PRINCIPLES OF MACROECONOMICS 5E

1564736962(1)
9781760424015_Principles of Macroeconomics, 5th Edition by Ben Bernanke; Nilss Olekalns; Robert Frank.pdf
	Table of Contents and Preface
		Half Title
		Title Page
		Copyright Page
		Dedication
		Contents in Brief
		Contents in Full
		Preface
		Assurance of Learning
		AACSB statement
		About the Australian author
			NILSS OLEKALNS
		About the US authors
			BEN S. BERNANKE
			ROBERT H. FRANK
			KATE ANTONOVICS
			ORI HEFFETZ
		Acknowledgments
			ACKNOWLEDGMENTS
		How to use this Book
		Digital resources
			Adaptive learning
			SmartBook
			LearnSmart
			Proven effective
			Connect support
			Visual progress
	Chapter 1 Macroeconomics: The bird's-eye view of the economy
		Part 1 Issues in Macroeconomics
		Introduction
		1.1 The major macroeconomic issues
			1.1.1  ECONOMIC GROWTH AND LIVING STANDARDS
			1.1.2  PRODUCTIVITY
			1.1.3  RECESSIONS AND EXPANSIONS
			1.1.4  UNEMPLOYMENT
			1.1.5  INFLATION
			1.1.6  ECONOMIC INTERDEPENDENCE AMONG NATIONS
		1.2 Macroeconomic policy
			1.2.1  TYPES OF MACROECONOMIC POLICY
			1.2.2  POSITIVE VERSUS NORMATIVE ANALYSES OF MACROECONOMIC POLICY
		1.3 Aggregation
		1.4 Studying macroeconomics: A preview
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 2 Measuring economic activity: Gross domestic product and unemployment
		Introduction
		2.1 Measuring economic activity: Gross domestic product and unemployment
			2.1.1 GDP: THE FINE PRINT
				Market value
			2.1.2 FINAL GOODS AND SERVICES
			2.1.3 PRODUCED WITHIN A COUNTRY DURING A GIVEN PERIOD
		2.2 Methods for measuring GDP
			2.2.1 THE NATIONAL INCOME ACCOUNTING IDENTITY
			2.2.2 GDP AND THE INCOMES OF CAPITAL AND LABOUR
		2.3 Nominal GDP versus real GDP
		2.4 Real GDP is not the same as economic wellbeing
			2.4.1 LEISURE TIME
			2.4.2 NON-MARKET ECONOMIC ACTIVITIES
			2.4.3 ENVIRONMENTAL QUALITY AND RESOURCE DEPLETION
			2.4.4 QUALITY OF LIFE
			2.4.5 POVERTY AND ECONOMIC INEQUALITY
			2.4.6 GDP IS RELATED TO ECONOMIC WELLBEING
			2.4.7 AVAILABILITY OF GOODS AND SERVICES
			2.4.8 LIFE EXPECTANCY
		2.5 Unemployment and the unemployment rate
			2.5.1 MEASURING UNEMPLOYMENT
			2.5.2 THE COSTS OF UNEMPLOYMENT
			2.5.3 THE DURATION OF UNEMPLOYMENT
			2.5.4 THE UNEMPLOYMENT RATE VERSUS ‘TRUE’ UNEMPLOYMENT
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 3 Measuring the price level and inflation
		Introduction
		3.1 The consumer price index: Measuring the price level
		3.2 Inflation
			3.2.1  A COMMON MISPERCEPTION ABOUT INFLATION
			3.2.2  ADJUSTING FOR INFLATION
				Indexing to maintain buying power
		3.3 Does the CPI measure ‘true’ inflation?
			3.3.1  THE COSTS OF INFLATION: NOT WHAT YOU THINK
		3.4 The true costs of inflation
			3.4.1 SHOE-LEATHER COSTS
			3.4.2 NOISE IN THE PRICE SYSTEM
			3.4.3 DISTORTIONS OF THE TAX SYSTEM
			3.4.4 UNEXPECTED REDISTRIBUTION OF WEALTH
			3.4.5 INTERFERENCE WITH LONG-RUN PLANNING
			3.4.6 MENU COSTS
			3.4.7  HYPERINFLATION
		3.5 Inflation and interest rates
			3.5.1  THE REAL INTEREST RATE
		3.6 Deflation
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 4 Saving, investment and wealth
