Principles of Macroeconomics

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Principles of Macroeconomics

  1. Chapters 1-6
    1. Chapter 1 | Welcome to Economics!
      1. 1.1 What Economics Is and Why It's Important
        1. The Problem of Scarcity
        2. Why the Division of Labor Increases Production
        3. The Division of and Specialization of Labor
        4. Trade and Markets
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Glossary
          2. Critical Thinking Questions
          3. Review Questions
          4. References
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
          8. Exercise 4
        7. Why Study Economics?
      2. 1.3. How Economists Use Theories and Models to Understand Economic Issues
        1. Figure 1.6. The Circular Flow Diagram
        2. Theory
        3. The circular flow diagram
        4. Model
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Critical Thinking Questions
          2. Review Questions
          3. Glossary
          4. Exercise 1
          5. Exercise 2
      3. 1.2. Microeconomics and Macroeconomics
        1. Macroeconomics
        2. Microeconomics
        3. Key Concepts and Summary
        4. Self-Check Questions
          1. Review Questions
          2. Glossary
          3. Critical Thinking Questions
          4. Self-Check Questions
      4. 1.4. How Economies Can Be Organized
        1. Market Economy
        2. The Rise of Globalization
        3. Table 1.1. Economic Freedoms, 2015
        4. Regulations: The Rules of the Game
        5. Command economies
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Glossary
          2. Critical Thinking Questions
          3. Review Questions
          4. References
          5. Exercise 1
          6. Exercise 2
        8. Decisions in the Social Media Age
      5. Chapter Review
    2. Chapter 3. Demand and Supply
      1. 3.3. Changes in Equilibrium Price and Quantity: The Four-Step Process
        1. Good Weather for Salmon Fishing
        2. The Interconnections and Speed of Adjustment in Real Markets
        3. Newspapers and the Internet
        4. A Combined Example
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Critical Thinking Questions
          3. Review Questions
          4. Problems
          5. Exercise 1
          6. Exercise 2
      2. 3.1. Demand, Supply, and Equilibrium in Markets for Goods and Services
        1. Supply of Goods and Services
        2. Figure 3.2. A Demand Curve for Gasoline
        3. Figure 3.3. A Supply Curve for Gasoline
        4. Table 3.1. Price and Quantity Demanded of Gasoline
        5. Equilibrium—Where Demand and Supply Intersect
          1. Table 3.3. Price, Quantity Demanded, and Quantity Supplied
          2. Equilibrium
          3. Figure 3.4. Demand and Supply for Gasoline
        6. Key Concepts and Summary
        7. Self-Check Question
          1. References
          2. Critical Thinking Questions
          3. Review Questions
          4. Problems
          5. Glossary
          6. Exercise 1
      3. 3.4. Price Ceilings and Price Floors
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Exercise 1
          4. Exercise 2
          5. Exercise 3
          6. Critical Thinking Questions
          7. Glossary
        3. Price Ceilings
        4. Price Floors
      4. 3.2. Shifts in Demand and Supply for Goods and Services
        1. Other Factors That Shift Demand Curves
          1. Changes in the Composition of the Population
          2. Shift in Demand
          3. Changes in Expectations about Future Prices
          4. Changing Tastes or Preferences
        2. Other Factors That Affect Supply
          1. Shift in Supply
        3. How Production Costs Affect Supply
          1. Table 3.5. Price and Shifts in Supply: A Car Example
          2. Figure 3.10. Shifts in Supply: A Car Example
        4. What Factors Affect Demand?
          1. How Does Income Affect Demand?
          2. Table 3.4. Price and Demand Shifts: A Car Example
          3. Figure 3.5. Shifts in Demand: A Car Example
          4. The Ceteris Paribus Assumption
        5. Summing Up Factors That Change Supply
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. References
          2. Critical Thinking Questions
          3. Review Questions
          4. Problems
          5. Glossary
          6. Exercise 1
          7. Exercise 2
          8. Exercise 3
      5. 3.5. Demand, Supply, and Efficiency
        1. Figure 3.23. Consumer and Producer Surplus
        2. Figure 3.24. Efficiency and Price Floors and Ceilings
        3. Inefficiency of Price Floors and Price Ceilings
        4. Demand and Supply as a Social Adjustment Mechanism
        5. Consumer Surplus, Producer Surplus, Social Surplus
        6. Why Can We Not Get Enough of Organic?
        7. Self-Check Questions
          1. Glossary
          2. Review Questions
          3. Exercise 1
          4. Exercise 2
      6. Chapter Review
    3. Chapter 2. Choice in a World of Scarcity
      1. 2.2. The Production Possibilities Frontier and Social Choices
        1. Productive efficiency
        2. Allocative efficiency
        3. The Shape of the PPF and the Law of Diminishing Returns
        4. Why Society Must Choose
        5. Figure 2.5. Production Possibility Frontier for the U.S. and Brazil
        6. Productive Efficiency and Allocative Efficiency
        7. Key Concepts and Summary
        8. Self-Check Questions
          1. Critical Thinking Questions
          2. Review Questions
          3. Glossary
          4. Exercise 1
          5. Exercise 2
          6. Exercise 3
        9. The PPF and Comparative Advantage
      2. 2.1 How Individuals Make Choices Based on Their Budget Constraint
        1. Sunk Costs
        2. Identifying Opportunity Cost
        3. The Concept of Opportunity Cost
        4. NOTE: UNDERSTANDING BUDGET CONSTRAINTS
        5. Marginal Decision-Making and Diminishing Marginal Utility
        6. From a Model with Two Goods to One of Many Goods
        7. Key Concepts and Summary
        8. Self-Check Questions
          1. References
          2. Critical Thinking Question
          3. Review Questions
          4. Problems
          5. Glossary
          6. Exercise 1
      3. 2.3. Confronting Objections to the Economic Approach
        1. Second Objection: People, Firms, and Society Should Not Act This Way
        2. NOTE: Choices ... To What Degree?
        3. Figure 2.6. The Tradeoff Diagram
        4. First Objection: People, Firms, and Society Do Not Act Like This
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Glossary
          2. Critical Thinking Questions
          3. Review Questions
          4. References
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
      4. Chapter Review
    4. Chapter 4. Labor and Financial Markets
      1. 4.2. Demand and Supply in Financial Markets
        1. Who Demands and Who Supplies in Financial Markets?
        2. Shifts in Demand and Supply in Financial Markets
        3. Equilibrium in Financial Markets
        4. The United States as a Global Borrower
        5. The Effect of Growing U.S. Debt
        6. Price Ceilings in Financial Markets: Usury Laws
        7. Key Concepts and Summary
        8. Self-Check Questions
