Warm-up
How do you usually get to school or to a friend's house?
- Ride in a car
- Bus
- Walk or bike
- Drive myself
Hands up for your answer.
Top story
Prices rose 3.6% in a year, and gas costs about $1.20 more a gallon.
- A government report says prices rose 3.6% in the year through September.
- Regular gas averaged about $4.27 on October 27, AAA says.
- A year ago it was about $3.07, so a gallon costs about $1.20 more.
3.6%
how much prices rose in a year through September (PCE index)
Talk about itIf you earn $15 an hour and prices rise 3.6%, how much would your pay need to rise to keep up? What would you cut if it did not?
Your money: A raise only counts if it beats inflation
Wage × (1 + inflation rate) = the pay you need to keep up.
A raise smaller than inflation is a pay cut in buying power.
- $15 an hour × 1.036 = $15.54
- $15.54 − $15.00 = $0.54 more just to keep up
- A raise to $15.30 falls short
TakeawayWhen you get a raise or a job offer, compare the percent increase to the inflation rate before you decide if it is a good deal.
Guess the number
Gas costs about $1.20 more per gallon than a year ago. About how much more does it cost to fill a 12-gallon tank?
about $14
12 gallons × $1.20 more per gallon = $14.40.
Pop quiz
You earn $20 an hour and prices rise 5% over a year. About what hourly wage do you need to keep your purchasing power?
- A$20.50
- B$21
- C$22
- D$25
B. $21. $20 × 1.05 = $21. Anything less than $21 an hour buys you less than before.
Discuss
Gas costs about $1.20 more per gallon than a year ago. If you drive, what would you change first: how often you drive, how far, or what else you spend on? Why?
Worksheet
Today's worksheet
The story, the money lesson and questions, with an answer key on its own page.
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