Recall the definition of the derivative:
What if, in the definition, we had $f'(x+h) - f'(x)$ instead? This gives us the derivative of the derivative, or the second derivative.
To find the second derivative, first find $f'(x)$, then find the derivative of $f'(x)$.
In general, this extends to the $n$th derivative. Here are common notations for multiple derivatives:
Sometimes we need to use the product rule in the second derivative.
We saw in Lecture 2.6 if $f(t)$ gives the position of an object moving in a straight line $t$ seconds after rest, then $f'(t)$ gives the velocity of the object at time $t$.
The rate of change of velocity is acceleration. This means $f''(t)$ gives the acceleration of the object at time $t$.
The Consumer Price Index (CPI) is a weighted average of a market basket of various goods and services. For example, clothing, food,, and energy are all contained in the market basket. CPI is a rough estimate of how much consumers are spending.
If $I(t)$ is the CPI at time $t$, then inflation rate at $t = c$ is \[\dfrac{\text{rate of change of CPI at } t = c}{\text{CPI at } t = c} = \dfrac{I'(c)}{I(c)}\] so if $I'(t)$ were positive, then consumers are paying more for goods and services (inflation).
Consider $I''(t)$. Intuitively, it is telling us the rate of change of inflation (the $I(t)$ term can be ignored, it is a positive number). If $I''(t) < 0$, this is telling us the rate of change of inflation is negative.
It is possible for $I'(t) > 0$ and $I''(t) < 0$. This means we are experiencing inflation but the rate at which inflation is growing is slowing down.