Macroeconomic Essentials. Understanding Economics in the News 2000

Macroeconomic Essentials - 2nd Edition: Understanding Economics in the News

ISBN: 0262611503
EAN: 2147483647

Year: 2004
Pages: 152

Authors: Peter E. Kennedy

BUY ON AMAZON

Cover
Cover
Contents
1 Introduction
1.1 Media Economics
1.2 Up-and-Down Economics
1.3 Policy Evaluation
1.4 A Picture Can Be Worth a Thousand Words
1.5 Really Important Macroeconomic Ideas
2 Measuring GDP and Inflation
2.1 What Is GDP?
Curiosity 2.1: What Is the Difference between GDP and GNP?
2.2 Estimating GDP
Curiosity 2.2: Where Can These Numbers Be Found?
2.3 GDP as Gross Deceptive Product
2.4 Real versus Nominal GDP
2.5 Measuring Inflation
Curiosity 2.3: How Do the GDP Deflator and the CPI Differ?
2.6 The Costs of Inflation
Curiosity 2.4: What Level of Inflation Should We Aim For?
Media Illustrations
Appendix 2.1: Measuring GDP by Adding Up Incomes
3 Unemployment
3.1 Defining and Measuring Unemployment
3.2 The EmploymentUnemployment Connection
Curiosity 3.1: How Is Unemployment Measured?
3.3 What Is Full Employment?
Curiosity 3.2: Why Is Unemployment So High in Europe?
3.4 The Cost of Unemployment
Curiosity 3.3: What Is Okun s Law?
Media Illustrations
4 The Role of Aggregate Demand
4.1 Aggregate Demand
Curiosity 4.1: What about Unwanted Investment in Inventories?
4.2 Determining National Income
4.3 The Multiplier
Curiosity 4.2: What Is the Multiplier?
4.4 Inventories and Forecasting
4.5 Policy Implications
Curiosity 4.3: What Is a Leading Indicator?
Media Illustrations
Appendix 4.1: Macroeconomics before Keynes: The Classical School
Appendix 4.2: The Circular Flow of Income
Appendix 4.3: The 45-Line Diagram
5 The Supply Side
5.1 The Aggregate Supply Curve
5.2 The Aggregate Demand Curve
5.3 Using the Aggregate-SupplyAggregate-Demand Diagram
5.4 Where Is Full Employment?
5.5 Moving into a Boom
Curiosity 5.1: How Do AD and AS Curves Differfrom Microeconomic Curves?
5.6 Moving into a Recession
Curiosity 5.2: Are Real Wages Countercyclical?
5.7 Analyzing Supply Shocks
5.8 Supply-Side Economics
Curiosity 5.3: What Is Real Business Cycle Theory?
Media Illustrations
Appendix 5.1: Deriving the AD Curve
6 Growth and Productivity
6.1 The Determinants of Growth
Curiosity 6.1: What Is Endogenous Growth Theory?
6.2 The Productivity Growth Process
6.3 The Role of National Saving
Curiosity 6.2: What about Foreign Financing?
6.4 Policy for Growth
Media Illustrations
7 Crowding Out
7.1 Automatic Stabilizers
7.2 Financing an Increase in Government Spending
Curiosity 7.1: What Is the Balanced-Budget Multiplier?
Media Illustrations
8 The Money Supply
8.1 What Is Money?
Curiosity 8.1: What Is the Fed?
Curiosity 8.2: What Is a NOW Account?
8.2 Fractional Reserve Banking
Curiosity 8.3: What Are the Legal Reserve Requirements?
8.3 Controlling the Money Supply
8.4 The Money Multiplier
Curiosity 8.4: How Big Is the Money Multiplier?
Media Illustrations
Appendix 8.1: What Is a Financial Intermediary?
9 The Monetarist Rule
9.1 The Quantity Theory
9.2 The Modem Quantity Theory
Curiosity 9.1: Does Excess Money Really Affect Spending?
9.3 The Monetarist Rule
Curiosity 9.2: What If Velocity Isn t Constant?
9.4 The Rules-versus-Discretion Debate
Curiosity 9.3: Should the Fed Be Independent?
