Macroeconomics : principles and policy

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Cover Brief Contents Table of Contents Available Versions Preface About the Authors Part 1: Getting Acquainted with Economics Chapter 1: What Is Economics? 1-1 Ideas for beyond the Final Exam 1-2 Inside the Economist's Tool Kit Summary Key Terms Discussion Questions Appendix: Using Graphs: A Review Chapter 2: The Economy: Myth and Reality 2-1 The American Economy: A Thumbnail Sketch 2-2 The Inputs: Labor and Capital 2-3 The Outputs: What Does America Produce? 2-4 The Central Role of Business Firms 2-5 What's Missing from the Picture? Government 2-6 Conclusion: It's a Mixed Economy Summary Key Terms Discussion Questions Chapter 3: The Fundamental Economic Problem: Scarcity and Choice 3-1 Scarcity, Choice, and Opportunity Cost 3-2 Scarcity and Choice for a Single Firm 3-3 Scarcity and Choice for the Entire Society 3-4 The Three Coordination Tasks of Any Economy 3-5 The Concept of Efficiency 3-6 Task 1. How the Market Fosters Efficient Resource Allocation 3-7 Task 2. Market Exchange and Deciding How Much of Each Good to Produce 3-8 Task 3. How to Distribute the Economy's Outputs among Consumers 3-9 Looking Ahead Summary Key Terms Test Yourself Discussion Questions Chapter 4: Supply and Demand: An Initial Look 4-1 The Invisible Hand 4-2 Demand and Quantity Demanded 4-3 Supply and Quantity Supplied 4-4 Supply and Demand Equilibrium 4-5 Effects of Demand Shifts on Supply-Demand Equilibrium 4-6 Supply Shifts and Supply-Demand Equilibrium 4-7 Battling the Invisible Hand: The Market Fights Back 4-8 A Simple But Powerful Lesson Summary Key Terms Test Yourself Discussion Questions Part 2: The Macroeconomy: Aggregate Supply and Demand Chapter 5: An Introduction to Macroeconomics 5-1 Drawing a Line between Macroeconomics and Microeconomics 5-2 Supply and Demand in Macroeconomics 5-3 Gross Domestic Product 5-4 The Economy on a Roller Coaster 5-5 The Problem of Macroeconomic Stabilization: A Sneak Preview Summary Key Terms Test Yourself Discussion Questions Chapter 6: The Goals of Macroeconomic Policy 6-1 The Goal of Economic Growth 6-2 The Capacity to Produce: Potential GDP and the Production Function 6-3 The Growth Rate of Potential GDP 6-4 The Goal of Low Unemployment 6-5 The Human Costs of High Unemployment 6-6 Counting the Unemployed: The Official Statistics 6-7 Types of Unemployment 6-8 How Much Employment Is "Full Employment"? 6-9 Unemployment Insurance: The Invaluable Cushion 6-10 The Goal of Low Inflation 6-11 Inflation as a Redistributor of Income and Wealth 6-12 Real versus Nominal Interest Rates 6-13 Inflation Distorts Measurements 6-14 Other Costs of Inflation 6-15 The Costs of Low versus High Inflation 6-16 Low Inflation Does Not Necessarily Lead to High Inflation Summary Key Terms Test Yourself Discussion Questions Appendix: How Statisticians Measure Inflation Chapter 7: Economic Growth: Theory and Policy 7-1 The Three Pillars of Productivity Growth 7-2 Levels, Growth Rates, and the Convergence Hypothesis 7-3 Growth Policy: Encouraging Capital Formation 7-4 Growth Policy: Improving Education and Training 7-5 Growth Policy: Spurring Technological Change 7-6 Recent Productivity Performance in the United States 7-7 Growth in the Developing Countries 7-8 From the Long Run to the Short Run Summary Key Terms Test Yourself Discussion Questions Chapter 8: Aggregate Demand and the Powerful Consumer 8-1 Aggregate Demand, Domestic