By Chiara Turrettini, year 12
During break on Friday the 25th of March, the Economics Society gathered to watch a presentation about inflation in the United States by Mutong Qi and Noah Hamilton, both year 12. By mixing economic theory taught in year 12 economics classes and using real-world examples (a concept that the IB loves) the audience learnt a lot about inflation which will aid them in their future IB exams.
To begin, Mutong and Noah did an introduction to inflation for those who did not know what it is and did a stakeholders analysis on how rising inflation affects different people in an economy. One example of this is people who borrow money will benefit from inflation because their debts will shrink over time in real terms. On the other hand, the people who lent this money will be disadvantaged because the money that they receive will have lower purchasing power than the money that they loaned out in the first place. This then led to an explanation of demand-pull inflation and cost-push inflation, two causes that lead to inflation. Demand-pull inflation is due to an increase in the aggregate demand of the economy and cost-push inflation is caused by an increase in costs of production or supply shocks that lead the short-run aggregate supply to decrease.
After all of this theory, Mutong and Noah intrigued the audience by showing graphs of the inflation levels in the United States along with the Federal debt levels from 1900 to predictions for 2050. It was shown that the federal debt levels now are approximately at the same levels as they were during the period of the Second World War. Therefore the Federal Reserve, United States’ central bank, must use monetary policy to reduce this inflation. The rising inflation is not only due to the Covid-19 Pandemic, but also due to the 1980 recession that decreased the inflation rates, as brilliantly explained by Noah and Mutong and shown in the graph below.
Some students from the Economics Society that were in the audience for this presentation thought this was a very informative and well-thought-out presentation. An anonymous year 12 student taking Economics at Higher Level said that it was a “Great presentation with eye-catching visuals. This really aided my understanding of Inflation which definitely helped me during my end-of-year Economics exam.” Another student, Vanya Saksena, year 12, said that “it was nice to listen to because most people know of inflation in the US, but I found that being able to dive into the specifics of the issue was worthwhile. Both Mutong and Noah did a great job explaining the concept and I think we all learned a lot from them!”
Join the Economics Society in CH 15 every Friday from 10:30-10:55 to have the opportunity to present or listen to these education presentations. If you are taking IB Economics at Standard or Higher Level, or economics in year 11, this is a great opportunity to further your understanding of the subject in a fun way. The Economics Society is hoping to see you there!
