Warm-up:
What is inflation?
Can you formulate a general rule concerning who gains and who loses from unexpected inflation?
How would inflation affect the following people (help, hurt, neither)?
1. A widow who lives on savings that carry a fixed rate of interest.
2. A family that bought a house and has a fixed rate interest mortgage.
3. Workers who have a cost-of-lving clause in their labor contract that raises wages in accord with any increase in the Consumer Price Index.
4. A grounds maintenance company that earlier signed a 10 year contract to work for fixed amount per year.
Can you formulate a general rule concerning who gains and who loses from unexpected inflation?
How would inflation affect the following people (help, hurt, neither)?
1. A widow who lives on savings that carry a fixed rate of interest.
2. A family that bought a house and has a fixed rate interest mortgage.
3. Workers who have a cost-of-lving clause in their labor contract that raises wages in accord with any increase in the Consumer Price Index.
4. A grounds maintenance company that earlier signed a 10 year contract to work for fixed amount per year.
Objective:
SWBAT explain how Gross Domestic Product and Consumer Price Index measure the performance of the American economy.