Principles of Macroeconomics

Contents
Preface
Chapter 1 Welcome to Economics!
	Introduction
	1.1 What Is Economics, and Why Is It Important?
	1.2 Microeconomics and Macroeconomics
	1.3 How Economists Use Theories and Models to Understand Economic Issues
	1.4 How To Organize Economies: An Overview of Economic Systems
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
Chapter 2 Choice in a World of Scarcity
	Introduction to Choice in a World of Scarcity
	2.1 How Individuals Make Choices Based on Their Budget Constraint
	2.2 The Production Possibilities Frontier and Social Choices
	2.3 Confronting Objections to the Economic Approach
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 3 Demand and Supply
	Introduction to Demand and Supply
	3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services
	3.2 Shifts in Demand and Supply for Goods and Services
	3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process
	3.4 Price Ceilings and Price Floors
	3.5 Demand, Supply, and Efficiency
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 4 Labor and Financial Markets
	Introduction to Labor and Financial Markets
	4.1 Demand and Supply at Work in Labor Markets
	4.2 Demand and Supply in Financial Markets
	4.3 The Market System as an Efficient Mechanism for Information
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 5 Elasticity
	Introduction to Elasticity
	5.1 Price Elasticity of Demand and Price Elasticity of Supply
	5.2 Polar Cases of Elasticity and Constant Elasticity
	5.3 Elasticity and Pricing
	5.4 Elasticity in Areas Other Than Price
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 6 The Macroeconomic Perspective
	Introduction to the Macroeconomic Perspective
	6.1 Measuring the Size of the Economy: Gross Domestic Product
	6.2 Adjusting Nominal Values to Real Values
	6.3 Tracking Real GDP over Time
	6.4 Comparing GDP among Countries
	6.5 How Well GDP Measures the Well-Being of Society
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 7 Economic Growth
	Introduction to Economic Growth
	7.1 The Relatively Recent Arrival of Economic Growth
	7.2 Labor Productivity and Economic Growth
	7.3 Components of Economic Growth
	7.4 Economic Convergence
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 8 Unemployment
	Introduction to Unemployment
	8.1 How Economists Define and Compute Unemployment Rate
	8.2 Patterns of Unemployment
	8.3 What Causes Changes in Unemployment over the Short Run
	8.4 What Causes Changes in Unemployment over the Long Run
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 9 Inflation
	Introduction to Inflation
	9.1 Tracking Inflation
	9.2 How to Measure Changes in the Cost of Living
	9.3 How the U.S. and Other Countries Experience Inflation
	9.4 The Confusion Over Inflation
	9.5 Indexing and Its Limitations
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 10 The International Trade and Capital Flows
	Introduction to the International Trade and Capital Flows
	10.1 Measuring Trade Balances
	10.2 Trade Balances in Historical and International Context
	10.3 Trade Balances and Flows of Financial Capital
	10.4 The National Saving and Investment Identity
	10.5 The Pros and Cons of Trade Deficits and Surpluses
	10.6 The Difference between Level of Trade and the Trade Balance
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 11 The Aggregate Demand/Aggregate Supply Model
	Introduction to the Aggregate Supply–Aggregate Demand Model
	11.1 Macroeconomic Perspectives on Demand and Supply
	11.2 Building a Model of Aggregate Demand and Aggregate Supply
	11.3 Shifts in Aggregate Supply
	11.4 Shifts in Aggregate Demand
	11.5 How the AD/AS Model Incorporates Growth, Unemployment, and Inflation
	11.6 Keynes’ Law and Say’s Law in the AD/AS Model
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 12 The Keynesian Perspective
	Introduction to the Keynesian Perspective
	12.1 Aggregate Demand in Keynesian Analysis
	12.2 The Building Blocks of Keynesian Analysis
	12.3 The Phillips Curve
	12.4 The Keynesian Perspective on Market Forces
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
Chapter 13 The Neoclassical Perspective
	Introduction to the Neoclassical Perspective
	13.1 The Building Blocks of Neoclassical Analysis
	13.2 The Policy Implications of the Neoclassical Perspective
	13.3 Balancing Keynesian and Neoclassical Models
