Lesson #17:

During this class students will explore the concept of inflation. Inflation is a key factor which is responsible for altering the money supply and, therefore, driving the economic cycle. Inflation is a term used to describe a general increase in the price of goods and services. Such an increase in prices will have the effect of decreasing the value of a country's currency.

• Consumer Price Index (C.P.I.)
• purchasing power
• base year
• adjusted value

In addition, students will come to understand the various causes of inflation, including:

• expectations
• printing
• government spending
• general decrease in supply
• general increase in demand

Finally, students will come to understand the various ways in which inflation effects society, including its effects on:

• income
• savings, and
• borrowing

Instructional Method and Evaluation:

Students will take notes on the above topics and participate in socratic discussion. Afterwards, students will complete an Excel Spreadsheet which will calculate various C.P.I. figures. A particular focus will be directed towards the conversion of current dollars into their base-year values.

Resources:

Text Reference:
• Chapter #12, pages 252 - 257

Handouts:
• The Consumer Price Index
• The Consumer Price Index Worksheet
• Exploring the Three Values of a Dollar
• Bank of Canada Backgrounder: Inflation

Relevant web sites:
• Bank of Canada Backgrounder: Consumer Price Index
• The Consumer Price Index - Presented by Statistics Canada
• Online Inflation Calculator (American)