Download Rome and Inflation Economic

NAME DATE Economics of History Activity
CLASS netw rks
Roman Civilization
Lesson 2 Rome’s Decline
Inflation and the Fall of
the Roman Empire
Background Information
In economics, inflation happens when prices rise, or inflate, while the value of money goes down. As a result, people need more money to buy the same amount of goods. During the third century, the Roman Empire experienced inflation. It was a factor that led to Rome’s decline and fall. The Roman Empire depended on its army to survive. The army conquered different regions and took control of them. The army protected them from invaders. To do these things, the army needed large amounts of money. Money was needed to pay for soldiers’ salaries and military equipment, such as armor. As the empire continued to expand, even more money was needed for the army. This drained Rome’s budget.
To understand how the empire tried to solve this problem, one must first learn about how Rome created its coins. Some Roman coins were made of gold, and others were made of silver. The value of coins was based on the amount of precious metals found in them.
Roman emperors ordered more coins to be made so they could pay for the army’s needs. This was very costly, so the emperors allowed the new coins to be made using smaller amounts of precious metals.
For example, around A.D. 54, one type of coin contained about 90 percent silver. By A.D. 270, there was only 0.02 percent of actual silver in the same kind of coin. With less precious metal in the coins, their buying power was far less.
As the value of Roman coins decreased, prices rose. As a result, Rome could no longer afford to support its large army. The size of the army was reduced. This left parts of Rome’s borders unprotected and open to attacks from groups living outside the empire.
Copyright by The McGraw-Hill Companies.
tr: B. Wilson/Ancient Art & Architecture Collection, c: Erich Lessing/Art Resource, NY, b: The Newark Museum/Art Resource, NY
NAME DATE Economics of History Activity Cont.
CLASS netw rks
Roman Civilization
Directions Answer the following questions.
1. Finding the Main Idea Why did the Roman Empire need
its army to survive?
2. Identifying Why did Roman emperors order more coins to
be made?
Critical Thinking
3. Analyzing Why did the value of Roman coins decrease
over time?
4. Identifying Cause and Effect How did inflation affect the
fall of Rome?
Copyright by The McGraw-Hill Companies.