Goods and services prices increase. ~Inflation is a negative for the economy and can cause panic.

Causes and Effects Causes: Main cause of Inflation: when the level of currency of a country exceeds the level of production Causes: rapid wage increase (bonuses and minimum wage increase) rising material costs rising import prices higher taxes declining productivity printing more money rising home prices

Causes and Effects Cont. value of money reduces stock market crashes cost of doing business cost of living economic recession unemployment rises

Inflation Example If the inflation rate is 4%, then gum will increase from one dollar to $1.04.

Wage-PRice Spiral Theory that suggests that rising wages raises disposable income (money after taxes) causing a rise in demand for supply, causing prices to raise.

Hyperinflation Out of control inflation. Defined when prices raise 50 cents per month or more.

Purchasing Power is the number of goods or services that can be purchased with a unit of currency.

Consumer Price Index A measure (index) of charges in the average price of consumer goods and services.

Consumer Price Index What does it measure? -Average change in the prices paid of goods and services and is divided into eight major groups: Food and Beverages Housing Apparel Transportation Medical Care Recreation Education and communication Other

Inflation video http://www.investopedia.com/video/play/what-is-inflation/

open inflation The rate where which the prices of consumer goods rise consistently.

stagflation & reflation combination of inflation slow economic growth and high unemployment worst kind of inflation an attempt to raise the general level of prices to counteract deflationary pressures

Suppressed inflation Existing inflation disguised by government price controls or other interferences in the economy such as subsidies.

galloping inflation very rapid almost impossible to reduce

creeping inflation where the inflation of a nation increases gradually, but continually, over time.

Matching Game http://www.superteachertools.us/speedmatch/speedmatch.php?gam efile=7173

Case Study 2008 Global Recession: -New inflation policies were made. -U.S. Federal Reserve kept interest rates at nearly zero to promote lending.

Cites http://www.investopedia.com/terms/w/wage-price-spiral.asp http://www.investopedia.com/terms/h/hyperinflation.asp http://www.investopedia.com/terms/i/inflation.asp