		Introduction
		4.1 Saving and wealth
			4.1.1  STOCKS AND FLOWS
			4.1.2  CAPITAL GAINS AND LOSSES
		4.2 Why do people save?
			4.2.1  SAVING AND THE REAL INTEREST RATE
			4.2.2  SAVING, SELF-CONTROL AND DEMONSTRATION EFFECTS
		4.3 National saving and its components
			4.3.1 THE MEASUREMENT OF NATIONAL SAVING
			4.3.2 PRIVATE AND PUBLIC COMPONENTS OF NATIONAL SAVING
			4.3.3 PUBLIC SAVING AND THE GOVERNMENT BUDGET
		4.4 Is low household saving a problem?
		4.5 Investment and capital formation
		4.6 Saving, investment and financial markets
			4.6.1 THE EFFECTS OF NEW TECHNOLOGY
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 5 Wages, employment and the labour market
		Introduction
		5.1 The perfectly competitive model of the labour market
			5.1.1 WAGES AND THE DEMAND FOR LABOUR
			5.1.2 SHIFTS IN THE DEMAND FOR LABOUR
			5.1.3 THE SUPPLY OF LABOUR
			5.1.4 SHIFTS IN THE SUPPLY OF LABOUR
			5.1.5 EQUILIBRIUM IN THE PERFECTLY COMPETITIVE MODEL OF THE LABOUR MARKET
		5.2 Explaining the trends in real wages and employment
			5.2.1 LARGE INCREASES IN REAL WAGES IN INDUSTRIALISED COUNTRIES
			5.2.2 REAL WAGES GROWTH AND EMPLOYMENT IN AUSTRALIA
			5.2.3  INCREASING WAGE INEQUALITY: THE EFFECTS OF GLOBALISATION AND TECHNOLOGICAL CHANGE
		5.3 Unemployment
			5.3.1 TYPES OF UNEMPLOYMENT AND THEIR COSTS
				Frictional unemployment
				Structural unemployment
				Cyclical unemployment
		5.4 Impediments to full employment
			5.4.1 MINIMUM WAGE LAWS
			5.4.2  LABOUR UNIONS
			5.4.3  UNEMPLOYMENT BENEFITS
			5.4.4 OTHER GOVERNMENT REGULATIONS
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 6 Short-term economic fluctuations: An introduction
		Part 2 Short-run macroeconomics: The analysis of the business cycle
		Introduction
		6.1 Contractions and expansions
			6.1.1 SOME FACTS ABOUT SHORT-TERM ECONOMIC FLUCTUATIONS
		6.2 Output gaps and cyclical unemployment
			6.2.1 POTENTIAL OUTPUT AND THE OUTPUT GAP
			6.2.2 THE NATURAL RATE OF UNEMPLOYMENT
			6.2.3 OKUN’S LAW
		6.3 Why do short-term fluctuations occur? A preview and a parable
			Lisa’s Ice-cream Store
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 7 Spending and output in the short run
		Introduction
		7.1 An introduction to the Keynesian model
		7.2 Aggregate expenditure
			7.2.1 PLANNED EXPENDITURE VERSUS ACTUAL EXPENDITURE
			7.2.2 CONSUMER SPENDING AND THE ECONOMY
		7.3 Planned aggregate expenditure and output
		7.4 Short-run equilibrium output
		7.5 Consumption and investment in the two-sector model
		7.6 The 45-degree diagram
		7.7 Withdrawals and injections
		7.8 The four-sector model
		7.9 Planned spending and the output gap
		7.10 The multiplier
		7.11 Stabilising planned spending: The role of fiscal and monetary policies
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 8 Fiscal policy
		Introduction
		8.1 Government purchases and planned spending
		8.2 Taxes, transfers and aggregate spending
		8.3 Fiscal policy as a stabilisation tool: Three qualifications
			8.3.1 FISCAL POLICY AND THE SUPPLY SIDE
			8.3.2  THE PROBLEM OF DEFICITS
			8.3.3  THE RELATIVE INFLEXIBILITY OF FISCAL POLICY
		8.4 Contemporary fiscal policy
			8.4.1  THE DISTRIBUTION OF INCOME
			8.4.2  MANAGING DEMOGRAPHIC CHANGE
			8.4.3  FISCAL POLICY AND THE PUBLIC DEBT
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 9 Money, prices and the Reserve Bank
		Introduction
		9.1 The financial system and the allocation of saving to productive uses
			9.1.1 THE BANKING SYSTEM
			9.1.2 BONDS AND STOCKS
				Bonds
				Stocks
		9.2 Bond markets, stock markets and the allocation of savings
			9.2.1 THE INFORMATIONAL ROLE OF BOND AND STOCK MARKETS
				Risk sharing and diversification
		9.3 Money and its uses
			9.3.1 MEASURING MONEY
		9.4 Commercial banks and the creation of money
			9.4.1 THE MONEY SUPPLY WITH BOTH CURRENCY AND DEPOSITS
		9.5 Money and prices
			9.5.1  VELOCITY
			9.5.2 MONEY AND INFLATION IN THE LONG RUN
		9.6 The Reserve Bank of Australia
			9.6.1 INFLUENCING INTEREST RATES: OPEN-MARKET OPERATIONS
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 10 The Reserve Bank and the economy
