[Music] foreign [Music] grade 12s my name is Viola from the distinction bound student and I'd like to welcome you to lesson 99 from the distinction bound student textbook written by Cardin matzo care I'm excited because I love the topic of inflation and I can't wait to get started so lesson 99 is in unit 1 and we will Define some key terms in unit 2 lesson 100 we will move on to measuring inflation and its characteristics in unit 3 lesson 101 we will look at causes and consequences of inflation in unit 4 lesson 102 we will look at the inflation problem in South Africa in unit 5 lesson 103 we will look at measures to combat inflation lastly in lesson 104 we will give you a test on inflation as we scroll down look at this the same amount of money wouldn't buy the exact same variety of goods in the same shop after a decade due to an inflation see the difference between 1997 2007 and 2017. what do you think 200 Rands would buy in 2027 probably a chocolate let us proceed to the lesson the previous lesson was a test and so there is no homework revision to kick-start this lesson we dive straight into it unit 1 inflation inflation is a continuous and considerable rise in prices in general over a period of time take note of the Bold terms in the definition I will address them one by one and ask questions where necessary first key part of the definition is that it is a continuous process prices continue to rise now and again meaning inflation is not a once-off event next key part is that it is concerned with considerable increases in prices smaller increases may be due to differences in quality of goods or services concerned to be inflation lastly it refers to prices in general inflation occurs when the prices of most goods and services in the economy are increasing put simply it means that the same amount of money can buy fewer goods and services as time goes on inflation is typically expressed as an annual percentage rate for example if the inflation rate is three percent for a given year it means that the overall price level has increased by three percent compared to the previous year let's consider the following example if after school you go window shopping at the mall and you see a pair of sneakers that you have been looking for let's say they are selling for 950 Rands you then go home and ask for 950 Rands and they give you that same amount you asked for the next day after school you go to the same shop and the price has gone up to 1 000 Rands would you say you failed to purchase the sneakers because of inflation or not I think you have answered in your head well you wouldn't want to call it inflation because you don't really have the full information for you to call it inflation we only call it inflation when prices of goods and services in general have increased continuously over time and not an increase in price for one item what if over a sustained period of time prices of goods and services in general have been decreasing and it was only those sneakers that went up in that case we would in fact be experiencing have deflation and not inflation ask questions in the comments section down below if you don't fully understand my example I will definitely clarify let us now look at two types of inflation namely demand pull and cost push inflation we will start with demand pull inflation this is asserted to arise when the demand for goods is much higher than the supply or demand increases much faster than Supply does which results in price increases due to increased spending by consumers government businesses and the foreign sector aggregate demand increases and this then pulls up the prices cost by an increase in money supply resulting from increased government spending G increasing in export earnings X increasing in investment spending I by firms an increase in consumption spending c as demand Rises producers May raise prices to match the increased demand it involves inflation Rising as real gross domestic product Rises and unemployment Falls as the economy moves along the Phillips curve this is commonly described as too much money chasing too few goods since only money that is spent on goods and services can cause inflation the next type is cost push inflation this type of inflation is an alleged type of inflation caused by substantial increases in the cost of important goods or services where no suitable alternative is available producers May then pass on these increased costs to consumers in the form of higher prices so the increased costs then push up the price level for example when the price of Labor is high it will lead to an increase in the selling price of all goods and services we have other terms or concepts related to inflation which may be confused for types of inflation I'm very much aware that other books have these as types of inflation but I strongly disagree we will start with hyperinflation it occurs when price increases exceed 50 per month and the inflation rate over three years approaches or exceeds 100 percent a typical example is that one of Zimbabwe when it hit a record 79 billion 600 million percent 79.6 billion percent in mid-november 2008. next up is stagflation it refers to a situation where a country persistently suffers from both High inflation and high unemployment for example if unemployment is 60 and inflation 49 we call it stagflation usually when unemployment is high spending declines as do prices of goods stagflation can prove to be a particularly tough problem for governments to deal with due to the fact that most policies designed to lower inflation tend to make it tougher for for the unemployed and policies designed to ease unemployment raise inflation let's now look at deflation it is when prices of goods and services decrease continuously over a long period of time it occurs when the inflation rate Falls below zero percent a negative inflation rate this should not be confused with disinflation it is basically the opposite of inflation an example of deflation is minus three percent negative three percent means prices in general dropped by 3 percent over time next we will look at disinflation it is a decrease in the rate of inflation or a Slowdown in the rate of increase of the general price level of goods and services in a nation's gross domestic product over time it is the opposite of reflation an example of disinflation is when the rate of inflation Falls from 6 to 4 percent next is reflation it is the act of stimulating the economy by increasing the money supply or by reducing taxes seeking to bring the economy specifically price level backup up to the long-term Trend following a dip in the business cycle as usual we conclude with homework activity 87 on page 214 question 1 during periods of inflation people's real disposable income tends to two marks question two a situation where there is persistently High inflation and high unemployment is called two marks question three runaway inflation is often known as two marks question four study the graph below and answer the questions that follow here is the graph pause the video and study the table that way you can get to check if there are terms that you still need help on 4.1 identify the following from the graph above 4.1.1 inflation 5 marks 4.1.2 deflation 2 marks 4.1.3 disinflation three marks that's it for today's lesson don't forget to like And subscribe to our Channel also hit the notification Bell well for you to get notified every time we post new content to our Channel we are also giving away the distinction bound student t-shirts to people who buy more than 10 books at the moment we have the following textbooks economics grade 10 11 and 12 plus business studies grades 11 and 12. we are looking forward to adding more books to our catalog remember our books come in two versions complete and no answers versions complete versions have answers and no answers versions do not thank you so much for your support see you in the next video God bless foreign [Music]