There are three macroeconomic goals that we want to keep an eye on to determine the health of the nation.
Stable Prices - Low unemployment - High and sustained economic growth
Inflation - Deflation
What do we mean by price? Since we are discussing Marco Economics we not talking about a single product, but rather the price of all products – some Kind of aggregate price, or weighted average prices of all the prices, a representative price indices out there, which price index.
Consumer Price Index - – some kind of aggregate price, or weighted average prices of all the prices, a representative price indices out there, which price index. While there are a few we could use depending on the type of question you want to answer, however, the most common is the Consumer price index (CPI)
How does the market basket ideal help us in finding a price index?
If a price index like the CPI indicates the current level of prices, how do we measure changes in the price level?
The Great Depression - Deflation
This is a PPT so it is to be used as a teaching resource. It has many pictures and very few words...
I have added questions (in order to encourage discussion) and a script (for teachers) with possible answers.