		Introduction
		10.1 The Reserve Bank, interest rates and monetary policy
			10.1.1  THE IMPLICATIONS OF A CHANGE IN MONETARY POLICY FOR THE MONEY SUPPLY
		10.2 Can the Reserve Bank control real interest rates?
		10.3 The effects of the Reserve Bank’s actions on the economy
			10.3.1  PLANNED AGGREGATE EXPENDITURE AND THE REAL INTEREST RATE
			10.3.2  THE RESERVE BANK FIGHTS A RECESSION
			10.3.3  THE RESERVE BANK FIGHTS INFLATION
		10.4 The Reserve Bank’s policy reaction function
		10.5 Monetary policymaking: Art or science?
		Summary
		Key Terms
		Review Questions
		Problems
		References
		Appendix to Chapter 10
			MONETARY POLICY IN THE BASIC KEYNESIAN MODEL
	Chapter 11 Aggregate demand, aggregate supply and inflation
		Introduction
		11.1 Inflation, spending and output: Aggregate demand curve
			11.1.1   INFLATION, THE RESERVE BANK AND THE AGGREGATE DEMAND CURVE
			11.1.2   OTHER REASONS FOR THE DOWNWARD SLOPE OF THE AGGREGATE DEMAND CURVE
			11.1.3   SHIFTS OF THE AGGREGATE DEMAND CURVE
				(A) Exogenous changes in spending
				(B) Exogenous changes in the Reserve Bank’s policy reaction function
			11.1.4   SHIFTS OF THE AGGREGATE DEMAND CURVE VERSUS MOVEMENTS ALONG THE AGGREGATE DEMAND CURVE
		11.2 Inflation and supply decisions
			11.2.1   INFLATION INERTIA
			11.2.2   OUTPUT GAPS AND INFLATION
		11.3 The aggregate demand–aggregate supply diagram
		11.4 The self-correcting economy
		11.5 Sources of inflation
			11.5.1    EXCESSIVE AGGREGATE SPENDING
			11.5.2    INFLATION SHOCKS
		11.6 Controlling inflation
		Summary
		Key Terms
		Review Questions
		Problems
		Appendix to Chapter 11
			Aggregate demand curve
			Shifts of aggregate demand curve
			Short-run equilibrium
			Long-run equilibrium
		References
	Chapter 12 Macroeconomic policy
		Introduction
		12.1 What is the role of stabilisation policy?
			12.1.1 STABILISATION POLICY AND DEMAND SHOCKS
			12.1.2 STABILISATION POLICY AND INFLATION SHOCKS
		12.2 Inflationary expectations and credibility
			12.2.1 CENTRAL BANK INDEPENDENCE
			12.2.2 ANNOUNCING A NUMERICAL INFLATION TARGET
			12.2.3 CENTRAL BANK REPUTATION
		12.3 Fiscal policy and the supply side
		12.4 Policymaking: Art or science?
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 13 The economy in the long run: An introduction to economic growth
