Introductory Macroeconomics

Introductory Macroeconomics

2nd Edition - January 1, 1984

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  • Author: Michael Veseth
  • eBook ISBN: 9781483257686

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Description

Introductory Macroeconomics, Second Edition deals with national economic issues, such as unemployment, inflation, the aggregate demand-aggregate supply model of macroeconomics, government economic policy, exchange, rates, international trade, and finance. The book examines national economic problems, economic goals, the role markets play in the economy, price control, unemployment, and inflation. By using the Phillips curve trade-off, the text notes that inflation increases the demand for labor. In the long term, according to the long-run Phillips curve, increased inflation does not actually lessen unemployment levels (known as the natural unemployment rate hypothesis). The text also examines whether minimum wage laws are necessary (to fight poverty, prevent exploitation) or cause poverty (in which the imposition of minimum wage results in lower demand for unskilled labor). The book notes that politics and unions favor minimum wage laws. The poor, uneducated, and unskilled laborers are left out. The text also tackles goals and trade-offs: for example, that economic growth suffers from both inflation and unemployment, or the trade-off that preventing unemployment only results in worse inflation problems. Economists, sociologists, professors in economics, or policy makers involved in economic and social development will find the text valuable.

Table of Contents


  • I Tools and Problems

    1 Macroeconomic Problems

    What Is Economics?

    Macroeconomic Goals and Problems

    The Great Depression

    The 1940s: War and Inflation

    The 1950s: Business Cycles

    The 1960s: The New Economics

    The Phillips Curve

    The 1970s: Stagflation

    What Happened to the Phillips Curve?

    The 1980s and Beyond

    Economic Controversy: Another Great Depression?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    2 Supply and Demand

    The Market

    The Idea of Demand

    The Demand Curve

    Shifts in Demand

    The Idea of Supply

    The Supply Curve

    Shifts in Supply

    The Market at Work

    Applications of Supply and Demand

    Inflation: A Preview

    Review of Market Actions

    Economic Controversy: Are Price Controls Desirable?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    3 The Problem of Unemployment

    The Unemployment Record

    The Unemployment Rate

    Unemployment and the Unemployment Rate

    Types of Unemployment

    The Goal of Full Employment

    How Serious Is the Unemployment Problem?

    The Labor Market

    Causes of Unemployment

    Inflation and Unemployment

    Economic Controversy: Minimum Wage

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    4 Understanding Inflation

    What Is Inflation?

    The Inflation Record

    Economic Effects of Inflation

    The Power of Compound Inflation

    Coping with Inflation

    Measuring Inflation

    Price Index Problems

    Three Inflation Measures

    Calculating Real Values

    Economic Controversy: Inflation or Unemployment?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    II A Simple Model of the Economy

    5 Measuring Economic Activity

    Why Measure Economic Activity?

    Gross National Product

    Three Views of GNP

    Take This with a Grain of Salt

    Real Gross National Product

    Are We Better Off Today Than in Years Past?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    6 Keynesian Aggregate Demand

    Depression Economics

    Spending Creates Income

    Macroeconomic Equilibrium

    Is Equilibrium Good?

    What Caused the Great Depression?

    Depression Economic Policies

    Inflation and Unemployment

    Four Components of Aggregate Demand

    The Aggregate Demand Curve

    Economic Controversy: Keynes Versus the Classics

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    Appendix: The 45-Degree Model of Circular Flow

    7 Aggregate Supply and the Economy

    Aggregate Supply

    The Aggregate Supply Curve

    Shifts in the Aggregate Supply Curve

    Macroeconomic Equilibrium

    Adjusting to Equilibrium

    Leading Indicators

    Inflation and Unemployment

    That Old-Time Religion

    Wage and Price Controls

    Indexation

    Increasing Aggregate Supply

    Winners and Losers from Economic Policies

    Economic Controversy: Wage and Price Controls

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    8 Fiscal Policy

    The Economic Role of Government

    Tools of Fiscal Policy

    The Multiplier Analysis

    Tax and Transfer Multipliers

    Multipliers and Government Policy

    Government and the Economy

    Multipliers in the Real World

    Government Spending Policies

    Different Types of Taxes

    Major United States Taxes

    The Total Tax Burden

    Tax Expenditures

    Automatic Stabilizers

    Advantages and Disadvantages of Fiscal Policies

    Deficit Spending and the National Debt

    Economic Controversy: Supply-Side

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    III Money, Credit, and the Economy

