The Economic Goal of Price Stability
Simulate a consumer's experience when dealing with unstable prices.
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Video Q&A
0-15 min
What Is Inflation?
OVERVIEW
Have you ever been shopping and noticed that the prices of a range of things you buy have gone up? If the same things in your shopping basket cost $100 last year and now they cost $105, at a very basic level, that’s “inflation.” In this video assignment, students will learn what is and what is not inflation.
What is inflation? In life, you buy things all the time. You probably notice that gradually the cost of items tends to increase. This is known as inflation, but what exactly does inflation mean? We've all gone to the store and seen a price rise like with these oranges. So is that alone a sign of inflation? Well, it depends. Let's look at another example with these lemons. Prices can go up or down for many reasons. For instance, lemons may go up in cost because of a freeze that reduces supply. But this type of increase is just temporary. Once growing conditions return to normal, the price goes back down to its previous level showing this was not inflation. Inflation occurs when not just in one category, but across the entire economy, prices of many goods and services trend upwards over time. So now you know, but should you care, absolutely catch our next episode to see why.
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More in This Series
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Why Should You Care About Inflation?
Explain how inflation affects consumers' incomes, spending, and wages.
VIDEO Q&A
0-15 MIN
Why Does the Fed Care about Inflation?
Explain what happens when inflation gets out of control.
VIDEO Q&A
0-15 MIN
Disinflation, Explained!
Explain disinflation and how it differs from deflation.
VIDEO Q&A
0-15 MIN
Shrinkflation, Explained!
Introduce the term "shrinkflation".
VIDEO Q&A
0-15 MIN
Stagflation, Explained!
Introduce the term "stagflation".
VIDEO Q&A
0-15 MIN
Hyperinflation, Explained!
Introudce the term "hyperinflation"
VIDEO Q&A
0-15 MIN
Deflation, Explained!
Introduce the term "deflation".
