Title: 2.4. Price Indices and Inflation Activities, Whiteboard, PPTs TEACHER ONLY
Course: AP Macro Unit 2 Economic Indicators and Business Cycle 12-17% Sample Syllabus > Section: Section 2.4: Prices Indices and Inflation

Teaching About Money and Inflation Using a Classroom Inflation Auction

This simple activity demonstrates a key economic idea: When the money supply in an economy increases, the prices of goods and services tend to rise. Students participate in two auctions: The goods in each auction are identical, but the money supply given to students increases from the first to the second auction. The activity results in higher prices when the money supply is greater. Students learn that if the money supply grows at a faster rate than the economy’s ability to produce goods and services, inflation will result. This is inflation caused by “too much money chasing too few goods.”

Lesson Author: Scott Wolla, Ph.D., Federal Reserve Bank of St. Louis

Ages: 12 to adult

Compelling Question: How are the money supply and inflation related?

Time Required: 20 minutes

https://www.stlouisfed.org/education/classroom-inflation-auction

Market Basket

Students will compare the price of goods from one time period to another and through discussion and role play interpret the effects of inflation on consumers. They will categorize goods and services according to the eight major groups of the consumer price index and be able to determine the difference between the Consumer Price Index (CPI) and the core CPI.

Market Basket Lesson (pdf) to accompany SMART/ActivInspire

Whiteboard (SMART/notebook)

Whiteboard (ActivInspire/flipchart)

Lesson (pdf) to accompany PowerPoint

PowerPoint (pptx)

https://www.stlouisfed.org/education/market-basket