Read the Story from Time Magazine about Jani the Giraffe (you can skim read the second half). Think about the following questions:
1. What was the previous price of the toy giraffe, what is the new price?
2. Identify 5 causes of inflation from the article?
3. Identify 5 consequences to society of inflation?
Fig 1: Fred CPI data 12 month rolling:
- Distinguish between inflation, disinflation and deflation.
- Explain how inflation and deflation are typically measured by calculating a consumer price index (CPI).
- Explain how different income earners may experience a different rate of inflation when their pattern of consumption is not accurately reflected by the CPI.
- Explain how inflation figures may not accurately reflect changes in consumption patterns and the quality of the products purchased.
- Explain how economists measure a core/underlying rate of inflation.
- Explain how a producer price index measuring changes in the prices of factors of production may be useful in predicting future inflation.
- HL Only Construct a weighted price index, using a set of data.
- HL Only Calculate the inflation rate from a set of data.
- Discuss the possible consequences of a high inflation rate.
- Discuss the possible consequences of deflation.
- Explain demand-pull inflation.
- Explain cost-push inflation.
- Evaluate government policies to deal with the different types of inflation.