Economics & Business · Year 12

Active learning ideas

Alternative Measures of Living Standards

Students often struggle to grasp how inflation measures living standards beyond price tags. Active learning lets them experience the mechanics of the CPI and inflation pressures firsthand, building lasting understanding. The three activities provide varied entry points to link theory with real-world data and policy decisions.

• ACARA Content Descriptions
• AC9EC12K04

• 30–45 min
• Pairs → Whole Class
• 3 activities

Activity 01

• Simulation Game
• 30 min · Whole Class

Simulation Game: The Inflation Auction

Give students varying amounts of 'class currency' to bid on limited items. In the second round, double everyone's money but keep the items the same. Students observe how prices skyrocket when 'too much money chases too few goods'.

Compare GDP with alternative measures of living standards.

Facilitation Tip

In 'The Inflation Auction,' assign roles clearly so every student participates in bidding and records outcomes, keeping the simulation fast-paced.

What to look for

Present students with three short country profiles, each highlighting different strengths (e.g., high GDP, high HDI, strong environmental policies). Ask students to write one sentence for each country explaining which indicator best reflects its overall living standard and why.

• Apply
• Analyze
• Evaluate
• Create
• Social Awareness
• Decision-Making

Activity 02

• Inquiry Circle
• 45 min · Small Groups

Inquiry Circle: CPI Basket Challenge

Groups are given a demographic (e.g., a university student, a retired couple, a family in regional QLD). They must research which items in the CPI basket affect their group the most and present how a 5% inflation rate would change that group's lifestyle.

Analyze how non-material factors contribute to overall societal well-being.

Facilitation Tip

For the 'CPI Basket Challenge,' provide pre-categorized items and weights to save time, but let students debate reallocations based on real trends.

What to look for

Facilitate a class debate using the prompt: 'Should governments prioritize increasing GDP or improving HDI and GPI?' Encourage students to cite specific examples and consider the trade-offs involved in policy decisions.

• Analyze
• Evaluate
• Create
• Self-Management
• Self-Awareness

Activity 03

• Formal Debate
• 30 min · Whole Class

Formal Debate: The 2-3% Target

Students debate whether the RBA's 2-3% inflation target is still appropriate in a post-pandemic world. One side argues for a higher target to encourage growth, while the other defends the current target as essential for price stability.

Justify the inclusion of environmental and social factors in economic measurement.

Facilitation Tip

During the '2-3% Target' debate, give each side 3 minutes of solid research time before opening the floor to arguments.

What to look for

Ask students to list one non-material factor that contributes to their personal well-being and explain how it is not captured by GDP. Then, have them suggest one way this factor could be measured in a national context.

• Analyze
• Evaluate
• Create
• Self-Management
• Decision-Making

A few notes on teaching this unit

Start with a concrete example, like the price of a school lunch in 2015 versus today, to ground the concept of inflation. Avoid abstract lectures about demand-pull and cost-push until students have felt these forces through simulation and data. Research shows that students retain economic concepts better when they experience the pressure of rising costs firsthand rather than hearing about it passively.

By the end of these activities, students will confidently explain how inflation is measured, why some prices rise while others fall, and who benefits or loses during inflationary periods. They will analyze the CPI basket, debate policy targets, and connect global events to local cost-of-living impacts.

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Watch Out for These Misconceptions

• During The Inflation Auction, watch for students who assume all prices rise uniformly in the auction simulation.

  After the auction, have groups calculate the average price change and compare it to individual item changes. Ask them to identify which items had the smallest and largest increases to reinforce the idea of weighted averages.

• During the CPI Basket Challenge, expect students to claim that inflation always hurts everyone equally.

  During the debrief, refer to the CPI basket data and ask students to categorize items as necessities or luxuries. Then, discuss who might be more affected by price changes in each category, tying it back to income levels and spending habits.

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Methods used in this brief

• Simulation Game
• Inquiry Circle
• Formal Debate