Principles of Macroeconomics for AP® Courses 2e

Principles of Macroeconomics for AP® Courses 2e......Page 3
3. About Principles of Macroeconomics for AP® Courses 2e......Page 9
4. Additional resources......Page 13
5. About the authors......Page 15
Chapter 1. Welcome to Economics!......Page 17
1.1. What Is Economics, and Why Is It Important?*......Page 18
1.2. Microeconomics and Macroeconomics*......Page 22
1.3. How Economists Use Theories and Models to Understand Economic Issues*......Page 23
1.4. How To Organize Economies: An Overview of Economic Systems*......Page 26
Glossary......Page 31
Chapter 2. Choice in a World of Scarcity......Page 35
2.1. How Individuals Make Choices Based on Their Budget Constraint*......Page 36
2.2. The Production Possibilities Frontier and Social Choices*......Page 41
2.3. Confronting Objections to the Economic Approach*......Page 46
Glossary......Page 50
Chapter 3. Demand and Supply......Page 53
3.1. Demand, Supply, and Equilibrium in Markets for Goods and Services*......Page 54
3.2. Shifts in Demand and Supply for Goods and Services*......Page 60
3.3. Changes in Equilibrium Price and Quantity: The Four-Step Process*......Page 69
3.4. Price Ceilings and Price Floors*......Page 75
3.5. Demand, Supply, and Efficiency*......Page 79
Glossary......Page 83
Chapter 4. Labor and Financial Markets......Page 91
4.1. Demand and Supply at Work in Labor Markets*......Page 92
4.2. Demand and Supply in Financial Markets*......Page 100
4.3. The Market System as an Efficient Mechanism for Information*......Page 106
Glossary......Page 111
Chapter 5. The Macroeconomic Perspective......Page 115
5.1. Measuring the Size of the Economy: Gross Domestic Product*......Page 117
5.2. Adjusting Nominal Values to Real Values*......Page 126
5.3. Tracking Real GDP over Time*......Page 132
5.4. Comparing GDP among Countries*......Page 134
5.5. How Well GDP Measures the Well-Being of Society*......Page 137
Glossary......Page 140
Chapter 6. Economic Growth......Page 145
6.1. The Relatively Recent Arrival of Economic Growth*......Page 146
6.2. Labor Productivity and Economic Growth*......Page 149
6.3. Components of Economic Growth*......Page 156
6.4. Economic Convergence*......Page 160
Glossary......Page 166
Chapter 7. Unemployment......Page 171
7.1. How Economists Define and Compute Unemployment Rate*......Page 172
7.2. Patterns of Unemployment*......Page 177
7.3. What Causes Changes in Unemployment over the Short Run*......Page 182
7.4. What Causes Changes in Unemployment over the Long Run*......Page 186
Glossary......Page 194
Chapter 8. Inflation......Page 199
8.1. Tracking Inflation*......Page 200
8.2. How to Measure Changes in the Cost of Living*......Page 204
8.3. How the U.S. and Other Countries Experience Inflation*......Page 209
8.4. The Confusion Over Inflation*......Page 214
8.5. Indexing and Its Limitations*......Page 219
Glossary......Page 222
Chapter 9. The International Trade and Capital Flows......Page 227
9.1. Measuring Trade Balances*......Page 228
9.2. Trade Balances in Historical and International Context*......Page 232
9.3. Trade Balances and Flows of Financial Capital*......Page 234
9.4. The National Saving and Investment Identity*......Page 237
9.5. The Pros and Cons of Trade Deficits and Surpluses*......Page 241
9.6. The Difference between Level of Trade and the Trade Balance*......Page 243
Glossary......Page 246
Chapter 10. The Aggregate Demand/Aggregate Supply Model......Page 251
10.1. Macroeconomic Perspectives on Demand and Supply*......Page 253
10.2. Building a Model of Aggregate Demand and Aggregate Supply*......Page 254
10.3. Shifts in Aggregate Supply*......Page 260
10.4. Shifts in Aggregate Demand*......Page 262
10.5. How the AD/AS Model Incorporates Growth, Unemployment, and Inflation*......Page 266
10.6. Keynes’ Law and Say’s Law in the AD/AS Model*......Page 269
Glossary......Page 271
Chapter 11. The Keynesian Perspective......Page 279