          1. References
          2. Glossary
          3. Critical Thinking Questions
          4. Review Questions
          5. Problems
          6. Exercise 1
          7. Exercise 2
          8. Exercise 3
          9. Exercise 4
          10. Exercise 5
      2. 4.3. The Market System as an Efficient Mechanism for Information
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Exercise 1
          2. Exercise 2
          3. Exercise 3
          4. Exercise 4
          5. Critical Thinking Questions
          6. Review Question
          7. Problems
        3. Figure 4.9. Demand and Supply Curves
        4. Why are demand and supply curves important?
        5. Baby Boomers Come of Age
      3. 4.1. Demand and Supply at Work in Labor Markets
        1. Shifts in Labor Demand
        2. Technology and Wage Inequality: The Four-Step Process
        3. Concepts and Summary
        4. Table 4.2. Factors That Can Shift Demand. Factors and Results
        5. Equilibrium in the Labor Market
        6. Shifts in Labor Supply
        7. Self-Check Questions
          1. References
          2. Glossary
          3. Critical Thinking Questions
          4. Review Questions
          5. Problems
          6. Exercise 1
          7. Exercise 2
          8. Exercise 3
        8. Price Floors in the Labor Market: Living Wages and Minimum Wages
        9. The Minimum Wage as an Example of a Price Floor
      4. Chapter Review
    5. Chapter 5: Elasticity
      1. 5.2. Polar Cases of Elasticity and Constant Elasticity
        1. Key Concepts and Summary
        2. Review Questions
        3. Critical Thinking Question
        4. Self-Check Question 1
        5. Self-Check Question 2
        6. Problems
        7. Glossary
      2. 5.4. Elasticity in Areas Other Than Prices
        1. Expanding the Concept of Elasticity
        2. Cross-Price Elasticity of Demand
        3. Table 5.6. Formulas for Calculating Elasticity
        4. Elasticity in Labor and Financial Capital Markets
        5. That Will Be How Much?
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Glossary
          2. Critical Thinking Questions
          3. Review Questions
          4. References
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
      3. 5.3. Elasticity and Pricing
        1. How do coffee prices fluctuate?
        2. Table 5.5. Will the Band Earn More Revenue by Changing Ticket Prices?
        3. Does Raising Price Bring in More Revenue?
        4. Can Costs Be Passed on to Consumers?
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Review Questions
          2. Glossary
          3. Problem
          4. Critical Thinking Questions
          5. Exercise 1
          6. Exercise 2
        7. Elasticity and Tax Incidence
        8. Long-Run vs. Short-Run Impact
      4. Chapter Review
      5. 5.1. Price Elasticity of Demand and Price Elasticity of Supply
        1. Finding the Price Elasticity of Demand
        2. Is the elasticity the slope?
        3. Calculating the Price Elasticity of Supply
        4. Key Concepts and Summary
        5. Self-Check Questions
          1. Exercise 2
          2. Critical Thinking Questions
          3. Review Questions
          4. Exercise 1
          5. Glossary
          6. Problems
        6. Calculating Price Elasticity of Demand
    6. Chapter 6: The Macroeconomic Perspective
      1. 6.5. How Well GDP Measures the Well-Being of Society
        1. Limitations of GDP as a Measure of the Standard of Living
        2. GDP is Rough, but Useful
        3. Does a Rise in GDP Overstate/Understate the Rise in the Standard of Living?
        4. How is the Economy Doing? How Does One Tell?
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Review Question
          2. Critical Thinking Question
          3. Glossary
          4. Exercise 1
      2. 6.3. Tracking Real GDP over Time
        1. Review Question
        2. Critical Thinking Questions
        3. References
        4. Key Concepts and Summary
        5. Self-Check Question 1
        6. Self-Check Question 2
        7. Glossary
        8. Self-Check Question 3
        9. Self-Check Question 4
      3. 6.2. Adjusting Nominal Values to Real Values
        1. Computing GDP
        2. Converting Nominal to Real GDP
        3. Key Concepts and Summary
        4. Self-Check Questions
          1. Review Questions
          2. Critical Thinking Question
          3. Problem 2
          4. Problem 1
          5. Exercise 1
          6. Glossary
      4. 6.4. Comparing GDP among Countries
        1. Converting GDP to a Common Currency
        2. GDP Per Capita
        3. Table 6.10. Comparing GDPs Across Countries, 2013
        4. Converting Currencies with Exchange Rates
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Problems
          2. Review Question
          3. Critical Thinking Questions
          4. Glossary
          5. Exercise 1
          6. Exercise 2
        7. Is China going to surpass the United States in terms of standard of living?
      5. Chapter Review
      6. 6.1. Measuring the Size of the Economy: Gross Domestic Product
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Exercise 1
          2. Exercise 2
          3. Critical Thinking Question
          4. Problem
          5. Review Questions
          6. References
          7. Glossary
        3. The Problem of Double Counting
        4. GDP Measured by What is Produced
        5. Other Ways to Measure the Economy
        6. GDP Measured by Components of Demand
  2. Chapters 12-16
    1. Chapter 14. Money and Banking
      1. 14.1. Defining Money by Its Functions
        1. Barter and the Double Coincidence of Wants
        2. Commodity versus Fiat Money
        3. Functions for Money
        4. Key Concepts and Summary
        5. Self-Check Questions
          1. Critical Thinking Questions
          2. Reference
          3. Glossary
          4. Exercise 1
          5. Exercise 2
          6. Review Questions
      2. 14.3. The Role of Banks
        1. How Banks Go Bankrupt
        2. Banks as Financial Intermediaries
        3. What led to the financial crisis of 2008–2009?
        4. A Bank’s Balance Sheet
        5. How are banks, savings and loans, and credit unions related?
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. References
          2. Critical Thinking Question
          3. Problem
          4. Glossary
          5. Exercise 1
          6. Review Questions
      3. 14.2. Measuring Money: Currency, M1, and M2
        1. Glossary
        2. Review Questions
        3. Critical Thinking Questions
        4. Key Concepts and Summary
        5. Self-Check Question 1
        6. Self-Check Question 2
        7. References
      4. 14.4. How Banks Create Money
        1. The Money Multiplier and a Multi-Bank System
        2. Using the Money Multiplier Formula
        3. Watch a video of Jem Bendell discussing “The Money Myth.”
        4. Money and Banks—Benefits and Dangers
        5. Cautions about the Money Multiplier
        6. Money Creation by a Single Bank
        7. How banks create money.
        8. The Many Disguises of Money: From Cowries to Bit Coins
        9. Key Concepts and Summary
        10. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Critical Thinking Questions
