Education Technology

The Shrinking Dollar

Published on 06/09/2008

Activity Overview

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
  • Re-teach concepts as necessary