INFLATION MADE EASY

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INFLATION MADE EASY

• POWERPOINT PRESENTATION

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Inflation A Lesson Plan

• By Paul C. Lohr
• ED 639
• Dr. Helms
• October 23, 2002

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Rationale

• Social Studies topic of Economics.
• Lesson plan adheres to Ohio Content Standards
  2002 draft requirements for 11th grade students.
• In depth study and working knowledge of U.S.
  Government and Economy.

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Objective

• The students will understand the role of money as
  a medium of exchange.
• The students will understand how the quantity of
  money in circulation impacts the general price
  level.

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Assessment

• Students will demonstrate understanding of the
  concept with
• In class discussion.
• In class essay worksheet.
• Essay homework assignment.
• Small group economic model story problems.
• 90 of students correct (goal _at_ 100).

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Class Exercises

• 1. Money, Gold Barter Demo
• 2. Elephant 1.00 Demo
• 3. Elephant 2.00 Demo
• 4. 1st CD Shopping Exercise
• 5. 2nd CD Shopping Exercise

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ECONOMICS TODAY

• Inflation and You!
• The Role of Money

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Rising Prices Inflation
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Why Use Money?

• Barter .(Trade Things)
• Precious Metals .(Gold)
• Fiat Money.(Currency)

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Barter, Gold, Money

• Need 3 Volunteers
• 1 come on up get this cash
• 2 come on up get this bag of gold
• 3 come on up bring your chair

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Money

• How does it work?
• Do others accept cash all the time?
• For everything?
• How do you know value or price of a product?

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Gold (Precious Metals)

• Does everyone accept it all the time?
• For Everything?
• Is it easy to carry around with you?

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Barter

• Trading stuff for other stuff
• That chair you have!
• Will everyone accept it for other stuff?
• How easy is it to carry around?
• What is the value?

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Science Experiment

• Lab Experiment
• Mix two ingredients in a test tube
• Money
• Product
• Cook up some inflation

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Spending Habits

• Law of gravity
• Predictable
• Absolute
• Law of consumption
• MPC
• Marginal Propensity to Consume
• People spend 97 of money available

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Economic Stew

• Recipe
• Add 1 to test tube
• Add 1 elephant to test tube
• Stir and heat
• This is a mini-economy mixture
• Pour into pie plate
• Sample to taste

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Our Entire Economy

• Produces one elephant
• Has one dollar in circulation
• What is the price of the elephant?
• Hint
• All the money always gets spent
• Nothing to buy except the one elephant..

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Price of the Elephant is
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Now We Create Inflation

• Take test tube
• Add one elephant
• Add 2
• Stir heat
• Pour into pie plate
• Sample to taste

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Price of the Elephant is.
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More Dollars Chasing Fewer Goods Monetary
Inflation
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Lets Go Shopping.

• Lets see how this works in real life.
• Shopping for your favorite music CD
• And see inflation happenright before your eyes!

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1st Shopping Exercise

• 1000 distributed among students
• 20 Music CDs to buy
• Average CD price 50

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2nd Shopping Exercise

• 2000 distributed among students
• 20 Music CDs to buy
• Average CD price 100

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Class Discussion

• Results of shopping?
• What happened to CD prices?
• Why?
• If only 500 used for 2nd shopping
• What would average CD price be?
• Why?

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Website References

• http//www.frbsf.org
• http//www.cnie.org/nle/info-14html
• http//www.axiomatic.net/ragnar/pdf/chart.pdf
• http//www.econlit.org/elsube.html
• http//www.karlshell.com/course.html
• http//www.clev.frb.org/Research/review98/madison.
  pdf

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End of PowerPoint Presentation