Borrowers with loans (mortgages, auto loans) based on fixed interest rates? Those who earn income with cost-of-living adjustments (COLAs)? Those with fixed payments? The federal government, as the largest borrower? Who loses: Lenders (banks) of loans with fixed interest rates? Those with savings accounts or other interest-earning accounts with fixed interest rates? Those with fixed incomes? 4. Divide the class into groups of four or five and hand out Activity 2-3 to each group. [15 minutes] Students are instructed to collaborate on determining who gains, who is hurt, and uncertain on the various scenarios and offer explanations. Monitor progress and collaboration. CLOSURE Review the answers to Activity 2-3 by asking each group a set of questions. Provide clarification if necessary. [10 minutes] OPTIONAL EXTENSION SUGGESTION/HOME LEARNING Have students research the 1979 Energy Crisis with a focus on the gasoline prices and have them explain the affect of the inflation on the American economy and American consumer. Sources/Bibliographic Information that contributed to this lesson: Ray, Margaret. Advanced Placement Economics: Macroeconomics: Teacher Resource Manual, 4th Edition. National Council for Economic Education, 2012. Who Is Hurt and Who Is Helped by Unanticipated Inflation? In Questions 1 through 15 decide which people or groups are hurt by unanticipated inflation and which benefit from unanticipated inflation. Circle the correct response, and explain why you answered as you did. H means the person or group is hurtby unanticipated inflation. G means the person or group gains from unanticipated inflation. U means it is uncertain if the person or group is affected by unanticipated inflation or if the effects are unclear. Banks extend many fixed-rate loans. H G U Explain: A farmer buys machinery with a fixed-rate loan to be repaid over a 10-year period. H G U Explain:
Borrowers with loans (mortgages, auto loans) based on fixed interest rates? Those who earn income with cost-of-living adjustments (COLAs)? Those with fixed payments? The federal government, as the largest borrower? Who loses: Lenders (banks) of loans with fixed interest rates? Those with savings accounts or other interest-earning accounts with fixed interest rates? Those with fixed incomes? 4. Divide the class into groups of four or five and hand out Activity 2-3 to each group. [15 minutes] Students are instructed to collaborate on determining who gains, who is hurt, and uncertain on the various scenarios and offer explanations. Monitor progress and collaboration. CLOSURE Review the answers to Activity 2-3 by asking each group a set of questions. Provide clarification if necessary. [10 minutes] OPTIONAL EXTENSION SUGGESTION/HOME LEARNING Have students research the 1979 Energy Crisis with a focus on the gasoline prices and have them explain the affect of the inflation on the American economy and American consumer. Sources/Bibliographic Information that contributed to this lesson: Ray, Margaret. Advanced Placement Economics: Macroeconomics: Teacher Resource Manual, 4th Edition. National Council for Economic Education, 2012. Who Is Hurt and Who Is Helped by Unanticipated Inflation? In Questions 1 through 15 decide which people or groups are hurt by unanticipated inflation and which benefit from unanticipated inflation. Circle the correct response, and explain why you answered as you did. H means the person or group is hurtby unanticipated inflation. G means the person or group gains from unanticipated inflation. U means it is uncertain if the person or group is affected by unanticipated inflation or if the effects are unclear. Banks extend many fixed-rate loans. H G U Explain: A farmer buys machinery with a fixed-rate loan to be repaid over a 10-year period. H G U Explain:
Grade%2011%20Lesson%207%20Inflation.docx