          4. References
          5. Glossary
          6. Exercise 1
      5. Chapter Review
    2. Chapter 12. The Keynesian Perspective
      1. 12.3. The Phillips Curve
        1. The Discovery of the Phillips Curve
        2. The Instability of the Phillips Curve
        3. The Phillips Curve for the United States
        4. Keynesian Policy for Fighting Unemployment and Inflation
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Glossary
          2. Critical Thinking Question
          3. References
          4. Exercise 1
          5. Review Questions
      2. 12.1. Aggregate Demand in Keynesian Analysis
        1. What Determines Government Spending?
        2. What Determines Consumption Expenditure?
        3. What Determines Net Exports?
        4. What Determines Investment Expenditure?
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Review Questions
          3. Critical Thinking Questions
          4. Glossary
          5. Exercise 1
          6. Exercise 2
        7. Table 12.1. Determinants of Aggregate Demand
      3. 12.4. The Keynesian Perspective on Market Forces
        1. References
        2. Key Concepts and Summary
        3. Self-Check Question 1
        4. Self-Check Question 2
        5. The Great Recession
        6. Review Question
        7. Critical Thinking Questions
      4. 12.2. The Building Blocks of Keynesian Analysis
        1. Why Is the Pace of Wage Adjustments Slow?
        2. The Expenditure Multiplier
        3. The Two Keynesian Assumptions in the AD/AS Model
        4. Wage and Price Stickiness
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Glossary
          3. Review Questions
          4. Critical Thinking Questions
          5. Exercise 1
          6. Exercise 2
      5. Chapter Review
    3. Chapter 15. Monetary Policy and Bank Regulation
      1. 15.4. Monetary Policy and Economic Outcomes
        1. The Effect of Monetary Policy on Interest Rates
        2. Federal Reserve Actions Over Last Four Decades
        3. The Effect of Monetary Policy on Aggregate Demand
        4. Quantitative Easing
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Glossary
          2. Review Questions
          3. Critical Thinking Question
          4. Exercise 1
          5. Exercise 2
      2. 15.2. Bank Regulation
        1. Deposit Insurance
        2. Bank Supervision
        3. Lender of Last Resort
        4. Bank Runs
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Glossary
          3. Review Questions
          4. Critical Thinking Question
          5. Exercise 1
          6. Exercise 2
      3. 15.1. The Federal Reserve Banking System and Central Banks
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Exercise 1
          2. Review Questions
          3. References
          4. Critical Thinking Questions
          5. Glossary
        3. Who has the most immediate economic power in the world?
        4. Structure/Organization of the Federal Reserve
        5. What Does a Central Bank Do?
      4. 15.3. How a Central Bank Executes Monetary Policy
        1. Changing Reserve Requirements
        2. Key Concepts and Summary
        3. Self-Check Questions
          1. Problems
          2. Exercise 1
          3. Exercise 2
          4. References
          5. Glossary
          6. Review Questions
          7. Critical Thinking Question
        4. Changing the Discount Rate
        5. Open Market Operations
      5. Chapter Review
      6. 15.5. Pitfalls for Monetary Policy
        1. Should monetary policy decisions be made more democratically?
          1. The Case for Greater Democratic Control of Monetary Policy
          2. The Case for an Independent Central Bank
        2. Calculating the Effects of Monetary Stimulus
        3. Unemployment and Inflation
        4. Unpredictable Movements of Velocity
        5. What happens during episodes of deflation?
        6. Asset Bubbles and Leverage Cycles
        7. Excess Reserves
        8. The Problem of the Zero Percent Interest Rate Lower Bound
        9. Key Concepts and Summary
        10. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Critical Thinking Questions
