Reading Guide 4

Textbook Reading Guide – Unit 4 Inflation

Jim’s comments:  Read Chapter 9 in the textbook.  Make note that we’re skipping chapter 8 at this time and will come back to it in the next unit. This whole chapter does a pretty good job. The one thing I would say is there’s a sub-section in 9.2 on how a price index itself is calculated using a “market basket of goods”, etc.  It’s important to understand what goes into the calculation of a price index and the potential for misleading or imprecise changes in the index, but you don’t need to focus on being able to actually calculate a price index from the prices of a bunch of goods.  Rather, I would hope you can use the price index to calculate the real value of something from the nominal value.  Pay close attention to the Closer Look and Tutorials on this website for what you do need to be able to calculate.   It would be useful after reading this chapter to go back and re-read Chapter 6, section 6.2. It may make even more sense now.

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Table of Contents from Principles of Macroeconomics, 2e