Monday, November 11, 2013

BQ YEAR 11 - Inflation 12th Nov




Inflation affects the purchasing power of the income that we earn by decreasing the amount of goods and services that a dollar will buy. Inflation also distorts the value or worth of different items over time making it difficult to compare peoples’ incomes, companies’ sales, or economic statistics over a long time period.

Go to the above inflation calculator found here, and answer the following questions below:
 What would $1000 1913 be worth in following dates:

1. 1920
2. 1935
3. 1950
4. 1979
5. 1999
6. 2013

7. In 1913, $1000 would have bought you a certain number (a specific quantity or "basket") of goods. If you wanted to buy the same basket in 1920, how much would you need to spend then? Would that same basket cost you more or less than $1000?  Over those 7 years what happened to the buying (or purchasing) power of those 1913 $1000? Why?
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1 comment:

  1. Sahil BadlaniNovember 12, 2013 at 9:11 AM

    1. $2,020.20
    2. $1,383.84
    3. $2,434.34
    4. $7,333.33
    5. $16,828.28
    6. $23,651.41

    7. I would spend $2,020.20 (which is more than $1000) on that same basket in 1920. Therefore, the purchasing power of those 1913 $1000 has increased, this is because of inflation.

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