          4. References
          5. Glossary
          6. Exercise 1
          7. Exercise 2
    4. Chapter 13. The Neoclassical Perspective
      1. 13.2. The Policy Implications of the Neoclassical Perspective
        1. Why and how are inflation expectations measured?
        2. Fighting Unemployment or Inflation?
        3. The Neoclassical Phillips Curve Tradeoff
        4. Tracking Inflation and Unemployment Rates
        5. Fighting Recession or Encouraging Long-Term Growth?
        6. Summary of Neoclassical Macroeconomic Policy Recommendations
        7. Summary of Neoclassical Economics versus Keynesian Economics
        8. Key Concepts and Summary
        9. Self-Check Questions
          1. References
          2. Glossary
          3. Review Questions
          4. Critical Thinking Question
          5. Exercise 1
          6. Exercise 2
      2. 13.3. Balancing Keynesian and Neoclassical Models
        1. Reference
        2. Key Concepts and Summary
        3. Navigating Unchartered Waters
        4. Self-Check Question
        5. Review Questions
        6. Critical Thinking Question
      3. 13.1. The Building Blocks of Neoclassical Analysis
        1. The Role of Flexible Prices
        2. Key Concepts and Summary
        3. Self-Check Questions
          1. Problem
          2. Exercise 1
          3. Review Questions
          4. Glossary
          5. Critical Thinking Questions
          6. References
        4. How Fast Is the Speed of Macroeconomic Adjustment?
        5. The Importance of Potential GDP in the Long Run
      4. Chapter Review
    5. Chapter 16. Exchange Rates and International Capital Flows
      1. 16.3. Macroeconomic Effects of Exchange Rates
        1. Summing Up Public Policy and Exchange Rates
        2. Exchange Rates, Aggregate Demand, and Aggregate Supply
        3. Key Concepts and Summary
        4. Self-Check Question 1
        5. Self-Check Question 2
        6. Fluctuations in Exchange Rates
        7. Exercises: Macroeconomic Effects of Exchange Rates
        8. Review Questions
        9. Critical Thinking Questions
      2. 16.2. Demand and Supply Shifts in Foreign Exchange Markets
        1. Purchasing Power Parity
        2. Differences across Countries in Rates of Return
        3. Expectations about Future Exchange Rates
        4. Relative Inflation
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Critical Thinking Questions
          2. Glossary
          3. Review Questions
          4. Exercise 1
          5. Exercise 2
          6. Exercise 3
      3. 16.4. Exchange Rate Policies
        1. Using Soft Pegs and Hard Pegs
        2. How do Tobin taxes control the flow of capital?
        3. A Merged Currency
        4. Tradeoffs of Soft Pegs and Hard Pegs
        5. Floating Exchange Rates
        6. Is a Stronger Dollar Good for the U.S. Economy?
        7. Key Concepts and Summary
        8. Self-Check Questions
          1. Glossary
          2. Review Questions
          3. Critical Thinking Questions
          4. Reference
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
      4. Chapter Review
      5. 16.1. How the Foreign Exchange Market Works
        1. Effects of a Weaker Dollar
        2. Why is a stronger currency not necessarily better?
        3. Participants in the Exchange Rate Market
        4. Demanders and Suppliers of Currency in Foreign Exchange Markets
        5. Strengthening and Weakening Currency
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Critical Thinking Question
          2. Problems
          3. Review Questions
          4. Glossary
          5. Exercise 1
        8. The Extraordinary Size of the Foreign Exchange Markets
  3. Chapters 7-11
    1. Chapter 10. The International Trade and Capital Flows
      1. 10.1. Measuring Trade Balances
        1. Components of the U.S. Current Account Balance
        2. Calculating the Merchandise Balance and the Current Account Balance
        3. How does the U.S. government collect trade statistics?
        4. Key Concepts and Summary
        5. Self-Check Questions
          1. Review Questions
          2. Critical Thinking Questions
          3. References
          4. Glossary
          5. Problems
          6. Exercise 1
          7. Exercise 2
          8. Exercise 3
      2. 10.3. Trade Balances and Flows of Financial Capital
        1. The Balance of Trade as the Balance of Payments
        2. A Two-Person Economy: Robinson Crusoe and Friday
        3. Key Concepts and Summary
        4. Self-Check Questions
          1. Review Question
          2. Critical Thinking Question
          3. Exercise 1
          4. Exercise 2
          5. Exercise 3
          6. Glossary
        5. Calculating Comparative Advantage
      3. 10.2. Trade Balances in Historical and International Context
        1. Key Concepts and Summary
        2. Review Question
        3. Critical Thinking Questions
        4. Exercise 1