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 14 Money and Banking
	Introduction to Money and Banking
	14.1 Defining Money by Its Functions
	14.2 Measuring Money: Currency, M1, and M2
	14.3 The Role of Banks
	14.4 How Banks Create Money
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 15 Monetary Policy and Bank Regulation
	Introduction to Monetary Policy and Bank Regulation
	15.1 The Federal Reserve Banking System and Central Banks
	15.2 Bank Regulation
	15.3 How a Central Bank Executes Monetary Policy
	15.4 Monetary Policy and Economic Outcomes
	15.5 Pitfalls for Monetary Policy
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 16 Exchange Rates and International Capital Flows
	Introduction to Exchange Rates and International Capital Flows
	16.1 How the Foreign Exchange Market Works
	16.2 Demand and Supply Shifts in Foreign Exchange Markets
	16.3 Macroeconomic Effects of Exchange Rates
	16.4 Exchange Rate Policies
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 17 Government Budgets and Fiscal Policy
	Introduction to Government Budgets and Fiscal Policy
	17.1 Government Spending
	17.2 Taxation
	17.3 Federal Deficits and the National Debt
	17.4 Using Fiscal Policy to Fight Recession, Unemployment, and Inflation
	17.5 Automatic Stabilizers
	17.6 Practical Problems with Discretionary Fiscal Policy
	17.7 The Question of a Balanced Budget
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 18 The Impacts of Government Borrowing
	Introduction to the Impacts of Government Borrowing
	18.1 How Government Borrowing Affects Investment and the Trade Balance
	18.2 Fiscal Policy and the Trade Balance
	18.3 How Government Borrowing Affects Private Saving
	18.4 Fiscal Policy, Investment, and Economic Growth
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 19 Macroeconomic Policy Around the World
	Introduction to Macroeconomic Policy around the World
	19.1 The Diversity of Countries and Economies across the World
	19.2 Improving Countries’ Standards of Living
	19.3 Causes of Unemployment around the World
	19.4 Causes of Inflation in Various Countries and Regions
	19.5 Balance of Trade Concerns
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 20 International Trade
	Introduction to International Trade
	20.1 Absolute and Comparative Advantage
	20.2 What Happens When a Country Has an Absolute Advantage in All Goods
	20.3 Intra-industry Trade between Similar Economies
	20.4 The Benefits of Reducing Barriers to International Trade
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Chapter 21 Globalization and Protectionism
	Introduction to Globalization and Protectionism
	21.1 Protectionism: An Indirect Subsidy from Consumers to Producers
	21.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions
	21.3 Arguments in Support of Restricting Imports
	21.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally
	21.5 The Tradeoffs of Trade Policy
	Key Terms
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	Problems
Appendix A The Use of Mathematics in Principles of Economics
	Algebraic Models
	Growth Rates
	Displaying Data Graphically and Interpreting the Graph
	Key Concepts and Summary
	Review Questions
Appendix B The Expenditure-Output Model
	The Axes of the Expenditure-Output Diagram
	Building the Aggregate Expenditure Schedule
	Equilibrium in the Keynesian Cross Model
	The Multiplier Effect
	Key Concepts and Summary
	Self-Check Questions
	Review Questions
	Critical Thinking Questions
	References
Answer Key
	Chapter 1
	Chapter 2
	Chapter 3
	Chapter 4
	Chapter 5
	Chapter 6
	Chapter 7
	Chapter 8
	Chapter 9
	Chapter 10
	Chapter 11
	Chapter 12
	Chapter 13
	Chapter 14
	Chapter 15
	Chapter 16
	Chapter 17
	Chapter 18
	Chapter 19
	Chapter 20
	Chapter 21
References
	Welcome to Economics!
	Choice in a World of Scarcity
	Demand and Supply
	Labor and Financial Markets
	Elasticity
	The Macroeconomic Perspective
	Economic Growth
	Unemployment
	Inflation
	The International Trade and Capital Flows
	The Aggregate Demand/Aggregate Supply Model
	The Keynesian Perspective
	The Neoclassical Perspective
	Money and Banking
	Monetary Policy and Bank Regulation
	Exchange Rates and International Capital Flows
	Government Budgets and Fiscal Policy
	The Impacts of Government Borrowing
	Macroeconomic Policy Around the World
	International Trade
	Globalization and Protectionism
Index
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