Product, and National Income 8-2 The Circular Flow of Spending, Production, and Income 8-3 Consumer Spending and Income: The Important Relationship 8-4 The Consumption Function and the Marginal Propensity to Consume 8-5 Factors That Shift the Consumption Function 8-6 The Extreme Variability of Investment 8-7 The Determinants of Net Exports 8-8 How Predictable Is Aggregate Demand? Summary Key Terms Test Yourself Discussion Questions Appendix: National Income Accounting Chapter 9: Demand-Side Equilibrium: Unemployment or Inflation? 9-1 The Meaning of Equilibrium GDP 9-2 The Mechanics of Income Determination 9-3 The Aggregate Demand Curve 9-4 Demand-Side Equilibrium and Full Employment 9-5 The Coordination of Saving and Investment 9-6 Changes on the Demand Side: Multiplier Analysis 9-7 The Multiplier Is a General Concept 9-8 The Multiplier and the Aggregate Demand Curve Summary Key Terms Test Yourself Discussion Questions Appendix A: The Simple Algebra of Income Determination and the Multiplier Appendix B: The Multiplier with Variable Imports Chapter 10: Bringing in the Supply Side: Unemployment and Inflation? 10-1 The Aggregate Supply Curve 10-2 Equilibrium of Aggregate Demand and Supply 10-3 Inflation and the Multiplier 10-4 Recessionary and Inflationary Gaps Revisited 10-5 Adjusting to a Recessionary Gap: Deflation or Unemployment? 10-6 Adjusting to an Inflationary Gap: Inflation 10-7 Stagflation from a Supply Shock 10-8 Applying the Model to a Growing Economy 10-9 A Role for Stabilization Policy Summary Key Terms Test Yourself Discussion Questions Part 3: Fiscal and Monetary Policy Chapter 11: Managing Aggregate Demand: Fiscal Policy 11-1 Income Taxes and the Consumption Schedule 11-2 The Multiplier Revisited 11-3 Planning Expansionary Fiscal Policy 11-4 Planning Contractionary Fiscal Policy 11-5 The Choice between Spending Policy and Tax Policy 11-6 Some Harsh Realities 11-7 The Idea behind Supply-Side Tax Cuts Summary Key Terms Test Yourself Discussion Questions Appendix A: Graphical Treatment of Taxes and Fiscal Policy Appendix B: Algebraic Treatment of Taxes and Fiscal Policy Chapter 12: Money and the Banking System 12-1 The Nature of Money 12-2 How the Quantity of Money Is Measured 12-3 The Banking System 12-4 Systemic Risk and the "Too Big to Fail" Doctrine 12-5 The Origins of the Money Supply 12-6 Banks and Deposit Creation 12-7 Why the Deposit-Creation Formula Is Oversimplified 12-8 The Need for Monetary Policy Summary Key Terms Test Yourself Discussion Questions Chapter 13: Monetary Policy: Conventional and Unconventional 13-1 Money and Income: The Important Difference 13-2 America's Central Bank: The Federal Reserve System 13-3 Implementing Monetary Policy in Normal Times: Open-Market Operations 13-4 Other Instruments of Monetary Policy 13-5 How Monetary Policy Works in Normal Times 13-6 Money and the Price Level 13-7 Application: Why the Aggregate Demand Curve Slopes Downward 13-8 Unconventional Monetary Policies 13-9 From Financial Distress to Recession 13-10 From Models to Policy Debates Summary Key Terms Test Yourself Discussion Questions Chapter 14: The Financial Crisis and the Great Recession 14-1 Roots of the Crisis 14-2 Leverage, Profits, and Risk 14-3 The Housing Price Bubble and the Subprime Mortgage Crisis 14-4 From the Housing Bubble to the Financial Crisis 14-5 From the Financial Crisis to the Great Recession 14-6 Hitting Bottom and Recovering 14-7 Lessons from the Financial Crisis Summary Key Terms Test Yourself Discussion Questions Chapter 15: The Debate over Monetary and Fiscal Policy 15-1 Velocity and the Quantity Theory of Money 15-2 Debate: Should the Fed Use Unconventional Monetary Policies? 