
Introductory Macroeconomics
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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