TY - BOOK AU - McConnell,Campbell R. AU - Brue,Stanley L. TI - Macroeconomics: principles, problems and policies SN - 0072875577 U1 - 339 PY - 2005///] CY - Boston PB - McGraw-Hill / Irwin KW - Macroeconomics. N1 - Includes glossary and index; pt. 1. An introduction to economics and the economy -- To the student -- 1. The nature and method of economics -- The economic perspective -- Scarcity and choice -- Rational behavior -- Marginalism : benefits and costs -- Consider this : free for all? -- Why study economics? -- Economics for citizenship -- Professional and personal applications -- Economic methodology -- Theoretical economics -- Policy economics -- Macroeconomics and microeconomics -- Macroeconomics -- Microeconomics -- Positive and normative economics -- Pitfalls to sound reasoning -- Biases -- Loaded terminology -- Definitions -- Fallacy of composition -- Causation fallacies -- A look ahead -- Last word : fast-food lines : an economic perspective -- Appendix chapter 1 : Graphs and their meaning -- Construction of a graph -- Direct and inverse relationships -- Dependent and independent variables -- Other things equal -- Slope of a line -- Vertical intercept -- Equation of a linear relationship -- Slope of a nonlinear curve -- 2. The economizing problem -- The foundation of economics -- Unlimited wants -- Scarce resources -- Economics : employment and efficiency -- Full employment : using available resources -- Full production : using resources efficiently -- Production possibilities table -- Production possibilities curve -- Law of Increasing opportunity cost -- Allocative efficiency revisited -- Unemployment, growth, and the future -- Unemployment and productive inefficiency -- A growing economy -- A qualification : international trade -- Examples and applications -- Consider this : a matter of degrees : is college worth the cost? -- Economic systems -- The market system -- The command system -- The circular flow model -- Last word : September 11, 2001, and the war on terrorism -- 3. Individual markets : demand and supply -- Markets -- Demand -- Law of demand -- The demand curve -- Market demand -- Change in demand -- Changes in quantity demanded -- Supply -- Law of supply -- The supply curve -- Determinants of supply -- Changes in supply -- Changes in quantity supplied -- Supply and demand : market equilibrium -- Surpluses -- Shortages -- Equilibrium price and quantity -- Rationing function of prices -- Changes in supply, demand, and equilibrium -- A reminder : "other things equal" -- Consider this : the cutting edge -- Application : government-set prices -- Price ceilings and shortages -- Price floors and surpluses -- Last word : ticket scalping : a bum rap? -- 3Web. Applications and extensions of supply and demand analysis (Web chapter, www.mcconnell16.com) -- Changes in supply and demand -- Lettuce -- American flags -- Pink salmon -- Gasoline -- Sushi -- Preset prices -- Olympic figure skating finals -- Olympic curling preliminaries -- Consider this : taking back a "gift" -- Nonpriced goods :the American bison -- Consumer and producer surplus -- Consumer surplus -- Producer surplus -- Efficiency revisited -- Efficiency losses -- Last word : efficiency gains from generic drugs -- 4. The market system -- Characteristics of the market system -- Private property -- Freedom of enterprise and choice -- Self-interest -- Competition -- Markets and prices -- Reliance on technology and capital goods -- Specialization -- Use of money -- Active, but limited, government -- The market system at work -- What will be produced? -- How will the goods and services be produced? -- Who will get the goods and services? -- How will the system accommodate change? -- Consider this : McHits and McMisses -- Competition and the "invisible hand" -- Last word : shuffling the deck -- 5. The U.S. economy : private and public sectors -- Households as income receivers -- The functional distribution of income -- The personal distribution of income -- Households as spenders -- Personal taxes -- Personal saving -- Personal consumption expenditures -- The business population -- Legal forms of businesses -- Advantages and disadvantages -- The principal-agent problem -- The public sector : government's role -- Providing the legal structure -- Maintaining competition -- Redistributing income -- Reallocating Resources -- Promoting stability -- Government's role : a qualification -- Consider this : street entertainers -- The circular flow revisited -- Government finance -- Government purchases and transfers -- Federal finance -- Federal expenditures -- Federal tax revenues -- State and local finance -- State finances -- Local finances -- Fiscal federalism -- Last word : the financing of corporations -- 6. The United States in the global economy -- International linkages -- The United States and world trade -- Volume and pattern -- Rapid trade growth -- Participants in international trade -- Specialization and comparative advantage -- Basic principle -- Comparative costs -- Terms