		Part 3 Long run macroeconomics: The analysis of economic growth
		Introduction
		13.1 Introduction to economic growth
		13.2 Economic growth and potential output
		13.3 Growth rates and differences in living standards
			13.3.1  WHY ‘SMALL’ DIFFERENCES IN GROWTH RATES MATTER
		13.4 Why nations become rich: The crucial role of average labour productivity
			13.4.1  THE DETERMINANTS OF AVERAGE LABOUR PRODUCTIVITY
				Human capital
				Physical capital
				Land and other natural resources
				Technology
				Entrepreneurship and management
				The political and legal environment
		13.5 The costs of economic growth
		13.6 Promoting economic growth
			13.6.1  POLICIES TO INCREASE HUMAN CAPITAL
			13.6.2  POLICIES THAT PROMOTE SAVING AND INVESTMENT
			13.6.3  POLICIES THAT SUPPORT RESEARCH AND DEVELOPMENT
			13.6.4  THE LEGAL AND POLITICAL FRAMEWORK
			13.6.5  THE POOREST COUNTRIES: A SPECIAL CASE?
		13.7 Are there limits to growth?
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 14 The production function approach to understanding growth
		Introduction
		14.1 Economists and economic growth
		14.2 The production function
			14.2.1 CAPITAL
			14.2.2 LABOUR
			14.2.3 BRINGING LABOUR AND CAPITAL TOGETHER: THE PRODUCTION FUNCTION
		14.3 The Cobb–Douglas production function
		14.4 Growth accounting
			14.4.1 ECONOMIC GROWTH AND THE FACTORS OF PRODUCTION
			14.4.2 THE SOURCES OF ECONOMIC GROWTH
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 15 Saving, capital formation and comparative economic growth
		Introduction
		15.1 Saving, investment and economic growth
			15.1.1 SAVING, INVESTMENT AND THE INCOME ACCOUNTING IDENTITY
		15.2 The neo-classical (Solow–Swan) model of economic growth
			15.2.1 A DIAGRAMMATIC TREATMENT
				Implication number 1
				Implication number 2
			15.2.2 EVIDENCE
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 16 International trade
		Part 4 Open-economy macroeconomics
		Introduction
		16.1 Production and consumption possibilities and the benefits of trade
			16.1.1  THE PRODUCTION POSSIBILITIES CURVE
			16.1.2  CONSUMPTION POSSIBILITIES WITH AND WITHOUT INTERNATIONAL TRADE
			16.1.3  COMPARATIVE ADVANTAGE AND INTERNATIONAL TRADE
			16.1.4  SOURCES OF COMPARATIVE ADVANTAGE
		16.2 A supply and demand perspective on trade
			16.2.1  WINNERS AND LOSERS FROM TRADE
		16.3 Protectionist policies: Tariffs and quotas
			16.3.1  TARIFFS
			16.3.2   QUOTAS
			16.3.3   THE INEFFICIENCY OF PROTECTIONISM
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 17 Exchange rates and the open economy
		Introduction
		17.1 Nominal exchange rates
			17.1.1  FLEXIBLE VERSUS FIXED EXCHANGE RATES
		17.2 The real exchange rate
		17.3 The determination of the exchange rate
			17.3.1  A SIMPLE THEORY OF EXCHANGE RATES: PURCHASING POWER PARITY
			17.3.2  SHORTCOMINGS OF THE PPP THEORY
		17.4 The determination of the exchange rate: A supply and demand analysis
			17.4.1  THE SUPPLY OF DOLLARS
			17.4.2  THE DEMAND FOR DOLLARS
			17.4.3  EQUILIBRIUM VALUE OF THE DOLLAR
			17.4.4  CHANGES IN THE SUPPLY OF DOLLARS
			17.4.5  CHANGES IN THE DEMAND FOR DOLLARS
		17.5 Monetary policy and the exchange rate
			17.5.1  THE EXCHANGE RATE AS A TOOL OF MONETARY POLICY
		17.6 Fixed exchange rates
			17.6.1  HOW TO FIX AN EXCHANGE RATE
			17.6.2  SPECULATIVE ATTACKS
			17.6.3   MONETARY POLICY AND FIXED EXCHANGE RATES
		17.7 Should exchange rates be fixed or flexible?
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 18 The balance of payments: Net exports and international capital flows
		Introduction
		18.1 The balance of payments
			18.1.1  THE CURRENT ACCOUNT
			18.1.2  THE CAPITAL ACCOUNT
		18.2 Capital flows and the relationship between the capital and the current accounts
			18.2.1  CAPITAL FLOWS AND THE CURRENT ACCOUNT BALANCE
		18.3 The determinants of international capital flows
		18.4 Saving, investment and capital inflows
		18.5 The saving rate and the trade and current account deficits
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Chapter 19 Macroeconomics: What have we learnt?
		Part 5 Concluding thoughts
		Introduction
		19.1 Lessons from the past
		19.2 Schools of thought in macroeconomics
			19.2.1  KEYNESIAN ECONOMICS
			19.2.2  MONETARISM
			19.2.3  NEW CLASSICAL MACROECONOMICS
			19.2.4  NEW KEYNESIAN MACROECONOMICS
			19.2.5  GROWTH THEORY AND THE REAL BUSINESS CYCLE SCHOOL
		19.3 Some concluding thoughts
		Summary
		Key Terms
		Review Questions
		Problems
		References
	Answers to concept checks
		Answers to concept checks
	Glossary
		Glossary
	Index
		Index