Exploring Macroeconomics (Fifth Edition)

Front Cover......Page 1
Title Page......Page 2
Copyright......Page 3
Table of Contents......Page 8
Part 1 INTRODUCTION......Page 34
CHAPTER 1 The Role and Method of Economics......Page 35
1.1 Economics: A Brief Introduction......Page 36
1.2 Economic Behavior......Page 40
1.3 Economic Theory......Page 43
1.4 Pitfalls to Avoid in Scientific Thinking......Page 47
1.5 Positive Statements and Normative Statements......Page 49
Interactive Chapter Summary......Page 53
CHAPTER 2 The Economic Way of Thinking......Page 69
2.1 Scarcity......Page 70
2.2 Choices, Costs, and Trade-Offs......Page 73
2.3 Marginal Thinking......Page 75
2.4 Incentives Matter......Page 80
2.5 Specialization and Trade......Page 82
2.6 Markets and Improved Efficiency......Page 85
Interactive Chapter Summary......Page 88
CHAPTER 3 Scarcity, Trade-Offs, and Production Possibilities......Page 99
3.1 The Three Economic Questions Every Society Faces......Page 100
3.2 The Circular Flow Model......Page 104
3.3 The Production Possibilities Curve......Page 106
3.4 Economic Growth and the Production Possibilities Curve......Page 111
Interactive Chapter Summary......Page 114
Part 2 SUPPLY AND DEMAND......Page 124
CHAPTER 4 Supply and Demand......Page 125
4.1 Markets......Page 126
4.2 Demand......Page 127
4.3 Shifts in the Demand Curve......Page 130
4.4 Supply......Page 137
4.5 Shifts in the Supply Curve......Page 139
Interactive Chapter Summary......Page 144
CHAPTER 5 Bringing Supply and Demand Together......Page 154
5.1 Market Equilibrium Price and Quantity......Page 155
5.2 Changes in Equilibrium Price and Quantity......Page 160
5.3 Price Controls......Page 168
Interactive Chapter Summary......Page 174
CHAPTER 6 Elasticities......Page 184
6.1 Price Elasticity of Demand......Page 185
6.2 Total Revenue and the Price Elasticity of Demand......Page 191
6.3 Other Types of Demand Elasticities......Page 196
6.4 Price Elasticity of Supply......Page 198
Interactive Chapter Summary......Page 205
Part 3 MARKET EFFICIENCY, MARKET FAILURE, AND THE PUBLIC SYSTEM......Page 214
CHAPTER 7 Market Efficiency and Welfare......Page 215
7.1 Consumer Surplus and Producer Surplus......Page 216
7.2 The Welfare Effects of Taxes, Subsidies, and Price Controls......Page 223
Interactive Chapter Summary......Page 233
CHAPTER 8 Market Failure......Page 242
8.1 Externalities......Page 243
8.2 Public Goods......Page 249
8.3 Asymmetric Information......Page 252
Interactive Chapter Summary......Page 259
CHAPTER 9 Public Sector and Public Choice......Page 266
9.1 Other Functions of Government......Page 267
9.2 Government Spending and Taxation......Page 270
9.3 Public Choice......Page 278
Interactive Chapter Summary......Page 282
Part 4 MACROECONOMIC FOUNDATIONS......Page 290
CHAPTER 10 Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations......Page 291
10.1 Macroeconomic Goals......Page 292
10.2 Employment and Unemployment......Page 293
10.3 Types of Unemployment......Page 298
10.4 Reasons for Unemployment......Page 302
10.5 Inflation......Page 305
10.6 Economic Fluctuations......Page 316
Interactive Chapter Summary......Page 319
CHAPTER 11 Measuring Economic Performance......Page 336
11.1 National Income Accounting: A Standardized Way to Measure Economic Performance......Page 337
11.2 Measuring Total Production......Page 339
11.3 Other Measures of Total Production and Total Income......Page 342
11.4 Problems in Calculating an Accurate GDP......Page 343
11.5 Problems with GDP as a Measure of Economic Welfare......Page 346
Interactive Chapter Summary......Page 350
CHAPTER 12 Economic Growth in the Global Economy......Page 360
12.1 Economic Growth......Page 361
