Students examine the long term effects of inflation. They compute the increase in cost price due to compounding of inflation rates every year. They recognize that this increase in cost price is exponential.

Before the Activity

See the attached PDF file for detailed instructions for this activity

Print pages 9 - 20 from the attached PDF file for your class

During the Activity

Distribute the pages to the class.
Follow the activity procedures:

Use the calculator to multiply the current cost price by the inflationary factor to get the increased cost price after one year

Determine the increased cost price for each additional year [compounding inflation]

Record the data in a table

Determine the number of years it takes for the cost to double due to inflation

Enter the data as a list

Set up a scatter plot of the increased cost price as a function of the number of years of inflation

Observe that the graph rises from left to right and indicates that as the number of years increases, the cost price also increases

Repeat the activity for another inflationary rate and compare the effects of the two rates of inflation

Find the approximate number of years it takes for an item to double in cost at various inflation rates

After the Activity

Students complete the data sheet and answer questions.

Review student results

As a class, discuss questions that appeared to be more challenging