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Lesson 3.9: Introduction to Inflation

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A paper grocery bag spilling out fresh vegetables, fruit, and bread beside a green upward arrow, illustrating how rising consumer prices are measured through the CPI market basket.

Introduction to Inflation

Unit 3 · Lesson 3.9 · Last updated June 2026

A 45-minute lesson where students learn inflation, disinflation, and deflation through an automotive analogy, explore how the CPI is measured, and apply their understanding by responding as an economist to real social media posts.

Duration45 min
Grades9–12
Prep<5 min
FormatDirect instruction + application
Open editable copy (Google Doc) Download lesson (PDF) View Instruction Slides (Google Slides)

Overview

Students are introduced to inflation, disinflation, and deflation using an automotive analogy — acceleration for inflation, deceleration for disinflation, reverse for deflation — to make these concepts tangible. They learn the usefulness and limitations of using the CPI inflation rate to measure inflation, then apply and solidify their knowledge by responding like an economist to realistic social media posts.

Learning Objectives

  • Describe the inflation rate and how it is measured.
  • Identify the usefulness and limitations of the inflation rate.
 
 

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Materials

Lesson Sequence

Activator
6 min · Slides 2–10

Slides 2–10

  1. Display Slide 2 and distribute 1 copy of Student Handout to each student. Instruct students to follow the instructions and complete the "Activator" portion of Student Handout. (Additional educator tips and suggested answers are in the notes section throughout Instruction Slides.)
  2. Proceed to Slide 3. Direct students to discuss the two questions on the slide. Review the correct answers as a class. Click to reveal the third question and allow approximately 30 seconds for any revisions to the activator.
  3. Display Slide 4. Instruct students to look over the data and note their correct and incorrect selections.
  4. Proceed to Slide 5. Reinforce that accounting for inflation is the key difference between nominal and real figures.
  5. Use Slides 6–7 to present the analogy: a nominal figure is like a cropped picture while a real figure is like an uncropped picture — nominal figures lack context whereas real figures provide it.
  6. Display Slide 8 and introduce the learning objectives. Highlight that inflation, how it is measured, and its usefulness as an indicator are the focus of this lesson. Future lessons will explore why inflation matters.
  7. Advance to Slide 9. Use the doctor/economist analogy to remind students that economists draw on multiple indicators to assess the economy.
  8. Proceed to Slide 10. Tell students they have already learned about the GDP growth rate and unemployment rate, and will be introduced to another key indicator today — the inflation rate.
Activity
32 min · Slides 11–46

Slides 11–46

  1. Progress through Slides 11–12. Ask students to discuss the questions on Slide 12 with a peer, then debrief as a class.
  2. Advance through Slides 13–14. Define inflation and explain the inflation/car analogy. Encourage students to add notes, examples, and drawings to Student Handout throughout the lesson.
  3. Proceed through Slides 15–16. Define the inflation rate and explain the inflation rate/car analogy.
  4. Progress through Slides 17–19. Define disinflation. Instruct students to follow the instructions on Slide 18 to discuss how they might incorporate disinflation into the car analogy. Use Slide 19 to reinforce the analogy.
  5. Display Slide 20 and define deflation. Alert students to the stumbling block (yellow warning graphic): students often confuse disinflation with deflation.
  6. Progress through Slides 21–22. Tell students to follow the instructions on Slide 21 and discuss how they might incorporate deflation into the car analogy. Use Slide 22 to reinforce.
  7. Advance to Slide 23. Allow students a moment to determine the answer. Remind students of the disinflation/deflation stumbling block. Proceed to Slide 24 to reveal the correct response and debrief.
  8. Use Slides 25–26 to repeat Step 15.
  9. Proceed to Slide 27. Before playing the ~2.5-minute video clip, tell students to consider the "Video Clip" question on Student Handout as they watch.
  10. Display Slide 28. Direct students to discuss the "Video Clip" question with 1–2 classmates and record their ideas on Student Handout before debriefing as a class.
  11. Advance through Slides 29–30. Instruct students to answer the questions on Slide 30 with a peer. Click to reveal the correct answers and debrief, explaining that students will learn how inflation is measured just as they learned how other indicators are measured.
  12. Progress through Slides 31–32. Define the consumer price index (CPI). Ask students to consider which goods and services on Slide 32 are likely included in a representative basket of consumer purchases. Click to reveal the correct responses.
  13. Display Slide 33 and describe the categories that make up the CPI market basket (see notes section for additional information).
  14. Proceed to Slide 34. Describe how the CPI inflation rate is determined and note the frequency of calculations.
  15. Progress through Slides 35–36 to demonstrate how the inflation rate is calculated using the CPI. Note: Students are not expected to carry out CPI calculations — the focus is on interpreting the headline number and applying understanding to real-world situations. The annual inflation rate is the usual focus of news stories about inflation.
  16. Display Slide 37. Instruct students to discuss the question, then poll the class. Proceed to Slide 38 to reveal the correct answer and call on a student who answered correctly to explain their reasoning. Return to the car analogy as needed.
  17. Advance through Slides 39–41, pointing out the chart title and axis labels on the first graph. Ask students to discuss the question on each slide with a peer. Click to reveal possible answers. Note: Alert students to the disinflation/deflation stumbling block on Slides 40 and 41.
  18. Display Slide 42. Instruct students to jot down their response to the prompt in the "Review" portion of Student Handout.
  19. Progress through Slides 43–44. Allow approximately 30 seconds for students to consider the questions. Call on several students to share responses and reasoning. Advance to Slide 45 to reveal why the BLS assumption that all households buy the same market basket can be limiting.
  20. Display Slide 46. Click to reveal the ways the CPI inflation rate can be both useful and limited when analyzing the economy.
Summarizer
7 min · Slides 47–48

Slides 47–48

  1. Progress through Slides 47–48. Distribute 1 copy of Friendly Economist to each student. Instruct students to read the instructions and individually respond to each post.
  2. After approximately 5 minutes, debrief responses (using Suggested Responses as needed). Encourage students to correct and/or add to their responses during the debrief, preferably in a different color. If time permits, ask for volunteers to share one response with the class.
  3. Collect Friendly Economist and review responses 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

The movie examples were a great visual. Students liked the simplicity of the lesson — especially since inflation is a slog. They liked not having to do the math for the CPI because it was already figured out for them.

Rob O.
High School Economics Teacher, Arizona

Very informative for students.

William H.
High School Economics Teacher, Georgia

It was succinct and I was able to easily guide students with taking extra notes.

Myra O.
High School Economics Teacher, Ohio