A Closer Look at Inflation
Unit 3 · Lesson 3.10 · Last updated June 2026
A 45-minute lesson where students learn the causes and short-run consequences of inflation, connect the business cycle and PPF to macroeconomic indicator trends, and complete a retrieval summarizer with elaborative feedback.
Overview
Students learn about the major causes and short-run impacts of inflation in the U.S., connecting periods of economic expansion and contraction to the production possibilities frontier (PPF) and typical trends in macroeconomic indicators. Note: This lesson assumes prior knowledge of the GDP growth rate, unemployment rate, and inflation (Unit 3), as well as the shifters of supply and demand in product markets (Unit 2: Microeconomics). Consider modifying the Activator and Connect slides (Slides 2, 6–7) if students have not been introduced to supply and demand shifters.
Learning Objectives
- Explain the causes and consequences of changes in the inflation rate.
- Describe typical trends in macroeconomic indicators during periods of economic expansion and contraction.
- Explain the interdependence of key macroeconomic indicators such as the GDP growth rate, unemployment rate, and inflation rate.
Create a free account, or log in.
Get full access to materials, the complete lesson sequence, aligned standards, and every lesson across all units.
Already a member? Sign in here.
Materials
- Instruction Slides (display during class period)
- Student Handout pp. 5–8 (1 copy per student)
- Retrieval Summarizer pp. 9–10 (1 copy per student)
OR - Digital Retrieval Summarizer (Google account required) + laptop or tablet (1 per student)
- KEY Retrieval Summarizer pp. 11–13 (1 copy per student — not needed if using Digital Retrieval Summarizer)
Lesson Sequence
Slides 2–3
- Display Slide 2 and instruct students to discuss the question with a peer. After approximately 30 seconds, click to reveal the correct responses. Review the factors that increase demand as needed and point out that some of the factors that increase demand in product markets are, at the macro level, major causes of inflation. (Additional educator tips and suggested answers are in the notes section throughout Instruction Slides.)
- Display Slide 3 and introduce the learning objectives. Remind students they previously learned what inflation is, how it is measured, and ways it can be both useful and limiting in Lesson 3.9.
Slides 4–36
- Distribute 1 copy of Student Handout to each student and encourage students to add notes, graphs, and/or examples throughout the lesson.
- Progress through Slides 4–5. Explain that in the U.S., demand generally drives inflation (though supply-side factors can also cause it). Tell students to consider the question on Slide 5 as they watch the ~1-minute video clip. After playing the clip, debrief as a class.
- Proceed to Slide 6. Allow approximately 30 seconds for students to discuss the prompts with a peer.
- Display Slide 7 to debrief, focusing on how changes in supply and demand can result in higher prices in a given product market. Note: The micro-level supply and demand model is used to build on prior knowledge — students can extrapolate what happens to the general price level when prices rise across many individual markets.
- Proceed to Slide 8. Click to reveal the text and further explain how an increase in demand or production costs across many goods and services can raise the general price level.
- Display Slide 9. Tell students to fill in the blanks in the "Causes of Inflation" section of Student Handout. Emphasize that the same fundamental supply and demand principles from microeconomics apply at the macro level — the focus shifts from individual product prices to the general price level.
- Advance through Slides 10–11. Explain that students will now learn about the consequences of inflation.
- Display Slide 12. Read the scenarios aloud and instruct students to circle their prediction on Student Handout. Proceed to Slide 13 to reveal the correct answer and explain which person is experiencing more inflationary pain. Direct students to record the correct response and notes in the "Answer and Notes" column.
- Progress through Slides 14–17 and repeat Step 10 for each scenario.
- Advance to Slide 18 and summarize for whom inflationary pain is most acute. Click to reveal the question and instruct students to consider the prompt. After approximately 15 seconds, proceed to Slide 19 to debrief.
- Display Slide 20 and instruct students to follow the instructions on the slide.
- Proceed to Slide 21. Acknowledge that although short-term inflation can be problematic, deflation is not preferable — contrary to popular opinion, deflation can cause significant problems for the economy.
- Display Slide 22. Remind students that deflation rarely occurs in the U.S. Re-emphasize the stumbling block (yellow warning graphic): students often confuse disinflation with deflation.
- Proceed to Slide 23. Direct students to consider the first question. After approximately 5 seconds, poll the class. Click to reveal the three follow-up questions one at a time. Allow students to consider each before debriefing.
- Use Slides 24–25 to explain the impact of deflation. Tell students to fill in the blanks with arrows on Student Handout.
- Advance to Slide 26. Instruct pairs to read the prompt and answer the question. Call on 1–2 students to share. Clarify as needed.
- Proceed to Slide 27. Click to reveal the text summarizing why moderate long-term inflation is generally not a problem, unlike the short-run examples discussed earlier.
- Display Slide 28. Highlight the tendency for the CPI inflation rate and average nominal wages to track one another. Reinforce that this typical relationship is why long-term moderate inflation is not a problem.
- Display Slide 29. Click to reveal the text and explain that governments and businesses expect some inflation. Note how those expectations influence government and business actions.
- Progress through Slides 30–31. Introduce the business cycle model and its purpose in macroeconomics. Note: The term "cycle" can cause misunderstandings — it may help to point out that periods within the business cycle are irregular and somewhat unpredictable, unlike cycles students may be familiar with (e.g., the moon cycle). Encourage students to add notes, drawings, and examples to Student Handout.
- Display Slide 32. Explain what periods of economic expansion represent and how they are modeled using the business cycle. Click to reveal the question and allow a moment for responses. Click to reveal the correct responses. Emphasize these are typical trends during expansion that students can reasonably expect to hold.
- Proceed to Slide 33 and describe how a period of economic expansion correlates to movement towards the PPF.
- Display Slide 34. Explain what periods of economic contraction represent. Click to reveal the question, allow a moment, then click to reveal the correct responses. Emphasize these are typical contraction trends.
- Proceed to Slide 35 and describe how a period of economic contraction correlates to movement away from the PPF.
- Advance to Slide 36 and introduce the term recession.
Slides 37–38
- Progress through Slides 37–38. Direct students to put Student Handout out of sight — they will not reference it during the quiz but will return to it after. Explain the steps listed on Slide 38.
- Distribute 1 copy of Retrieval Summarizer to each student and allow 8 minutes to work through the practice problems. If using the digital version, send the link to Digital Retrieval Summarizer and direct students to get a device.
- After students complete the Retrieval Summarizer, distribute 1 copy of KEY Retrieval Summarizer. Instruct students to review the elaborative feedback and use it to score their summarizers. If using the digital version, tell students to click "View score" to see their elaborative feedback.
- Remind students to complete the "Reflection" portion of Student Handout after reviewing missed questions and feedback.
- Collect Retrieval Summarizer (paper version) and KEY Retrieval Summarizer. Review for misconceptions. Address at the start of the next lesson.
Aligned Standards
Voluntary National Content Standards in Economics
Standard 15 Inflation
What Educators Are Saying
This was a great review that helped students make connections between unemployment and inflation. I feel like students are making better progress with the project this semester — they have a better idea of concrete suggestions to offer when indicators are rising or falling.
High School Economics Teacher, Georgia
I like the tie into all the other lessons — GDP, business cycle, circular flow model, etc.
High School Economics Teacher, Arizona
This lesson connects inflation back to shifts in supply and demand from microeconomics — I haven't seen that in other inflation lessons. It also clearly explains the two types of inflation.
High School Economics Teacher