Today we will study the costs that inflation imposes on society. You should have read the text chapter identified below in the homework section and watched the related videos. We will start class today with you working cooperatively with a partner to find a solution to the "Problem of the Day" and then there will be a lecture on our next topic. This page contains all the information you need for today's class: homework, the problem of the day, helpful resources (videos, podcasts, etc.) and an explanation of the activities we will do in class. Use the table of contents on the right to help you navigate.
Read Mankiw (Chapter 30 - "Costs of Inflation" section) and watch the following video.
Problem of the Day: You will work cooperatively with your partner to construct a response to the following prompt.
Define the following terms: classical dichotomy, monetary neutrality, and quantity equation.
According to the quantity theory of money, what is the effect of an increase in the quantity of money?
Explain how an increase in the price level affects the real value of money.
Lecture
Related Readings