Lesson Notes By Weeks and Term - Senior Secondary 2

Inflation and deflation

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Term: 3rd Term

Week: 7

Class: Senior Secondary School 2

Age: 16 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Economics

Topic:-       Inflation and deflation

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

  1. Define inflation
  2. Define various inflation terminologies such as stagflation, inflationary gap, inflationary spiral, slumpflation, price instability, disinflation, reflation, etc
  3. Explain types of inflation

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

PRESENTATION

TEACHER’S ACTIVITY

STUDENT’S ACTIVITY

STEP 1

INTRODUCTION

The teacher reviews the previous lesson on demand for and supply of money

Students pay attention

STEP 2

EXPLANATION

She defines inflation and

various inflation terminologies such as stagflation, inflationary gap, inflationary spiral, slumpflation, price instability, disinflation, reflation, etc

.

 

 

Students pay attention and participates

STEP 3

DEMONSTRATION

She explains types of inflation

 

 

Students pay attention and participate

STEP 4

NOTE TAKING

The teacher writes a summarized note on the board

The students copy the note in their books

 

NOTE

INFLATION

 

Inflation refers to a persistent rise in the general price level. During the period of inflation, there is too much money in circulation, and too much money chases fewer goods and services. Prior to civil war of 1966-1970, Nigerian economy was in steady growth. The need to increase government expenditure after the civil war triggered inflation to rise to about 6% in 1973. Since then, every successive government had been trying to control inflation but it has not yet been eliminated.

 

INFLATION TERMINOLOGIES

  1. Stagflation: This refers to high rate of inflation resulting from the slowing down of industrial production.

 

  1. Inflationary gap: This refers to economic situation in which the total demand in the economy exceeds the total supply of goods and services available to satisfy demand.
  2. This is the difference between the total amount of money available for spending and the total money values of goods and services to meet the demand.

 

  1. Inflationary spiral: This occurs as a result of the interaction between wages (income) and prices, such that an increase in price level pushes workers to demand for higher wages. If such demand is granted, workers income will increase, thereby increasing their demands and pushes price level higher. In addition to that, increase

in workers’ wages implies increase in the cost of production and this will push the price level higher. Simply put, when price level increases, workers demand for higher wages, both workers' income and producers’ cost of production will rise.

Then, workers will increase their demand for goods and services and this increase in demand and rise in the cost of production will push price level higher. It continues in this spiral trend.

 

  1. Slumpflation: This refers to economic condition in which there is much reduction in economic activities. It is characterized by idleness and under-utilisation of resources, such as capital and labour.

 

  1. Price instability: Periodic increases and falls in the general price level lead to a condition of price instability. This implies that periodic price increases (which do not persist) are not regarded as inflation.

 

  1. Disinflation: This refers to the removal of inflationary pressure in an economy so as to maintain value of money. This is done by reducing the supply of money or increasing interest rate. It is a tool used to control inflation.

 

  1. Reflation: This refers to a period of rising prices which is deliberately caused by the government. It is used to control deflation.

Note: Disinflation is used to control inflation, while reinflation is used to control deflation

 

TYPES OF INFLATION

 

  1. Demand-pull inflation: This type of inflation emanates from excess of demand over supply. If the demand for goods and services increases considerably without a corresponding increase in their supply, price will increase. If the price increase persists, inflation will result.
  2. Cost-push inflation: This type of inflation is generated by increases in the cost of acquiring the factors of production. If the cost of hiring labour and other factors has increased, producers will increase the price of their commodities to maintain their profit margin. If this price increase persists, inflation occurs.
  3. Open inflation: This is the type of inflation generated by an increase in money supply without a corresponding increase in the volume of goods and services. Therefore, too much money chases fewer goods.
  4. Creeping or chronic or persistent inflation: This occurs when inflation involves slow but steady rise in the general price level.
  5. Galloping inflation or hyper inflation or run-away inflation : It occurs when there is rapid and steady rise in general price level. War, budget deficit, etc are the major causes of this type of inflation

 

 

EVALUATION:

  1. Define inflation

 

  1. Define various inflation terminologies such as stagflation, inflationary gap, inflationary spiral, slumpflation, price instability, disinflation, reflation, etc

 

  1. Explain various types of inflation

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively