- Distinguish between inflation, disinflation and deflation.
- Explain that inflation and deflation are typically measured by calculating a consumer price index (CPI), which measures the change in prices of a basket of goods and services consumed by the average household.
- Explain that different income earners may experience a different rate of inflation when their pattern of consumption is not accurately reflected by the CPI.
- Explain that inflation figures may not accurately reflect changes in consumption patterns and the quality of the products purchased.
- Explain that economists measure a core/underlying rate of inflation to eliminate the effect of sudden swings in the prices of food and oil, for example.
- Explain that a producer price index measuring changes in the prices of factors of production may be useful in predicting future inflation.
Hungary has actually suffered a higher rate of inflation than that.... in July 1946 the rate of inflation was Jul. 1946, 41.9 quadrillion percent! See here for more details. Current inflation details for Hungary can be found here.
The US Inflation calculator can be found here... how much would it cost you in 2014 to buy something that was priced at $20 in the year you were born and what is the cumulative inflation rate?
Define the following terms and also construct a graph to show these events over time:
Click on the link Measuring Inflation to access worksheet with tasks