OVERVIEW: WEEK OF OCTOBER 14th
Topic
This week, as we move into the topic of inflation, it is important to remember that inflation in the United States has been rather modest and uneventful...............of course, until it isn't, like it had recently as a result of supply chain issues and pent-up demand resulting from the pandemic. Of course, Putin declaring war on Ukraine and the upheaval between Israel and Hamas hasn't helped issues either.
Inflation involves the increase in the average level of prices throughout the economy, rather than solely focusing on one or a few goods or services. While inflation has been historically and relatively mild in the United States and in other industrialized countries, the same cannot be said for many others, usually less developed countries or those that go through much political upheaval. In the worst of cases, hyperinflation may be more common at times which sometimes leads to the collapse of their economies.
Keep in mind that inflation is not a bad thing, it's a fact of life. Inflation is only bad when its growth exceeds the rate of growth of society's income, making things more expensive. The fact is that countries want to experience some inflation because it signals economic activity. In other words, households, firms and governments are consuming (demanding) goods and services and thus pushing prices up. So long as the increase in prices happens at a moderate rate (keeps up with incomes) then there's no problem. But if it doesn't, then it needs to be addressed. But remember, over time as demand may rise, supply may be rising too, for many reasons. An increase in supply may mitigate the higher demand that could bring higher prices.
Lastly, over the last several years, since the great recession of 2008, the United States and many countries throughout the world have been experiencing very mild inflation. There are many reasons for this, but no one conclusive reason. Global leaders have actually struggled to lift demand despite the fact that there are many reasons why inflation rates should be higher.
However.......today, due to the global economy bouncing back with fierce demand and low supply from the Covid pandemic, as well as from Putin's invasion of Ukraine disrupting the global energy market, we have been witnessing inflation not seen for decades in the United States.
Objectives
By the end of this week, you will be able to:
- Define inflation/deflation.
- Distinguish between cost-push and demand-pull inflation.
- Define hyperinflation.
- Compute inflation using the Consumer Price Index (CPI)
- Articulate the reasons for inflation.
- Student will be able to articulate the current level of inflation in the United States and over the last several years.
Weekly Schedule
| Due date | Activity |
|---|---|
|
Read textbook Chapter 9: The Price Level & Inflation |
|
| Refer to Schedule | Assignment: Relevant Study Guide Questions |
|
Sunday, 10/20 |
Quiz #7 |