15-3 Debate: Should Policymakers Fight Asset Price Bubbles? 15-4 Debate: Should We Rely on Fiscal or Monetary Policy? 15-5 Debate: The Shape of the Aggregate Supply Curve 15-6 Debate: Should the Government Intervene at All? 15-7 Dimensions of the Rules-versus-Discretion Debate Summary Key Terms Test Yourself Discussion Questions Chapter 16: Budget Deficits in the Short and Long Run 16-1 Should the Budget Always Be Balanced? The Short Run 16-2 The Importance of the Policy Mix 16-3 Deficits and Debt: Terminology and Facts 16-4 Interpreting the Budget Deficit or Surplus 16-5 Why Is the National Debt Considered a Burden? 16-6 Budget Deficits and Inflation 16-7 Debt, Interest Rates, and Crowding Out 16-8 The Main Burden of the National Debt: Slower Growth 16-9 The Economics and Politics of the U.S. Budget Deficit Summary Key Terms Test Yourself Discussion Questions Chapter 17: The Trade-Off between Inflation and Unemployment 17-1 Demand-Side Inflation versus Supply-Side Inflation: A Review 17-2 Origins of the Phillips Curve 17-3 Supply-Side Inflation and the Collapse of the Phillips Curve 17-4 What the Phillips Curve Is Not 17-5 Fighting Unemployment with Fiscal and Monetary Policy 17-6 What Should Be Done? 17-7 Inflationary Expectations and the Phillips Curve 17-8 The Theory of Rational Expectations 17-9 Why Economists (and Politicians) Disagree 17-10 The Dilemma of Demand Management 17-11 Attempts to Improve the Trade-Off Summary Key Terms Test Yourself Discussion Questions Part 4: The United States in the World Economy Chapter 18: International Trade and Comparative Advantage 18-1 Why Trade? 18-2 International versus Intranational Trade 18-3 The Principle of Comparative Advantage 18-4 The Arithmetic of Comparative Advantage 18-5 Tariffs, Quotas, and Other Interferences with Trade 18-6 Why Inhibit Trade? 18-7 Can Cheap Imports Hurt a Country? Summary Key Terms Test Yourself Discussion Questions Appendix: Supply, Demand, and Pricing in World Trade Chapter 19: The International Monetary System: Order or Disorder? 19-1 What Are Exchange Rates? 19-2 Exchange Rate Determination in a Free Market 19-3 When Governments Fix Exchange Rates: The Balance of Payments 19-4 A Bit of History: The Gold Standard and the Bretton Woods System 19-5 Adjustment Mechanisms under Fixed Exchange Rates 19-6 Why Try to Fix Exchange Rates? 19-7 The Current "Nonsystem" Summary Key Terms Test Yourself Discussion Questions Chapter 20: Exchange Rates and the Macroeconomy 20-1 International Trade, Exchange Rates, and Aggregate Demand 20-2 Aggregate Supply in an Open Economy 20-3 The Macroeconomic Effects of Exchange Rates 20-4 Fiscal and Monetary Policies in an Open Economy 20-5 International Aspects of Deficit Reduction 20-6 Should We Worry about the Trade Deficit? 20-7 On Curing the Trade Deficit 20-8 Conclusion: No Nation Is an Island Summary Key Terms Test Yourself Discussion Questions Part 5: The Economy Today Chapter 21: Contemporary Issues in the U.S. Economy 21-1 Can We Grow Much Faster Than 2 Percent a Year? 21-2 Who Loses from Globalization? 21-3 Are Trade Wars "Good and Easy to Win"? 21-4 Where Is the National Debt Headed? 21-5 Has the Phillips Curve Disappeared? Summary Key Terms Discussion Questions Appendix Glossary Index