of trade -- Gains from specialization and trade -- The foreign exchange market -- Dollar-yen market -- Changing rates : depreciation and appreciation -- Consider this : a ticket to ride -- Government and trade -- Trade impediments and subsidies -- Why government trade interventions? -- Costs to society -- Multilateral trade agreements and free-trade zones -- Reciprocal Trade Agreements Act -- General agreement on tariffs and trade -- World Trade Organization -- The European Union -- North American Free Trade Agreement -- Global competition -- Last word : petition of the candlemakers, 1845. pt. 2. Macroeconomic measurement and basic concepts -- 7. Measuring domestic output and national income -- Assessing the economy's performance -- Gross domestic product -- A monetary measure -- Avoiding multiple counting -- GDP excludes nonproduction transactions -- Two ways of looking at GDP : spending and income -- The expenditures approach -- Personal consumption expenditures (C) -- Gross private domestic investment (Ig) -- Government purchases (G) -- Net exports (Xn) -- Putting it all together : GDP = C + Ig + G + Xn -- Consider this : stock answers about flows -- The income approach -- Compensation of employees -- Rents -- Interest -- Proprietors' income -- Corporate profits -- From national income to GDP -- Other national accounts -- Net domestic product -- National income -- Personal income -- Disposable income -- The circular flow revisited -- Nominal GDP versus real GDP -- Adjustment process in a one-product economy -- An alternative method -- Real-world considerations and data -- Shortcomings of GDP -- Nonmarket activities -- Leisure -- Improved product quality -- The underground economy -- GDP and the environment -- Composition and distribution of output -- Noneconomic sources of well-being -- Last word : feeding the GDP accounts -- 8. Introduction to economic growth and instability -- Economic growth -- Growth as a goal -- Arithmetic of growth -- Main sources of growth -- Growth in the United States -- Relative growth rates -- The business cycle -- Phases of the business cycle -- Causation : a first glance -- Cyclical impact : Durables and nondurables -- Unemployment -- Measurement of unemployment -- Types of unemployment -- Definition of full employment -- Economic cost of unemployment -- Noneconomic costs -- International comparisons -- Inflation -- Meaning of inflation -- Measurement of inflation -- Facts of inflation -- Types of inflation -- Complexities -- Consider this : clipping coins -- Redistribution effects of inflation -- Who is hurt by inflation? -- Who is unaffected or helped by inflation? -- Anticipated inflation -- Addenda -- Effects of inflation on output -- Cost-push inflation and real output -- Demand-pull inflation and real output -- Hyperinflation and breakdown -- Last word : the stock market and the economy -- 9. Basic macroeconomic relationships -- The income-consumption and income-saving relationships -- The consumption schedule -- The saving schedule -- Average and marginal propensities -- Nonincome determinants of consumption and saving -- Terminology, shifts, and stability -- Consider this : what wealth effect? -- The interest-rate, investment -- Relationship -- Expected rate of return -- The real interest rate -- Investment demand curve -- Shifts of the investment demand curve -- Instability of investment -- The multiplier effect -- Rationale -- The multiplier and the marginal propensities -- How large is the actual multiplier effect? -- Last word : squaring the economic circle. pt. 3. Macroeconomic models and fiscal policy -- 10. The aggregate expenditures model -- Simplifications -- Consumption and investment schedules -- Equilibrium GDP : C + Ig = GDP -- Tabular analysis -- Graphical analysis -- Other features of equilibrium GDP -- Saving equals planned investment -- No unplanned changes in inventories -- Changes in equilibrium GDP and the multiplier -- Adding international trade -- Net exports and aggregate expenditures -- The net export schedule -- Net exports and equilibrium GDP -- International economic linkages -- Adding the public sector -- Government purchases and equilibrium GDP -- Taxation and equilibrium GDP -- Equilibrium versus full-employment GDP -- Recessionary gap -- Application : the U.S. recession of 2001 -- Inflationary gap -- Application : U.S. inflation in the late 1980s -- Limitations of the model -- Last word : Say's law, the Great Depression, and Keynes -- 11. Aggregate demand and aggregate supply -- Aggregate demand -- Aggregate demand curve -- Determinants of aggregate demand -- Aggregate supply -- Aggregate supply in the long run -- Aggregate supply in the short run -- Determinants of aggregate supply -- Equilibrium and changes in equilibrium -- Increases in AD : demand-pull inflation -- Decreases in AD : recession and cyclical unemployment -- Decreases in AS : cost-push inflation -- Increases in AS : full employment with price-level stability -- Consider this : ratchet effect -- Last word : why is unemployment in Europe so high? -- Appendix chapter 11 : the relationship of the aggregate demand curve to the aggregate expenditures model -- Deriving the aggregate demand curve from the aggregate expenditures model -- Aggregate demand shifts and the aggregate expenditures model -- 12. Fiscal policy -- Legislative mandates -- Fiscal policy and the AD-AS model -- Expansionary fiscal policy -- Contractionary fiscal policy -- Financing of deficits and disposing of surpluses -- Policy options : G or T -- Built-in stability -- Automatic or built-in stabilizers -- Evaluating fiscal policy -- Full-employment budget -- Recent U.S. fiscal policy -- Problems, criticisms, and complications -- Problems of timing -- Political considerations -- Future policy reversals -- Offsetting state and local finance -- Crowding-out effect -- Fiscal policy in the open economy -- Last word : the leading indicators -- Current thinking on fiscal policy. pt. 4. Money, banking, and monetary policy -- 13. Money and banking -- The functions of money -- The supply of money -- Money definition M1 -- Money definition M2 -- Money definition M3 -- Consider this : are credit cards money? -- What "backs" the money supply? -- Money as debt -- Value of money -- Money and prices -- Stabilization of money's value -- The demand for money -- Transactions demand, Dt -- Asset demand, Da -- Total money demand, Dm -- The money market -- Adjustment to a decline in the money supply -- Adjustment to an increase in the money supply -- The Federal Reserve and the banking system -- Historical background -- Board of Governors -- FOMC -- The 12 Federal Reserve Banks -- Commercial banks and thrifts -- Fed functions and the money supply -- Federal Reserve independence -- Recent developments in money and banking -- The relative decline of banks and thrifts -- Consolidation among banks and thrifts -- Convergence of services provided by financial institutions -- Globalization of Financial Markets -- Electronic Transactions -- Last word : the global greenback -- 14. How banks and thrifts create money -- The balance sheet of a commercial bank -- Prologue : the goldsmiths -- A single commercial bank -- Formation of a commercial bank -- Money-creating transactions of a commercial bank -- Profits, liquidity, and the federal funds market -- The banking system : multiple-deposit expansion -- The banking system's lending potential -- The monetary multiplier -- Some modifications -- Need for monetary control -- Last word : the bank panics of 1930 to 1933 -- 15. Monetary policy -- Consolidated balance sheet of the Federal Reserve Banks -- Assets -- Liabilities -- Tools of monetary policy -- Open-market operations -- The reserve ratio -- The discount rate -- Easy money and tight Money -- Relative importance -- Monetary policy, real GDP, and the price level -- Cause-effect chain -- Effects of an easy money policy -- Effects of a tight money policy -- Monetary policy in action -- The focus on the federal funds rate -- Recent monetary policy -- Problems and complications -- "Artful management" or "inflation targeting"? -- Monetary policy and the international economy -- Consider this : pushing on a string -- The "big picture" -- Last word : for the fed, life is a metaphor. pt. 5. Long-run perspectives and macroeconomic debates -- 16. Extending the analysis of aggregate supply -- From short run to long run -- Short-run aggregate supply -- Long-run aggregate supply -- Equilibrium in the extended AD-AS model -- Applying the extended AD-AS model -- Demand-pull inflation in the extended AD-AS model -- Cost-push inflation in the extended AD-AS model -- Recession and the extended AD-AS model -- The inflation-unemployment relationship -- The Phillips curve -- Aggregate supply shocks and the Phillips curve -- The long-run Phillips curve -- Short-run Phillips curve -- Long-run vertical Phillips curve -- Disinflation -- Taxation and aggregate supply -- Taxes and incentives to work -- Incentives to save and invest -- The Laffer curve -- Criticisms of the Laffer curve -- Rebuttal and evaluation -- Consider this : Sherwood Forest -- Last word : has the impact of oil prices diminished? -- 17. Economic growth -- Ingredients of growth -- Supply factors -- Demand factor -- Efficiency factor -- Production possibilities analysis -- Growth and production possibilities -- Labor and productivity -- Growth in the AD-AS model -- U.S. economic growth rates -- Accounting for growth -- Labor inputs versus productivity -- Technological advance -- Quantity of capital -- Education and training -- Economies of scale and resource allocation -- Other factors -- Consider this : economic growth rates matter! -- The productivity acceleration : a new economy? -- Reasons for the productivity acceleration -- Macroeconomic implications -- Skepticism about permanence -- What can we conclude? -- Is growth desirable and sustainable? -- The antigrowth view -- In defense of economic growth -- Last word : women and economic growth -- 18. Deficits, surpluses, and