Media Illustrations
10 Monetary Policy and Interest Rates
10.1 A Multitude of Interest Rates
10.2 Interest Rates and the Price of Bonds
Curiosity 10.1: How Is Yield to Maturity Calculated?
10.3 Monetary Policy and Interest Rates
10.4 The Transmission Mechanism
10.5 Monetary Policy versus Fiscal Policy
Curiosity 10.2: What Are the Discount and Federal Funds Rates?
Media Illustrations
Appendix 10.1: All about Bonds
11 Real versus Nominal Interest Rates
11.1 Expected Inflation
11.2 The Real Rate of Interest
11.3 The Nominal Rate of Interest
Curiosity 11.1: What Is the Term Structure of Interest Rates?
11.4 Policy Implications
Curiosity 11.2: Was the Fed Ever Monetarist?
Media Illustrations
Appendix 11.1 Eight Applications of Real versus Nominal Interest Rates
12 Stagflation
12.1 The Phillips Curve
Curiosity 12.1: What Are New Classicals and New Keynesians?
12.2 Policy Implications
12.3 Fighting Inflation with Recession
Curiosity 12.2 Why Did the Natural Rate of Unemployment Fall in the Late 1990s?
Curiosity 12.3: What Is the Sacrifice Ratio?
12.4 Wage-Price Controls
12.5 Explaining Stagflation
Media Illustrations
13 The Real Cause of Inflation
13.1 Losing Control of the Money Supply
Curiosity 13.1: What Is Hysteresis?
Curiosity 13.2: What Is Seigniorage?
Media Illustrations
14 Budget Deficits and the National Debt
14.1 Implications of Budget Deficits
Curiosity 14.1: What Is the Full-Employment Budget?
14.2 The Structural Deficit
14.3 Burdening Future Generations
Curiosity 14.2: What Is Generational Accounting?
Media Illustrations
15 The Balance of Payments
15.1 The Balance of Payments
Curiosity 15.1: Where Is the Foreign Exchange Market?
15.2 Determinants of Foreign Exchange Market Activity
15.3 The International Economic Accounts
Curiosity 15.2: Why Is There More Than One Exchange Rate?
Curiosity 15.3: How Do We Know the Statistical Discrepancy?
15.4 The Twin Deficits
Media Illustrations
Appendix 15.1: The Principle of Comparative Advantage
16 Policy in an Open Economy
16.1 International Imbalance with a Flexible Exchange Rate
Curiosity 16.1: What Is the Effective Exchange Rate?
16.2 International Imbalance with a Fixed Exchange Rate
16.3 Fiscal Policy under Flexible Exchange Rates
16.4 Fiscal Policy under Fixed Exchange Rates
16.5 Monetary Policy under Flexible Exchange Rates
16.6 Monetary Policy under Fixed Exchange Rates
16.7 Sterilization Policy
Curiosity 16.2: What Is the J Curve?
16.8 Government Influence on the Exchange Rate
16.9 Fixed versus Flexible Exchange Rates
Media Illustrations
17 Purchasing Power Parity
17.1 Inflation with a Fixed Exchange Rate
Curiosity 17.1: What Was the Bretton Woods System?
17.2 Inflation with a Flexible Exchange Rate
Curiosity 17.2: What Is the Real Exchange Rate?
17.3 Purchasing Power Parity
17.4 The PPP Exchange Rate
Media Illustrations
18 Interest Rate Parity
18.l Why Are Real Interest Rates Similar in Different Countries?
18.2 Why Approximately?
Curiosity 18.1: Can Monetary Policy Change Real Interest Rates?
18.3 Why Not Nominal Interest Rates?
Curiosity 18.2: What Is a Forward Exchange Rate?
Media Illustrations
Appendix A: Supply and Demand
Appendix B: Additional Media Exercises
Appendix C: Suggested Answers to Even-Numbered Exercises