        5. Exercise 2
        6. Exercise 3
        7. Exercise 4
        8. Glossary
      4. 10.4. The National Saving and Investment Identity
        1. Domestic Saving and Investment Determine the Trade Balance
        2. Solving Problems with the Saving and Investment Identity
        3. Exploring Trade Balances One Factor at a Time
        4. Understanding the Determinants of the Trade and Current Account Balance
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Glossary
          2. Review Questions
          3. Critical Thinking Questions
          4. Exercise 4
          5. Exercise 5
          6. Exercise 6
          7. Problems
          8. Exercise 1
          9. Exercise 2
          10. Exercise 3
        7. Short-Term Movements in the Business Cycle and the Trade Balance
      5. 10.5. The Pros and Cons of Trade Deficits and Surpluses
        1. References
        2. Key Concepts and Summary
        3. Review Questions
        4. Critical Thinking Question
        5. Are trade surpluses always beneficial? Considering Japan since the 1990s.
        6. Self-Check Question 1
        7. Self-Check Question 2
        8. Self-Check Question 3
        9. Are trade deficits always harmful?
      6. Chapter Review
      7. 10.6. The Difference between Level of Trade and the Trade Balance
        1. Self-Check Question 1
        2. Self-Check Question 2
        3. Review Questions
        4. Final Thoughts about Trade Balances
        5. More than Meets the Eye in the Congo
        6. Critical Thinking Questions
        7. Key Concepts and Summary
        8. Are trade surpluses always beneficial? Considering Colonial India.
    2. Chapter 8. Unemployment
      1. 8.3. What Causes Changes in Unemployment over the Short Run
        1. Cyclical Unemployment
        2. Figure 8.7. Rising Wage and Low Unemployment
        3. Why Wages Might Be Sticky Downward
        4. Key Concepts and Summary
        5. Self-Check Questions
          1. Review Questions
          2. Critical Thinking Question
          3. Glossary
          4. Problem
          5. Exercise 1
      2. 8.1. How the Unemployment Rate is Defined and Computed
        1. Calculating Labor Force Percentages
        2. Who’s In or Out of the Labor Force?
        3. Hidden Unemployment
        4. Labor Force Participation Rate
        5. Calculating the Unemployment Rate
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Glossary
          2. Critical Thinking Questions
          3. Review Questions
          4. Problem
          5. Exercise 1
          6. Exercise 2
        8. The Establishment Payroll Survey
        9. How Is the U.S. Unemployment Data Collected?
        10. Criticisms of Measuring Unemployment
      3. 8.4. What Causes Changes in Unemployment over the Long Run
        1. The Natural Rate of Unemployment in Recent Years
        2. The Natural Rate of Unemployment in Europe
        3. Structural Unemployment
        4. Natural Unemployment and Potential Real GDP
        5. The Long Run: The Natural Rate of Unemployment
        6. Frictional Unemployment
        7. Productivity Shifts and the Natural Rate of Unemployment
        8. Public Policy and the Natural Rate of Unemployment
        9. Key Concepts and Summary
        10. Self-Check Questions
          1. Glossary
          2. Critical Thinking Questions
          3. Review Questions
          4. Problem
          5. References
          6. Exercise 1
          7. Exercise 2
        11. A Preview of Policies to Fight Unemployment
      4. 8.2. Patterns of Unemployment
        1. Unemployment Rates by Group
        2. International Unemployment Comparisons
        3. Breaking Down Unemployment in Other Ways
        4. The Historical U.S. Unemployment Rate
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Critical Thinking Questions
          2. Review Questions
          3. Exercise 1
          4. Exercise 2
      5. Chapter Review
    3. Chapter 7. Economic Growth
      1. 7.4. Economic Convergence
        1. Arguments Favoring Convergence
        2. The Slowness of Convergence
        3. Arguments That Convergence Is neither Inevitable nor Likely
        4. Calories and Economic Growth
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Glossary
          3. Review Questions
          4. Critical Thinking Questions
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
          8. Exercise 4
          9. Exercise 5
      2. 7.2. Labor Productivity and Economic Growth
        1. Measuring Productivity
        2. Sources of Economic Growth: The Aggregate Production Function
        3. Components of the Aggregate Production Function
        4. The “New Economy” Controversy
        5. Figure 7.2. Aggregate Production Functions
        6. The Power of Sustained Economic Growth
        7. Key Concepts and Summary
        8. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Critical Thinking Questions
