Warm Up. Everything You Need To Know About Inflation… Write your name at the very top Write down the description for each turn Then, before we move on,

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Presentation transcript:

Warm Up

Everything You Need To Know About Inflation… Write your name at the very top Write down the description for each turn Then, before we move on, STOP, DROP, and DRAW a visual representation/ symbol for each turn!!!

Inflation A gradual increase in prices over time. The U.S. economy hopes to maintain an annual increase in inflation at 3-4% annually.

Creeping Inflation Inflation at 2-3%...the U.S. has come to expect at least this much inflation every year.

Deflation Although prices increase gradually over time, there are times when prices can fall and decrease. For example, there was a period of deflation when prices fell over 50% during the height of the Great Depression.

Unanticipated Inflation Inflation at a rate which was greater than the rate expected for that period of time. *Creditors & individuals that live on Fixed Income=losers!!! *Debtors=winners!!!

Anticipated Inflation Inflation at a rate equal to the rate expected in that period. When inflation is fully anticipated, there are no winners and losers.

“COLA” (cost of living adjustment) Most wage earners protect themselves by having a clause in their contract where inflation must be taken into account. If there is higher inflation, then their income must increase accordingly.

Hyperinflation A very rapid rise in the price level. Prices are rising way to fast.

Stagflation Inflation coupled with stagnate growth (low GDP).

Nominal Value The value of a good or service before inflation is taken into consideration

Real Value The value of a good or service after inflation is taken into account.