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Warm Up
Everything You Need To Know
About Inflation…
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Write your name at the very top
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Write down the description for each turn
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Then, before we move on, STOP, DROP,
and DRAW a visual representation/
symbol for each turn!!!
Inflation
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A gradual increase in prices over time.
The U.S. economy hopes to maintain an
annual increase in inflation at 3-4%
annually.
Creeping Inflation
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Inflation at 2-3%...the U.S. has come to
expect at least this much inflation every
year.
Deflation
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Although prices increase gradually over
time, there are times when prices can fall
and decrease. For example, there was a
period of deflation when prices fell over
50% during the height of the Great
Depression.
Unanticipated Inflation
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Inflation at a rate which was greater than
the rate expected for that period of time.
*Creditors & individuals that live on Fixed
Income=losers!!!
*Debtors=winners!!!
Anticipated Inflation
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Inflation at a rate equal to the rate
expected in that period. When inflation is
fully anticipated, there are no winners and
losers.
“COLA” (cost of living adjustment)
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Most wage earners protect themselves by
having a clause in their contract where
inflation must be taken into account. If
there is higher inflation, then their income
must increase accordingly.
Hyperinflation
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A very rapid rise in the price level. Prices
are rising way to fast.
Stagflation
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Inflation coupled with stagnate growth
(low GDP).
Nominal Value
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The value of a good or service before
inflation is taken into consideration
Real Value
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The value of a good or service after
inflation is taken into account.