the public debt -- Deficits, surpluses, and debt : definitions -- Budget philosophies -- Annually balanced budget -- Cyclically balanced budget -- Functional finance -- The public debt : facts and figures -- Causes -- Quantitative aspects -- Social Security considerations -- False concerns -- Bankruptcy -- Burdening future generations -- Substantive issues -- Income distribution -- Incentives -- Foreign-owned public debt -- Crowding out and the stock of capital -- Deficits and surpluses : 1992-2012 -- From deficits to surpluses -- What to do with the surpluses? -- Back to deficits in 2002 -- The Tax cuts of 2003 -- Last word : the long-run fiscal imbalance : Social Security -- 19. Disputes over macro theory and policy -- Some history : classical economics and Keynes -- The classical view -- The Keynesian view -- What causes macro instability? -- Mainstream view -- Monetarist view -- Real-business-cycle view -- Coordination failures -- Does the economy "self-correct"? -- New classical view of self-correction -- Mainstream view of self-correction -- Rules or discretion? -- In support of policy rules -- In defense of discretionary stabilization policy -- Increased Macro stability -- Consider this : on the road again -- Summary of alternative views -- Last word : the Taylor rule : could a robot replace Alan Greenspan? pt. 6. International economics and the world economy -- 20. International trade -- Some key facts -- The economic basis for trade -- Comparative advantage : graphical analysis -- Two isolated nations -- Specializing based on comparative advantage -- Terms of trade -- Gains from trade -- Trade with increasing costs -- The case for free trade -- Supply and demand analysis of exports and imports -- Supply and demand in the United States -- Supply and demand in Canada -- Equilibrium world price, exports, and imports -- Trade barriers -- Economic impact of tariffs -- Economic impact of quotas -- Net costs of tariffs and quotas -- Impact on income distribution -- The case for protection : a critical review -- Military self-sufficiency argument -- Increased domestic employment argument -- Diversification-for-stability argument -- Infant industry argument -- Protection-against-dumping argument -- Cheap foreign labor argument -- A summing up -- Consider this : shooting yourself in the foot -- Last word : the WTO protests -- The World Trade Organization -- 21. Exchange rates, the balance of payments, and trade deficits -- Financing international trade -- U.S. export transaction -- U.S. import transaction -- The balance of payments -- Current account -- Capital account -- Official reserves account -- Payments, deficits, and surpluses -- Flexible exchange rates -- Depreciation and appreciation -- Determinants of exchange rates -- Flexible rates and the balance of payments -- Disadvantages of flexible exchange rates -- Consider this : the Big Mac index -- Fixed exchange rates -- Use of reserves -- Trade policies -- Exchange controls and rationing -- Domestic macroeconomic adjustments -- International exchange-rate systems -- The gold standard : fixed exchange rates -- The Bretton Woods system -- The current system : the managed float -- Recent U.S. trade deficits -- Causes of the trade deficits -- Implications of U.S. trade deficits -- Last word : speculation in currency markets -- 22Web. The economics of developing countries (Web chapter, www.mcconnell16.com) -- The rich and the poor -- Classifications -- Comparisons -- Growth, decline, and income gaps -- The human realities of poverty -- Obstacles to economic development -- Natural resources -- Human resources -- Capital accumulation -- Technological advance -- Sociocultural and institutional factors -- The vicious circle -- Role of government -- A positive role -- Public sector problems -- Role of advanced nations -- Expanding trade -- Foreign aid : public loans and grants -- Flows of private capital -- Where from here? -- DVC policies for promoting growth -- IAC policies for fostering DVC growth -- Last word : famine in Africa -- 23Web. Transition economies : Russia and China -- (Web chapter, www.mcconnell16.com) -- Ideology and institutions -- State ownership and central planning -- Planning goals and techniques -- Problems with central planning -- The coordination problem -- The incentive problem -- Collapse of the Soviet economy -- Declining growth -- Poor product quality -- Lack of consumer goods -- Large military burden -- Agricultural drag -- The Russian transition to a market system -- Privatization -- Price reform -- Promotion of competition -- Making the ruble fully convertible -- Price-level stabilization -- Other major problems -- Recent revival -- Market reforms in China -- Agricultural and rural reform -- Reform of urban industries -- Special economic zones -- Development of supporting institutions -- Transformation of the SOEs -- Outcomes and prospects -- Positive outcomes of reform -- Problems -- Conclusion -- Last word : police smash down Smirnov's doors -- Glossary ER -