          4. Glossary
          5. Exercise 1
          6. Exercise 2
        9. Comparing the Economies of Two Countries
      3. 7.1. The Relatively Recent Arrival of Economic Growth
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Exercise 1
          2. Exercise 2
          3. References
          4. Review Questions
          5. Critical Thinking Question
          6. Glossary
        3. Table 7.1. GDP Per Capita Estimates in Current International Dollars
        4. What were economic conditions like before 1870?
        5. Rule of Law and Economic Growth
      4. 7.3. Components of Economic Growth
        1. Growth Accounting Studies
        2. A Healthy Climate for Economic Growth
        3. How do girls’ education and economic growth relate in low-income countries?
        4. Capital Deepening
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Review Questions
          3. Critical Thinking Questions
          4. Glossary
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
      5. Chapter Review
    4. Chapter 9. Inflation
      1. 9.2. How Changes in the Cost of Living are Measured
        1. How do U.S. government statisticians measure the Consumer Price Index?
        2. The CPI and Core Inflation Index
        3. Figure 9.2. The Weighting of CPI Components
        4. Practical Solutions for the Substitution and the Quality/New Goods Biases
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Critical Thinking Questions
          2. Review Questions
          3. References
          4. Glossary
          5. Exercise 1
          6. Exercise 2
        7. Additional Price Indices: PPI, GDP Deflator, and More
      2. 9.4. The Confusion Over Inflation
        1. Figure 9.6. U.S. Minimum Wage and Inflation
        2. The Land of Funny Money
        3. Blurred Price Signals
        4. Unintended Redistributions of Purchasing Power
        5. Problems of Long-Term Planning
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Critical Thinking Questions
          2. References
          3. Exercise 1
          4. Review Question
        8. Any Benefits of Inflation?
      3. 9.3. How the U.S. and Other Countries Experience Inflation
        1. Inflation around the World
        2. Historical Inflation in the U.S. Economy
        3. Key Concepts and Summary
        4. Self-Check Questions
          1. Critical Thinking Question
          2. Problem
          3. Glossary
          4. Exercise 1
          5. Review Questions
      4. 9.1. Tracking Inflation
        1. Calculating an Annual Rate of Inflation
        2. Why do you not just subtract index numbers?
        3. Index Numbers
        4. The Price of a Basket of Goods
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Review Questions
          3. Critical Thinking Question
          4. Exercise 2
          5. Exercise 3
          6. Exercise 4
          7. Problems
          8. Exercise 1
          9. Glossary
        7. Video: Duck Tales Inflation Lesson
      5. 9.5. Indexing and Its Limitations
        1. Indexing in Government Programs
        2. A Preview of Policy Discussions of Inflation
        3. Might Indexing Reduce Concern over Inflation?
        4. A $550 Million Loaf of Bread?
        5. Indexing in Private Markets
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Critical Thinking Questions
          4. References
          5. Glossary
          6. Exercise 1
          7. Exercise 2
      6. Chapter Review
    5. Chapter 11. The Aggregate Demand/Aggregate Supply Model
      1. 11.5. How the AD/AS Model Incorporates Growth, Unemployment, and Inflation
        1. Growth and Recession in the AD/AS Diagram
        2. Inflationary Pressures in the AD/AS Diagram
        3. Unemployment in the AD/AS Diagram
        4. Importance of the Aggregate Demand/Aggregate Supply Model
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Critical Thinking Questions
          2. Review Questions
          3. References
          4. Exercise 1
          5. Exercise 2
          6. Exercise 3
      2. 11.3. Shifts in Aggregate Supply
        1. Other Supply Shocks
        2. How Productivity Growth Shifts the AS Curve
        3. Key Concepts and Summary
        4. Self-Check Questions
          1. Review Questions
          2. Glossary
          3. Exercise 1
          4. Exercise 2
          5. Critical Thinking Questions
        5. How Changes in Input Prices Shift the AS Curve
      3. 11.2. Building a Model of Aggregate Demand and Aggregate Supply
        1. Interpreting the AD/AS Model
        2. Key Concepts and Summary
        3. Why does AS cross potential GDP?
        4. Self-Check Questions
          1. Problems
          2. Exercise 1
          3. Exercise 2
          4. Glossary
          5. Review Questions
          6. Critical Thinking Question
        5. The Aggregate Supply Curve and Potential GDP
        6. The Aggregate Demand Curve
        7. Equilibrium in the Aggregate Demand/Aggregate Supply Model
        8. Are AS and AD macro or micro?
        9. Defining SRAS and LRAS
      4. 11.4. Shifts in Aggregate Demand
        1. How Changes by Consumers and Firms Can Affect AD
        2. Do economists favor tax cuts or oppose them?
        3. How Government Macroeconomic Policy Choices Can Shift AD
        4. Do imports diminish aggregate demand?
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Critical Thinking Questions
          2. Review Questions
          3. Exercise 1
          4. Exercise 2
          5. Exercise 3
          6. Exercise 4
      5. 11.1. Macroeconomic Perspectives on Demand and Supply
        1. Review Questions
        2. Critical Thinking Question
        3. References
        4. Combining Supply and Demand in Macroeconomics
        5. Keynes’ Law and the Macroeconomics of Demand
        6. Key Concepts and Summary
        7. Self-Check Question 1
        8. Self-Check Question 2
        9. Say’s Law and the Macroeconomics of Supply
        10. Glossary
      6. 11.6. Keynes’ Law and Say’s Law in the AD/AS Model
        1. Glossary
        2. Self-Check Question 1
        3. Self-Check Question 2
        4. Review Questions
        5. Key Concepts and Summary
        6. Critical Thinking Questions
        7. From Housing Bubble to Housing Bust
