Inflation offers a great opportunity for students to explore percent change over time and compare relative prices over time. Exploring the cost of DVD players and computers offers a nice combination of looking at how much is costs to produce things and how that changes over time and how the price of the item reflects those changes (VCRs are interesting too, but who knows if students will know what those are!). Younger students can look for patterns and trends while older students can explore if the growth is linear or not and compare the various tools that are used to measure inflation.
Highlighted Example: Burger Inflation
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Many people are often more than happy to point out how much cheaper things were when they were a kid. My husband remembers a fast-food chain advertising campaign in Philadelphia from around 1970 that said, “Burger, fries, and a drink, and change for your dollar!” A burger alone was 29 cents.
Nowadays in Philadelphia a burger, small fries, and a small drink from the same fast-food chain will cost you $2.89, and a burger alone is 89 cents. That sure seems more expensive! But if you take inflation into account, is this actually more expensive than it used to be?
“Inflation,” when we talk about money, is the rise in the general level of prices. This accounts for the fact that $1 doesn’t buy as much as it used to. At the same time, we might have more dollars than we used to. This doesn’t necessarily mean that we’re worse off, but it’s information that economists use to figure out how we’re doing in terms of our ability to buy goods and services.
For example, here is what $1 in 1970 would be “worth” for some different years:
1970 $1.00 1980 $2.12 1990 $3.37 2000 $4.44