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Unit 16 Inflation and Unemployment

Unit 16 Inflation and Unemployment

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Study the slideshow and take the quiz

Understanding Inflation: Changes in Purchasing Power

"Inflation is taxation without legislation." -- Milton Friedman

Why does your monthly rent today cost just as much as the down payment your grandparent's put on their home 70 years ago? The answer is inflation. Economics Professor Robert Lawson explains how inflation is essentially the change in the purchasing power of your money (i.e. how many tacos can you buy with, say, $20 today as compared to a decade ago). When inflation occurs, you're able to buy fewer goods and services with the same amount of money. And when inflation really picks up, it can have catastrophic economic consequences. Watch Professor Lawson to learn more!

Russia - Inflation

Inflation inches up in February

March 3, 2014

In February, consumer prices rose 0.7% ove​r the previous month, which was up from the 0.6% rise recorded in January. The pick-up mainly stemmed from higher prices for food and non-alcoholic beverages as well as for alcoholic beverages and tobacco. Annual headline inflation inched up from 6.1% in January to 6.2% in February, which is still above the Central Banks 5.0% target for 2014. 

The core consumer price index, which excludes short-term price changes that are influenced by administrative and seasonal factors, rose 0.5% in February, which was a notch above the 0.4% increase in January. Annual core inflation inched up from 5.5% in January to 5.6% in February.

FocusEconomics Consensus Forecast panelists see inflation ending 2014 at 5.0%, which is unchanged from last month’s forecast. In 2015, participants expect inflation to inch up to 5.2%.



1) Take the quiz.

2) Watch the video and answer the questions (in writing):


- What causes inflation? 

- Who has a problem with inflation?

- Does inflation influence long-term loans?

- Can economy deal with inflation? How? 

- Can too much inflation destroy the wealth of the nation? What country is given as an example? 


3) Comment on the graph on inflation in Russia and the current level of inflation in our country (in writing). 


What does it actually mean to be "unemployed"?

Types of Unemployment

There are several different types of unemployment, of varying duration and severity (in terms of implications for the economy). This video goes through the types, and addresses why the Macroeconomic goal is "Low Unemployment," rather than "Zero Unemployment."