Consumer Price Index Lesson Plan

Instructor: Tammy Galloway

Tammy teaches business courses at the post-secondary and secondary level and has a master's of business administration in finance.

If you are discussing the economy, this lesson plan will help your class explore the consumer price index. Students will watch a video, participate in discussion, complete an activity and take a quiz.

Learning Objectives

After this lesson students will be able to:

  • Explain how inflation affects prices and the cost of living
  • Discuss the consumer price index calculation
  • Describe how changes in the consumer price index impacts the economy, businesses and consumers

Length

60 minutes

Curriculum Standards

  • CCSS.ELA-Literacy.W.11-12.1.a

Introduce precise, knowledgeable claim(s), establish the significance of the claim(s), distinguish the claim(s) from alternate or opposing claims, and create an organization that logically sequences claim(s), counterclaims, reasons, and evidence.

  • CCSS.ELA-Literacy.W.11-12.1.b

Develop claim(s) and counterclaims fairly and thoroughly, supplying the most relevant evidence for each while pointing out the strengths and limitations of both in a manner that anticipates the audience's knowledge level, concerns, values, and possible biases.

  • CCSS.ELA-Literacy.L.11-12.6

Acquire and use accurately general academic and domain-specific words and phrases, sufficient for reading, writing, speaking, and listening at the college and career readiness level; demonstrate independence in gathering vocabulary knowledge when considering a word or phrase important to comprehension or expression.

Materials

Vocabulary

  • Factors of production
  • Cost of living
  • Inflation
  • Deflation
  • Inflation rate
  • Consumer price index
  • Purchasing power
  • Nominal terms
  • Real terms

Instructions

  • Prior to the lesson, assign the vocabulary.
  • Begin the lesson by asking students to discuss the vocabulary definitions.
  • Explain that these terms relate to the consumer price index, which we will discuss further today.
  • Distribute the Consumer Price Index: Measuring the Cost of Living and Inflation lesson.
  • Begin playing the video, pausing at 2:37. Ask students to discuss how inflation impacts the cost of living.
  • Now, resume the video. Pause at 4:56, then pose these discussion points:
    • Explain how supply and demand impacts prices.
    • Discuss how often the inflation rate increases and its impact on businesses.
    • Describe the correlation between the consumer price index and purchasing power.
  • Next, resume the video and play until the end, then ask the class to answer the following:
    • What is the difference between nominal and real terms?
    • How can nominal interest rates and inflation affect an individual's checking account balance?
    • Can a dollar today buy the same amount of goods as a dollar in five years? Explain.
  • Afterwards, display the lesson quiz and ask students to write down the answer to each question, then review answers with the class.

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