Educational material from 
What you will learn
- Total the same quantities at prices from two different times.
- Distinguish a budget increase in money from changing purchasing power.
- Explain why a small exercise basket is not a national inflation measure.
Prepare: keep the quantities in the basket
Allow five minutes for the item cards, ten for calculations, ten for comparison and five for an exit question. Give each pair a calculator and the table. Draw the items as cards if useful, but keep the same quantities in both price rounds. Changing the contents would answer a different question.
All prices and budgets are fictional and expressed in SEK. The Riksbank describes inflation as a broad change in the price level and explains its effect on what money buys. This small basket helps students practise that mechanism, but its change is neither current Swedish inflation nor an official consumer price index.
Student worksheet: two prices and three budget questions
The basket contains two loaves of bread, three milk cartons and one bag of fruit. Calculate each row’s cost at old and new prices. Total each basket and calculate the increase as a percentage of the old cost. Do not simply average the three items’ percentage changes.
The starting budget is SEK 500. How many baskets does it buy before and after the price change? Retain full decimal values in intermediate calculations. A fractional basket count is useful for comparison even if a shop does not sell part of a basket. Now test a budget rising by 5%. Can it buy as many baskets as before?
If the table does not fit, scroll it sideways.
| Item and quantity | Old unit price | New unit price |
|---|---|---|
| Bread, two loaves | SEK 25 | SEK 27.50 |
| Milk, three cartons | SEK 15 | SEK 16 |
| Fruit, one bag | SEK 30 | SEK 32 |
Answer key: a larger budget can buy less
The old basket costs 2 × 25 + 3 × 15 + 30 = SEK 125. The new basket costs 2 × 27.50 + 3 × 16 + 32 = SEK 135. The increase is 10 / 125 × 100 = 8%. Different row amounts mean that a simple average of the three price increases does not give the correct basket change.
SEK 500 initially buys four baskets and later buys 500 / 135, approximately 3.70. The relative decrease in purchasing power is approximately 7.41%. A 5% budget increase gives SEK 525, buying approximately 3.89 baskets. Compared with four baskets, that is still approximately 2.78% less.
Preserving four of these exact baskets requires 4 × 135 = SEK 540. The budget must therefore rise by the same 8% as the basket’s cost. That relationship concerns this fixed exercise basket. A real person may consume different items in different proportions and experience price changes differently.
If the table does not fit, scroll it sideways.
| Case | Budget | Basket count |
|---|---|---|
| Old prices | SEK 500 | 4.00 |
| New prices, unchanged budget | SEK 500 | 3.70 |
| New prices, budget +5% | SEK 525 | 3.89 |
| New prices, budget +8% | SEK 540 | 4.00 |
Teacher notes: ask what has stayed constant
If students add unit prices without quantities, rebuild the basket one row at a time. If they say purchasing power falls by exactly 8%, ask them to compare four baskets with 500 / 135. Eight percent describes the cost increase using the old cost as its base; the inverse relationship uses a different base.
Ask pairs to construct another example where one item becomes cheaper but the total still rises. Look for clear quantities, dates and budgets. Finish with a sentence about what the basket demonstrates and what it does not measure. For a connection with investing, the separate real-return lesson also compares an account value with a price level.
Try it yourself
Another unchanged basket rises from SEK 100 to SEK 110. The budget rises from SEK 200 to SEK 220. How does the affordable basket count change?
Show the solution and explanation
It is unchanged: two baskets at both times.
200 / 100 = 2 and 220 / 110 = 2. Both the budget and the basket cost rise by 10% in this example.
Check your understanding
Is the activity’s 8% the Swedish inflation rate?
No. It is the cost change for three fictional items in fixed quantities. An official measure uses much broader data.
Why must quantities stay the same?
Then you compare the price of the same basket. Changing its contents would mix price changes with changes in consumption.
Practise with virtual money
Try what you just learned in a practice portfolio with virtual money. You don't deposit any real money.
How the practice portfolio worksKeep learning and practising
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Sources and examples
- Riksbank: the price level and what money buys (in Swedish)
- Skolverket: mathematics, percentages, change factors and interpreting charts (in Swedish)
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
