This introductory text offers an alternative to the encyclopedic, technically oriented approach taken by traditional textbooks on macroeconomic principles. Concise and nontechnical but rigorous, its goal is not to teach students to shift curves on diagrams but to help them understand fundamental macroeconomic concepts and their real-world applications. It accomplishes this by providing a clear exposition of introductory macroeconomic theory along with more than 700 one- or two-sentence “news clips,” based on economics media coverage, as illustrations or student exercises. Although the writing is accessible, end-of-chapter questions are challenging, requiring a thorough understanding of related macroeconomic concepts, critical-thinking skills, and an ability to make connections to the real world.
This fourth edition has been thoroughly revised and updated, with new material on such topics as aggregate supply and demand, supply-side models, recent issues faced by the Federal Reserve, the role of government, and “burst bubbles.” The more challenging end-of-chapter questions are separated out, and news clip questions have been added that refer to recent events. Optional chapter appendixes offer technical material; other appendixes provide answers to sample exam questions and to even-numbered end-of-chapter questions. Text boxes (“curiosities”) offer short expositions of related topics. The book can be used as a text for principles of macroeconomics and applied macroeconomics courses, as a supplementary text for a traditional macro-principles course, or for MBA macroeconomics courses.
Author(s): Peter Kennedy
Edition: 3rd
Publisher: MIT Press
Year: 2010
Language: English
Pages: 483
Tags: Macroeconomics, Economy, Economics,
Contents......Page 8
Preface......Page 14
Chapter 1. Introduction......Page 18
1.1 Media Economics......Page 19
1.2 Up-and-Down Economics......Page 20
1.4 A Picture Can Be Worth a Thousand Words......Page 21
1.5 Really Important Macroeconomic Ideas......Page 22
Chapter 2. The Basics of Supply and Demand, and a Big Picture......Page 28
2.1 Supply and Demand Diagram......Page 29
2.2 Equilibrium......Page 30
2.3 Shifts in Curves versus Movements along Curves......Page 31
2.4 Media Examples......Page 33
2.5 Macroeconomic Markets......Page 34
2.6 Picturing the Macroeconomic Markets......Page 35
2.7 A “Big Picture” for Macroeconomics......Page 37
Chapter 3. Measuring GDP and Inflation......Page 40
3.1 What Is GDP?......Page 41
3.2 Estimating GDP......Page 43
3.3 GDP as Gross Deceptive Product......Page 45
3.4 Real versus Nominal GDP......Page 48
3.5 Measuring Inflation......Page 50
3.6 The Costs of Infl ation......Page 54
Chapter 4. Unemployment......Page 68
4.1 Defining and Measuring Unemployment......Page 69
4.2 The Employment/Unemployment Connection......Page 72
4.3 What Is Full Employment?......Page 73
4.4 The Cost of Unemployment......Page 75
Chapter 5. The Role of Aggregate Demand......Page 88
5.1 Aggregate Demand......Page 89
5.2 Determining National Income......Page 90
5.3 The Multiplier......Page 92
5.4 How Big Is the Multiplier?......Page 96
5.5 Inventories and Forecasting......Page 101
5.6 Policy Implications......Page 102
5.7 Deficit Spending......Page 104
5.8 Burdening Future Generations......Page 107
Chapter 6. The Supply Side......Page 134
6.1 The Aggregate Supply Curve......Page 135
6.2 The Aggregate Demand Curve......Page 136
6.3 Using the Aggregate-Supply/Aggregate-Demand Diagram......Page 138
6.4 Where Is Full Employment?......Page 139
6.5 Moving into a Boom......Page 140
6.6 Moving into a Recession......Page 143
6.7 Analyzing Supply Shocks......Page 146
6.8 Supply-Side Economics......Page 148
Chapter 7. Growth and Productivity......Page 160
7.1 The Determinants of Growth......Page 161