      7. Chapter Review
  4. Chapters 17-21
    1. Chapter 18. The Impacts of Government Borrowing
      1. 18.1. How Government Borrowing Affects Investment and the Trade Balance
        1. The National Saving and Investment Identity
        2. Key Concepts and Summary
        3. Self-Check Question 1
        4. Self-Check Question 2
        5. What about Budget Surpluses and Trade Surpluses?
        6. Review Questions
        7. Critical Thinking Questions
      2. 18.3. How Government Borrowing Affects Private Saving
        1. Problem
        2. Glossary
        3. Key Concepts and Summary
        4. Self-Check Question
        5. Review Questions
        6. Critical Thinking Question
      3. 18.2. Fiscal Policy, Investment, and Economic Growth
        1. Public Investment in Human Capital
        2. The Interest Rate Connection
        3. Crowding Out Physical Capital Investment
        4. Public Investment in Physical Capital
        5. How Fiscal Policy Can Improve Technology
        6. Summary of Fiscal Policy, Investment, and Economic Growth
        7. Key Concepts and Summary
        8. Self-Check Questions
          1. Critical Thinking Questions
          2. Glossary
          3. Review Questions
          4. Problem
          5. References
          6. Exercise 1
          7. Exercise 2
      4. 18.4. Fiscal Policy and the Trade Balance
        1. Budget Deficits and Exchange Rates
        2. Using Fiscal Policy to Address Trade Imbalances
        3. From Budget Deficits to International Economic Crisis
        4. Twin Deficits?
        5. Financing Higher Education
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Problems
          2. Critical Thinking Questions
          3. References
          4. Self-Check Question
          5. Review Question
      5. Chapter Review
    2. Chapter 20. International Trade
      1. 20.3. Intra-industry Trade between Similar Economies
        1. The Prevalence of Intra-industry Trade between Similar Economies
        2. Economies of Scale, Competition, Variety
        3. Gains from Specialization and Learning
        4. Dynamic Comparative Advantage
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Critical Thinking Questions
          4. References
          5. Glossary
          6. Exercise 1
          7. Exercise 2
      2. 20.1. Absolute and Comparative Advantage
        1. Gains from Trade
        2. A Numerical Example of Absolute and Comparative Advantage
        3. What are the opportunity costs and gains from trade?
        4. Can a production possibility frontier be straight?
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Critical Thinking Questions
          4. References
          5. Glossary
          6. Exercise 1
          7. Exercise 2
          8. Exercise 3
      3. 20.4. The Benefits of Reducing Barriers to International Trade
        1. Review Question
        2. Critical Thinking Questions
        3. It’s Apple’s (Global) iPhone
        4. From Interpersonal to International Trade
        5. Key Concepts and Summary
        6. Self-Check Question
        7. References
        8. Glossary
        9. Problems
      4. 20.2. What Happens When a Country Has an Absolute Advantage in All Goods
        1. Mutually Beneficial Trade with Comparative Advantage
        2. Comparative Advantage Goes Camping
        3. How Opportunity Cost Sets the Boundaries of Trade
        4. Production Possibilities and Comparative Advantage
        5. Calculating Absolute and Comparative Advantage
        6. Key Concepts and Summary
        7. Self-Check Questions
          1. Problems
          2. Review Questions
          3. Critical Thinking Questions
          4. Reference
          5. Exercise 1
      5. Chapter Review
    3. Chapter 19. Macroeconomic Policy Around the World
      1. 19.4. Causes of Inflation in Various Countries and Regions
        1. Concepts and Summary
        2. Review Questions
        3. Critical Thinking Questions
        4. Problems
        5. Glossary
        6. Self-Check Question 1
        7. Self-Check Question 2
        8. Self-Check Question 3
      2. 19.2. Improving Countries’ Standards of Living
        1. Growth Policies for Economically-Challenged Countries
        2. Growth Policies for the High-Income Countries
        3. Does foreign aid to low-income countries work?
        4. Growth Policies for the Middle-Income Economies
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. Glossary
          2. Problems
          3. Review Questions
          4. Critical Thinking Question
          5. References
          6. Exercise 1
          7. Exercise 2
        7. UK harming efforts to raise food aid in Africa
      3. 19.1. The Diversity of Countries and Economies across the World
        1. Self-Check Question 1
        2. Self-Check Question 2
        3. Differences in Industry Structure and Economic Institutions
        4. Geographic and Demographic Differences
        5. Key Concepts and Summary
        6. Problems
        7. Critical Thinking Question
        8. Review Questions
        9. References
      4. 19.3. Causes of Unemployment around the World
        1. The Natural Rate of Unemployment
        2. Key Concepts and Summary
        3. Self-Check Question
        4. Self-Check Question 2
        5. Undeveloped Labor Markets
        6. Unemployment from a Recession
        7. Problems
        8. References
        9. Review Questions
        10. Critical Thinking Question
      5. Chapter Review
      6. 19.5. Balance of Trade Concerns
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Exercise 1
          2. Exercise 2
          3. Review Questions
          4. Critical Thinking Question
          5. References
        3. Market-Oriented Economic Reforms
        4. Concerns over International Flows of Capital
        5. Youth Unemployment: Three Cases
        6. Concerns over International Trade in Goods and Services
    4. Chapter 17. Government Budgets and Fiscal Policy
      1. 17.2. Taxation
        1. Federal Taxes
        2. State and Local Taxes
        3. How does the marginal rate work?
        4. Key Concepts and Summary
        5. Self-Check Questions
          1. Review Questions
          2. Critical Thinking Questions
