INFLATION

LENGUA INGLESA 5 2023

WHAT IS INFLATION?

ANYTHING generally accepted in payment for goods & services IS money

WHAT IS MONEY?

01

If it performs the functions of money, then it is money.

Do you know what else has been used as money throughout history?

• measure of value

Values are expressed in money prices.

• store of value

It's a way to store wealth over time.

• medium of exchange

It's accepted in buying & selling (reduces transactions cost)

02

Functions of money

LET'S BID!

+ info

THIS ACTIVITY WILL INTRODUCE YOU TO THE CONCEPT OF INFLATION.

AUCTION

What you just witnessed...is called INFLATION.

i. Why did the prices go up? ii. Who bid the prices up? iii. Why were you willing to pay more?

Let's figure this out!

1. How did you feel during the auction as prices increased? 2. Did you notice any trends in how the prices of items changed over the course of the auction? How does this relate to the concept of inflation in the real world? 3. How did the increasing prices during the auction affect your decisions about which items to bid on and how much to bid? Can you draw parallels between this decision-making process and how consumers might adjust their spending habits in response to inflation? 4. In what ways did competition among bidders influence the final prices of the items? How might competition among consumers impact prices in markets affected by inflation? 5. Reflecting on the auction, do you think there were any winners or losers in terms of purchasing power? How might inflation affect different groups of people within a society differently? 6. What role do you think inflation expectations play in shaping economic decisions, both during the auction and in real life? How might changes in inflation expectations influence consumer behavior and market dynamics? 7. Can you identify any risks or challenges associated with high or unpredictable inflation? How might individuals and businesses mitigate these risks in their financial planning and decision-making?

Discussion

It's a general increase in the price level of goods and services.

a. Inflation is different from changes in relative prices. b. The most commonly used measure of inflation is the Consumer Price Index, (or CPI). The GDP Deflator is another important measure of inflation. Changes in these price indices indicate changes in the purchasing power of the U.S. dollar. c. Unanticipated inflation alters the normal signals buyers and sellers receive from prices,changing their behavior in markets. i. Inflation encourages more debt and faster spending as buyers and sellers try to avoid rising prices.ii. Inflation creates uncertainty and makes future planning more difficult.

INFLATION

03

GET TO WORK!

Get together in groups of 3, choose an English-speaking country and search for its CPI during the last 4 years. What conclusion can you draw from the results? Share the results with the rest of the class.

SPEAK UP!

What did you learn about the CPI and its importance in measuring inflation? How does the CPI data you researched relate to your own experiences as consumers? What are some potential consequences of changes in the CPI for individuals, businesses, and the economy as a whole? How might policymakers use CPI data to inform economic decisions and monetary policies? In what ways can consumers use CPI information to make informed financial choices and plan for the future?

FINAL REFLECTION

Read this webpage on inflation, read the text until George’s questions and answer them. Then, try to answer the review questions.

FURTHER READING

economic measures

Thank you!