An Example of Inflation

A good example of an exponential function is the mathematical model for inflation. Simply put, inflation is an increase in the overall price of all goods and services in our economy.

d = c(1+r)^t

d = inflated price, c = current price, r = annual inflation rate, t = time in years.

1. Start a new conversation about changes to prices of goods/services over time as it relates to inflation. Does the past inflation rate inform us today?

• Select a good/service of interest to you and a date sometime in the past (at least 25 years ago). Research, via the Internet, the price of your selected good/service at that time and the inflation rate at that time. Share the good/service, the past date, its past price and past inflation rate. (Cite all URLs that you referenced.)
• Based on this past info, determine what the inflated price would be today.
• Provide some explanation between any differences in prices between the past, the calculated inflated price for today and the actual price today.
  • Were there any significant events happening in the world that might contribute to a higher or lower inflation rate?
  • Was there a high/low demand for the good/service at that time?
  • Is there a high/low demand for the good/service today?
  • Justify your explanation with numeric evidence.