AP Macro – 2/06/2020
I. Bellwork: Why the Fed Worries Inflation Is too Low
A. Based upon the article:
- Summarize what the Fed planning to do.
- Explain the methods they will employ.
- Explain the reason the Fed believes this action is necessary.
- What did you learn about inflation from this article?
II. Objective
- Calculate the rate of inflation
- Specify the economic costs of inflation
- Identify who is helped and who is hurt by inflation
III. Inflation an Overview: pages 138-143
A. Inflation and Deflation
B. The Level of Prices Doesn’t Matter . . .. . . But The Rate of Change of Prices Does
- Shoe – Leather Costs
- Menu Costs
- Unit-of-Account Costs
C. Inflation – Winners and Losers
- Nominal interest rate = real interest rate + expected inflation
D. Disinflation
E. Causes of Inflation & Effects on the Economy
IV. Classwork
- 2.3 Inflation Practice Page 1 only
- Module14 Questions
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