11.1. Aggregate Demand in Keynesian Analysis*......Page 280
11.2. The Building Blocks of Keynesian Analysis*......Page 284
11.3. The Expenditure-Output (or Keynesian Cross) Model*......Page 287
11.4. The Phillips Curve*......Page 305
11.5. The Keynesian Perspective on Market Forces*......Page 309
Glossary......Page 311
Chapter 12. The Neoclassical Perspective......Page 317
12.1. The Building Blocks of Neoclassical Analysis*......Page 319
12.2. The Policy Implications of the Neoclassical Perspective*......Page 324
12.3. Balancing Keynesian and Neoclassical Models*......Page 331
Glossary......Page 333
Chapter 13. Money and Banking......Page 337
13.1. Defining Money by Its Functions*......Page 338
13.2. Measuring Money: Currency, M1, and M2*......Page 340
13.3. The Role of Banks*......Page 343
13.4. How Banks Create Money*......Page 348
Glossary......Page 352
Chapter 14. Monetary Policy and Bank Regulation......Page 357
14.1. The Federal Reserve Banking System and Central Banks*......Page 358
14.2. Bank Regulation*......Page 361
14.3. How a Central Bank Executes Monetary Policy*......Page 364
14.4. Monetary Policy and Economic Outcomes*......Page 367
14.5. Pitfalls for Monetary Policy*......Page 372
Glossary......Page 379
Chapter 15. Exchange Rates and International Capital Flows......Page 383
15.1. How the Foreign Exchange Market Works*......Page 384
15.2. Demand and Supply Shifts in Foreign Exchange Markets*......Page 392
15.3. Macroeconomic Effects of Exchange Rates*......Page 397
15.4. Exchange Rate Policies*......Page 399
Glossary......Page 406
Chapter 16. Government Budgets and Fiscal Policy......Page 411
16.1. Government Spending*......Page 412
16.2. Taxation*......Page 415
16.3. Federal Deficits and the National Debt*......Page 417
16.4. Using Fiscal Policy to Fight Recession, Unemployment, and Inflation*......Page 420
16.5. Automatic Stabilizers*......Page 423
16.6. Practical Problems with Discretionary Fiscal Policy*......Page 425
16.7. The Question of a Balanced Budget*......Page 429
Glossary......Page 431
Chapter 17. The Impacts of Government Borrowing......Page 437
17.1. How Government Borrowing Affects Investment and the Trade Balance*......Page 438
17.2. Fiscal Policy, Investment, and Economic Growth*......Page 441
17.3. How Government Borrowing Affects Private Saving*......Page 446
17.4. Fiscal Policy and the Trade Balance*......Page 447
Glossary......Page 452
Chapter 18. Macroeconomic Policy Around the World......Page 455
18.1. The Diversity of Countries and Economies across the World*......Page 457
18.2. Improving Countries’ Standards of Living*......Page 460
18.3. Causes of Unemployment around the World*......Page 465
18.4. Causes of Inflation in Various Countries and Regions*......Page 466
18.5. Balance of Trade Concerns*......Page 467
Glossary......Page 472
A.1. Algebraic Models......Page 477
A.3. Displaying Data Graphically and Interpreting the Graph......Page 481
A.5. Review Questions......Page 492
B.1. What Is an Indifference Curve?......Page 493
B.2. Utility-Maximizing with Indifference Curves......Page 495
B.3. Changes in Income......Page 496
B.4. Responses to Price Changes: Substitution and Income Effects......Page 497
B.5. Indifference Curves with Labor-Leisure and Intertemporal Choices......Page 498
B.6. Sketching Substitution and Income Effects......Page 501
B.7. Key Concepts and Summary......Page 504
B.8. Review Questions......Page 505
C.1. Applying Present Discounted Value to a Stock......Page 507
C.3. Other Applications......Page 508
Chapter 2......Page 511
Chapter 3......Page 512
Chapter 4......Page 514
Chapter 6......Page 517
Chapter 8......Page 519
Chapter 9......Page 521
Chapter 10......Page 523
Chapter 11......Page 524
Chapter 13......Page 527
Chapter 15......Page 528
Chapter 16......Page 529
Chapter 17......Page 531
Chapter 18......Page 532
References......Page 535
Index......Page 543
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