12.2 Determinants of Economic Growth......Page 363
12.3 Public Policy and Economic Growth......Page 367
12.4 Population and Economic Growth......Page 371
Interactive Chapter Summary......Page 373
CHAPTER 13 Financial Markets, Saving, and Investment......Page 382
13.1 Financial Institutions and Intermediaries......Page 383
13.2 Saving, Investment, and the Financial System......Page 387
13.3 The Financial Crisis of 2008......Page 396
Interactive Chapter Summary......Page 402
Part 5 THE MACROECONOMIC MODELS......Page 416
CHAPTER 14 Aggregate Demand and Aggregate Supply......Page 417
14.1 The Determinants of Aggregate Demand......Page 418
14.2 The Aggregate Demand Curve......Page 419
14.3 Shifts in the Aggregate Demand Curve......Page 421
14.4 The Aggregate Supply Curve......Page 423
14.5 Shifts in the Aggregate Supply Curve......Page 426
14.6 Macroeconomic Equilibrium......Page 429
14.7 The Classical and the Keynesian Macroeconomic Model......Page 436
Interactive Chapter Summary......Page 440
CHAPTER 15 The Aggregate Expenditure Model......Page 460
15.1 Simple Aggregate Expenditure Model......Page 461
15.2 Finding Equilibrium in the Aggregate Expenditure Model......Page 463
15.3 Adding Investment, Government Purchases, and Net Exports......Page 468
15.4 Shifts in Aggregate Expenditure and the Multiplier......Page 470
15.5 From Aggregate Expenditures to Aggregate Demand......Page 473
Interactive Chapter Summary......Page 477
Part 6 MACROECONOMIC POLICY......Page 486
CHAPTER 16 Fiscal Policy......Page 487
16.1 Fiscal Policy......Page 488
16.2 Fiscal Policy and the AD/AS Model......Page 490
16.3 The Multiplier Effect......Page 494
16.4 Supply-Side Effects of Tax Cuts......Page 499
16.5 Possible Obstacles to Effective Fiscal Policy......Page 504
16.6 Automatic Stabilizers......Page 508
16.7 The National Debt......Page 510
Interactive Chapter Summary......Page 515
CHAPTER 17 Monetary Institutions......Page 530
17.1 What Is Money?......Page 531
17.2 Measuring Money......Page 535
17.3 How Banks Create Money......Page 541
17.4 The Money Multiplier......Page 547
17.5 The Collapse of America’s Banking System, 1920–1933......Page 550
Interactive Chapter Summary......Page 552
CHAPTER 18 The Federal Reserve System and Monetary Policy......Page 561
18.1 The Federal Reserve System......Page 562
18.2 How Does the Federal Reserve Change the Money Supply?......Page 565
18.3 Money, Interest Rates, and Aggregate Demand......Page 568
18.4 Expansionary and Contractionary Monetary Policy......Page 577
18.5 Money and Inflation......Page 583
18.6 Problems in Implementing Monetary and Fiscal Policy......Page 586
Interactive Chapter Summary......Page 590
CHAPTER 19 Issues in Macroeconomic Theory and Policy......Page 606
19.1 The Phillips Curve......Page 607
19.2 The Phillips Curve over Time......Page 609
19.3 Rational Expectations and Real Business Cycles......Page 614
19.4 Controversies in Macroeconomic Policy......Page 620
Interactive Chapter Summary......Page 627
Part 7 THE GLOBAL ECONOMY......Page 642
CHAPTER 20 International Trade......Page 643
20.1 The Growth in World Trade......Page 644
20.2 Comparative Advantage and Gains from Trade......Page 646
20.3 Supply and Demand in International Trade......Page 655
20.4 Tariffs, Import Quotas, and Subsidies......Page 658
Interactive Chapter Summary......Page 667
CHAPTER 21 International Finance......Page 678
21.1 The Balance of Payments......Page 679
21.2 Exchange Rates......Page 683
21.3 Equilibrium Changes in the Foreign Exchange Market......Page 686
21.4 Flexible Exchange Rates......Page 691
Interactive Chapter Summary......Page 698
Glossary......Page 709
Index......Page 715