PCM
ECON 2301 MACROECONOMICS
Chapter 7
Below you will find the learning objective, concept, idea, term,
or theory that each question on the exam will cover. The numbers in the list
refer to the question number on Exam 2 that will test your knowledge of that
specific learning objective. Each of these topics/learning objectives is
discussed in the textbook in the order that they are listed below. A much better understanding can often be attained by
working through the "active graphs" and "smart graphs"
connected to many of these objectives in the online material.
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After reading Chapter 7, you should be able to: -
Define the terms inflation and deflation. (Section 7.1)
- Describe the history of inflation in the United States especially
over the last 60 years. (Section 7.1)
- Discuss other countries experience with inflation. (Section 7.1)
- Explain the difference between deflation and disinflation.
(Section 7.1)
- Define what is meant by the core rate of inflation and cost of
living adjustments. (Section 7.2)
- Explain the difference between anticipated and unanticipated inflation and
how inflation can harm or benefit people. (Section 7.2)
- Compute and interpret a price index -- CPI and GDP implicit price
deflator. (Section 7.3)
- Use a price index to compute a real value from a nominal value.
(Section 7.3)
- Identify problems (substitution effect and product quality
changes) with price indexes and efforts to improve them (chained
indexes and hedonic models). (Section 7.3 and Section 7.4)
- Explain how people respond to inflation, hyperinflation, and
deflation and how their responses
affect price indices and the economy in general. (Section 7.4)
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