Inflation and Hyperinflation

In class students learned about why the US follows a policy of moderate inflation (2-3%).  We also discussed the problems with tying to reduce inflation, for example from 15% to 5% (see Aggregate Demand/Aggregate Supply Curve for problems).  We also talked about hyperinflation and why it occurs.  Finally, we talked about the classical model of price level (vertical supply curve) and is a good model for hyperinflation but not so much for the US economy.

The notes are attached and the homework is listed below:


Notes - Inflation, Hyperinflation, Disinflation, Deflation


HW - Read Module 34