1. Life With Inflation To identify who is hurt and helped by inflation

2. Inflation  General increase in the price level of goods

3. Inflation  General increase in the price level of goods  However, this is an estimate, as some goods could actually decrease, but others rise

5. Consumer Price Index (CPI)  Tool for measuring inflation

6. Consumer Price Index (CPI)  Tool for measuring inflation  Survey 21,000 stores then compare them to a base year

7. Consumer Price Index (CPI)  Tool for measuring inflation  Survey 21,000 stores then compare them to a base year  The base year is given an index value of 100 and the this year is totaled and compared

8. Consumer Price Index (CPI)  Tool for measuring inflation  Survey 21,000 stores then compare them to a base year  The base year is given an index value of 100 and the this year is totaled and compared  If this year receives a 115, then inflation is 15%

9. Types of Inflation  Demand-Pull Inflation – there is a shortage of goods (high demand)

10. Types of Inflation  Demand-Pull Inflation – there is a shortage of goods (high demand)  This is a good sign that the economy is doing well

11. Types of Inflation  Demand-Pull Inflation – there is a shortage of goods (high demand)  This is a good sign that the economy is doing well  Often times, this inflation is found in times of war

12. Types of Inflation  Demand-Pull Inflation – there is a shortage of goods (high demand)  This is a good sign that the economy is doing well  Often times, this inflation is found in times of war  Cost-Push Inflation – prices go up b/c of an increase in the costs of production

13. Who Wins? Who Loses?

14.  Hurt:

15. Who Wins? Who Loses?  Hurt:  Those with a fixed income

16. Who Wins? Who Loses?  Hurt:  Those with a fixed income  Creditors, or those who have loaned money

17. Who Wins? Who Loses?  Hurt:  Those with a fixed income  Creditors, or those who have loaned money  When repaid a loan, their $ buys less

18. Who Wins? Who Loses?  Hurt:  Those with a fixed income  Creditors, or those who have loaned money  When repaid a loan, their $ buys less  Business activity

19. Who Wins? Who Loses?  Hurt:  Those with a fixed income  Creditors, or those who have loaned money  When repaid a loan, their $ buys less  Business activity  People may buy less

20. Who Wins? Who Loses?  Hurt:  Those with a fixed income  Creditors, or those who have loaned money  When repaid a loan, their $ buys less  Business activity  People may buy less  If inflation goes up, so do interest rates, meaning businesses will take out fewer loans

21. Who Wins? Who Loses?  Helped:

22. Who Wins? Who Loses?  Helped:  Debtors, people who have borrowed money

23. Who Wins? Who Loses?  Helped:  Debtors, people who have borrowed money  Higher inflation means higher wages which means that they can pay off previous loans easier