7.2 The Productivity Growth Process......Page 166
7.3 The Role of National Saving......Page 168
7.4 Policy for Growth......Page 172
Chapter 8. The Money Supply......Page 184
8.1 What Is Money?......Page 185
8.2 Fractional Reserve Banking......Page 189
8.3 Controlling the Money Supply......Page 191
8.4 The Money Multiplier......Page 192
8.5 The Subprime Mortgage Crisis......Page 194
Chapter 9. The Monetarist Rule......Page 206
9.1 The Quantity Theory......Page 207
9.2 The Modern Quantity Theory......Page 208
9.3 The Monetarist Rule......Page 211
9.4 Seigniorage......Page 214
9.5 The Rules-versus-Discretion Debate......Page 215
Chapter 10. Monetary Policy and Interest Rates......Page 234
10.1 A Multitude of Interest Rates......Page 235
10.2 Interest Rates and the Price of Bonds......Page 236
10.3 Monetary Policy and Interest Rates......Page 242
10.4 The Transmission Mechanism......Page 243
10.5 Monetary Policy versus Fiscal Policy......Page 245
Chapter 11. Real-versus-Nominal Interest Rates......Page 264
11.1 Expected Inflation......Page 265
11.2 The Real Rate of Interest......Page 266
11.3 The Nominal Rate of Interest......Page 268
11.4 Policy Implications......Page 271
Chapter 12. Stagflation......Page 290
12.1 The Phillips Curve......Page 291
12.2 Policy Implications......Page 295
12.3 Fighting Infl ation with Recession......Page 297
12.4 Wage-Price Controls......Page 302
12.5 Explaining Stagfl ation......Page 303
Chapter 13. The Balance of Payments......Page 324
13.1 The Balance of Payments......Page 325
13.2 Determinants of Foreign Exchange Market Activity......Page 326
13.3 The International Economic Accounts......Page 329
13.4 The Twin Defi cits......Page 332
Chapter 14. Policy in an Open Economy......Page 344
14.1 International Imbalance with a Flexible Exchange Rate......Page 345
14.2 International Imbalance with a Fixed Exchange Rate......Page 347
14.3 International Influence on Fiscal Policy......Page 348
14.4 International Influence on Monetary Policy......Page 349
14.5 Sterilization Policy......Page 351
14.6 Government Influence on the Exchange Rate......Page 352
14.7 Fixed-versus-Flexible Exchange Rates......Page 354
Chapter 15. Purchasing Power Parity......Page 366
15.1 Inflation with a Fixed Exchange Rate......Page 367
15.2 Inflation with a Flexible Exchange Rate......Page 369
15.3 Purchasing Power Parity......Page 371
15.4 The PPP Exchange Rate......Page 374
Chapter 16. Interest-Rate Parity......Page 384
16.1 Why Are Real Interest Rates Similar in Different Countries?......Page 385
16.2 Why Approximately?......Page 386
16.3 Why Not Nominal Interest Rates?......Page 387
Chapter 3: Measuring GDP and Infl ation......Page 400
Chapter 5: The Role of Aggregate Demand......Page 401
Chapter 6: The Supply Side......Page 402
Chapter 8: The Money Supply......Page 403
Chapter 9: The Monetarist Rule......Page 404
Chapter 11: Real-versus-Nominal Interest Rates......Page 405
Chapter 13: The Balance of Payments......Page 406
Chapter 15: Purchasing Power Parity......Page 407
Chapter 16: Interest Rate Parity......Page 408
Chapter 3: Measuring GDP and Inflation......Page 410
Chapter 4: Unemployment......Page 412
Chapter 5: The Role of Aggregate Demand......Page 414
Chapter 6: The Supply Side......Page 418
Chapter 7: Growth and Productivity......Page 419
Chapter 8: The Money Supply......Page 421
Chapter 9: The Monetarist Rule......Page 422
Chapter 10: Monetary Policy and Interest Rates......Page 425
Chapter 11: Real-versus-Nominal Interest Rates......Page 430
Chapter 12: Stagflation......Page 433
Chapter 13: The Balance of Payments......Page 436
Chapter 14: Policy in an Open Economy......Page 438
Chapter 15: Purchasing Power Parity......Page 441
Chapter 16: Interest Rate Parity......Page 443
Glossary......Page 446
Index......Page 464
