1. Bell Ringer
What is something that you can remember being a lot less expensive when you were a kid?
1982
2014

2. A general upward movement in prices
What is inflation?
A general upward movement in prices

3. What causes inflation?
The money supply increases more than the output and value of goods and services

4. How?
The federal government prints too much money 4

5. The central bank of the U.S.
Who prints the money?
The Federal Reserve
(a.k.a., The Fed)
What’s the Fed?
The central bank of the U.S.

6. What is the recent history of inflation?
1946 to % annually
1948 to % annually
1969 to prices doubled
Currently

7. How did the inflation of the 1970’s effect society?
Fast food restaurants
Two income families
Change in family styles

8. Why is inflation called an arbitrary tax?
Because it lessens people’s disposable income randomly

9. What is the consumer price index (CPI)?
A measure of the cost of a fixed “market basket” of consumer goods and services

10. Does this “fixed basket” change?
As people’s tastes and preferences change, what goes into the basket will change

11. If inflation is 10% and you get a 7% raise, what has happened to your money income? Real income?
Your money income has increased by 7% but your real income has decreased by 3%

12. Is there anything wrong with a slow and steady rate of inflation?
No, especially when the inflation rate is anticipated.
It can raise prices (which encourages growth) and boost wages (which increases productivity).

13. What is hyperinflation?
“Out of control” inflation; usually %

14. What is an example of hyperinflation?
In 1923, the German mark inflated from 2,000 to the dollar to 4.2 trillion to the dollar

15. What is an example of hyperinflation?
In 2008, the yearly inflation rate in Zimbabwe reached over 10 million percent. 15