DO NOW:What are some products that you buy? Think back over the last few years, have the prices of those goods (and services)

remained constant? Have they gone down? Have they gone up?

Make a list of products that now cost you more money.

What is Inflation?Inflation is an increase in the

general level of prices.Inflation reduces the “purchasing power” of money

Examples: • It takes $2 to buy what $1

bought in 1982• It takes $6 to buy what $1

bought in 1961•When inflation occurs, each dollar of income will buy fewer goods than before.

What causes inflation?http://www.youtube.com/watch?v=WZ_OyroIQc0

As you watch this short clip, try to ID all possible causes of inflation.

Historic Inflation Rates

INFLATIONCountry and Year:Zimbabwe, 2008Annual Inflation

Rate:79,600,000,000%Time for Prices to

Double:24.7 hours

How does hyperinflation affect the economy?

When does inflation become a concern?

Inflation and College Costs

Why is the cost of college so high?Why is it rising twice the rate of inflation?

http://www.fox11online.com/dpp/news/local/on_assignment/cost-of-college-far-outpaces-inflation

Public two-year (in-state)

Public four-year (in-state)

Private four-year

Tuition & fees $3,131 $8,655 $29,056

Room, board, books, etc. $12,453 $13,606 $14,233

Total cost $15,584 $22,261 $43,289

Net price (after scholarships, grants, aid)

$4,350 $5,750 $15,680

The average cost of college: 2012-13Source: The College Board's Trends in College Pricing 2012 and Trends in Student Aid 2012 reports.

Turn ‘n Talk with your partner and then answer on a sheet of paper:

• Why are the cost of college and the price of textbooks rising significantly faster than inflation?

• Are the current inflated prices of college and college textbooks worth the enormous cost?

• How would you reduce the cost of college and college textbooks? Propose at least 3 ways to reduce these costs.