Inflation, the What and Why
Student Activity Sheet
PART 1: Bellringer
Item 1
Item 2
Item 3
Round 1: Your Bid
Round 2: Your Bid
If the items didn’t change, why were the bids so much higher in the second round?
PART 2: Learn
Imagine 3 more dollars wash ashore. Do you think the islanders are richer?
Imagine 3 mangos wash ashore. Do you think the islanders are richer?
Higher prices mean money is worth ____ (more/less)
Lower prices mean money is worth ____ (more/less)
RETRIEVAL PRACTICE
What do you recall about fiat money from the previous two lectures? What is it and how does it differ from other types of money?
Video Pause at 1:00
How do you think Mugabe will get the money to pay people?
Video Pause at 1:20
What do you think will happen as a result of Mugabe printing money?
PART 3: Practice
Fill in the table. Guess the rank of the countries in terms of average annual inflation rate based on their rank in terms of their growth rate of money supply (minus the growth rate of real GDP).
Rank of the Money Growth rate
Rank of the Inflation Growth Rate
Argentina
1
Indonesia
3
Poland
2
US
4
PART 4: Exit Ticket
If everyone in the class got an A, would A’s be worth more or less? How does this relate to inflation?
Summative Assessment Questions
Which of the following is an example of inflation?
The price of an iPhone rises as demand increases.
The price of a TV remains constant as quality improves.
The average price of a laptop decreases as the money supply increases.
The average price of groceries increases following an increase in the money supply.
Which of the following is TRUE about inflation?
All price increases are instances of inflation.
Inflation happens when the money supply shrinks unexpectedly.
Inflation in the long run typically follows periods of expansion in the money supply.
Rapid inflation occurs when the Federal Reserve does not create money.
Which of the following is true about hyperinflation?
Hyperinflation harms the richest members of a country the most.
If anticipated, hyperinflation doesn’t have a detrimental effect on economic activity.
Hyperinflation boosts the value of long term savings.
Hyperinflation decreases the purchasing power of money.