    9 Money and Banking

    A Financial Fable

    The Money Supply

    Money Substitutes

    The Interest Rate

    The Prime Interest Rate

    Money and Banks

    Fractional Reserve Banking

    How Banks Create Money

    The Fed

    Open Market Operations

    Reserve Requirement Policy

    Discount Rate Policy

    Economic Controversy: Return to the Gold Standard?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    10 Credit Markets and Monetary Policy

    The Stock Market

    Commodity Markets

    Bond Markets

    Credit Markets

    The Demand for Credit

    The Credit Demand Curve

    The Supply of Credit

    The Credit Supply Curve

    The Credit Market at Work

    The Inflation Premium

    High Interest Rates and Disintermediation

    Investment and the Credit Market

    Monetary Policy

    The Pros and Cons of Monetary Policy

    Economic Controversy: Interest Rate Ceilings?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    11 Monetary versus Fiscal Policy

    Fighting Unemployment

    Policy Options

    Fighting Inflation

    Fighting Stagflation

    Financing Government Spending

    Reviewing the Alternatives

    Congress Versus the Fed

    Economic Controversy: The Independence of the Federal Reserve

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    12 The Challenge to Keynesian Economics

    Keynesian Doctrine

    Monetarist Theory

    Modern Monetarist Theory

    Friedman's Policy of Rules

    The Monetarist Influence

    Rational Expectations Theory

    Rational Expectations Policies

    Disequilibrium Theory

    Supply-Side Economics

    Who Is Right Here?

    Economic Controversy: How Do You Fight Inflation?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    IV International Economics

    13 International Trade

    Why Do Nations Trade?

    The Law of Comparative Advantage

    Gains from Trade

    Economic Effects of Trade

    Comparative Advantage in the Real World

    Tariffs and Quotas

    Who Pays the Tariff?

    Arguments for Tariffs

    Arguments against Tariffs

    Customs Unions

    Balance-of-Payments Accounts

    Stages in the Balance of Payments

    Is a Deficit Bad?

    Economic Controversy: Automobile Import Quotas?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    14 The Foreign-Exchange Market

    The Exchange Rate

    The Foreign-Exchange Market

    Demand for Francs

    Demand for Dollars

    Games Exchange Rates Play

    Here Is Demand, Where Is Supply?

    Exchange-Market Equilibrium

    The Foreign-Exchange Market at Work

    The Traveller's Paradox

    Fixed Exchange Rates

    Economic Controversy: Flexible or Fixed Exchange Rates?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    15 International Economics

    Trade and the Economy

    International Credit Movements

    Eurodollars

    Economic Policy with Flexible Exchange Rates

    Economic Lessons for the 1980s

    Economic Policy with Fixed Exchange Rates

    Economic Lessons from the 1970s

    Economic Policy with Intervention

    Oil and International Economic Policy

    Interest Rate Wars

    Economic Controversy: Defending the Dollar

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    16 Problems, Goals, and Trade-Offs

    Goal 1: Full Employment

    Goal 2: Stable Prices

    Goal 3: Economic Growth

    Other National Goals

    International Economic Goals

    Trade-Offs: Give Up a Goal?

    Three Questions in Search of an Answer

    Policy Problems

    Questions? Answers! Answers?

    Economic Controversy: Where Are We Going?

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    Suggestions for Further Reading

    Glossary

    Answers to "Test Yourself"

    Index

Product details

  • No. of pages: 426
  • Language: English
  • Copyright: © Academic Press 1984
  • Published: January 1, 1984
  • Imprint: Academic Press
  • eBook ISBN: 9781483257686

About the Author

Michael Veseth

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