          3. Glossary
          4. References
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
          8. Exercise 4
      2. 17.4. Using Fiscal Policy to Fight Recession, Unemployment, and Inflation
        1. Key Concepts and Summary
        2. Self-Check Question 1
        3. Self-Check Question 2
        4. Expansionary Fiscal Policy
        5. Review Questions
        6. Critical Thinking Questions
        7. Glossary
        8. Contractionary Fiscal Policy
        9. References
        10. Problem
      3. 17.3. Federal Deficits and the National Debt
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Exercise 1
          2. Exercise 2
          3. Problem
          4. References
          5. Glossary
          6. Review Questions
          7. Critical Thinking Questions
        3. The Path from Deficits to Surpluses to Deficits
        4. Debt/GDP Ratio
        5. What is the long-term budget outlook for Social Security and Medicare?
      4. 17.1. Government Spending
        1. State and Local Government Spending
        2. Self-Check Question 1
        3. Self-Check Question 2
        4. Self-Check Question 3
        5. Glossary
        6. Key Concepts and Summary
        7. Total U.S. Government Spending
        8. Problems
        9. References
        10. Review Questions
        11. Critical Thinking Questions
      5. 17.5. Automatic Stabilizers
        1. Critical Thinking Questions
        2. Glossary
        3. Key Concepts and Summary
        4. Review Questions
        5. The Standardized Employment Deficit or Surplus
        6. Self-Check Question 1
        7. Self-Check Question
        8. Self-Check Question 3
        9. Counterbalancing Recession and Boom
      6. 17.6. Practical Problems with Discretionary Fiscal Policy
        1. Political Realties and Discretionary Fiscal Policy
        2. Temporary and Permanent Fiscal Policy
        3. Why do jobs vanish?
        4. Long and Variable Time Lags
        5. Discretionary Fiscal Policy: Summing Up
        6. Structural Economic Change Takes Time
        7. The Limitations of Fiscal Policy
        8. Key Concepts and Summary
        9. Self-Check Questions
          1. References
          2. Review Question
          3. Critical Thinking Questions
          4. Glossary
          5. Exercise 1
          6. Exercise 2
          7. Exercise 3
        10. Fiscal Policy and Interest Rates
    5. Chapter 21. Globalization and Protectionism
      1. 21.5. The Tradeoffs of Trade Policy
        1. Key Concepts and Summary
        2. Glossary
        3. Critical Thinking Questions
        4. Self-Check Question 1
        5. Self-Check Question 2
        6. Review Questions
        7. References
        8. What’s the Downside of Protection?
      2. 21.3. Arguments in Support of Restricting Imports
        1. Should Anti-Dumping Cases Be Limited? Anti-Dumping Cases Be Limited?
        2. The Environmental Protection Argument
        3. The Infant Industry Argument
        4. The Anti-Dumping Argument
        5. The National Interest Argument
        6. How does the United States really feel about expanding trade?
        7. Why Might Dumping Occur?
        8. The Unsafe Consumer Products Argument
        9. Key Concepts and Summary
        10. Self-Check Questions
          1. References
          2. Glossary
          3. Critical Thinking Questions
          4. Review Questions
          5. Problems
          6. Self-Check Question 1
          7. Self-Check Question 2
          8. Self-Check Question 3
          9. Self-Check Question 4
          10. Self-Check Question 5
          11. Self-Check Question 6
        11. The Race to the Bottom Scenario
        12. Pressuring Low-Income Countries for Higher Environmental Standards
      3. 21.2. International Trade & Its Effects on Jobs, Wages& Working Conditions
        1. Key Concepts and Summary
        2. References
        3. Trade and Wages
        4. Fewer Jobs?
        5. Labor Standards and Working Conditions
        6. Review Questions
        7. Critical Thinking Questions
        8. Self-Check Question 1
        9. Self-Check Question 2
        10. Self-Check Question 3
        11. Self-Check Question 4
        12. Self-Check Question 5
        13. Self-Check Question 6
      4. 21.4. How Trade Policy Is Enacted: Globally, Regionally, and Nationally
        1. Regional Trading Agreements
        2. Long-Term Trends in Barriers to Trade
        3. Trade Policy at the National Level
        4. The World Trade Organization
        5. Key Concepts and Summary
        6. Self-Check Questions
          1. References
          2. Review Questions
          3. Critical Thinking Questions
          4. Glossary
          5. Self-Check Question 1
          6. Self-Check Question 2
          7. Self-Check Question 3
      5. Chapter Review
      6. 21.1. Protectionism: An Indirect Subsidy from Consumers to Producers
        1. Key Concepts and Summary
        2. Self-Check Questions
          1. Exercise 1
          2. Exercise 2
          3. Problems
          4. Review Questions
          5. Critical Thinking Questions
          6. References
          7. Glossary
        3. Effects of Trade Barriers
        4. Why are there low-income countries?
        5. Who Benefits and Who Pays?
        6. Demand and Supply Analysis of Protectionism
  5. About this textbook
  6. Preface
    1. Senior Content Expert
    2. Senior Contributors
    3. Senior Contributing Author
  7. Appendices
    1. The Expenditure-Output Model
      1. The Multiplier Effect
        1. How Does the Multiplier Work?
        2. Calculating Keynesian Policy Interventions
        3. Calculating the Multiplier
        4. NOTE
        5. Multiplier Tradeoffs: Stability versus the Power of Macroeconomic Policy
      2. Building the Aggregate Expenditure Schedule
        1. Government Spending and Taxes as a Function of National Income
        2. Consumption as a Function of National Income
        3. Exports and Imports as a Function of National Income
        4. Investment as a Function of National Income
        5. Building the Combined Aggregate Expenditure Function
        6. USING AN ALGEBRAIC APPROACH TO THE EXPENDITURE-OUTPUT MODEL
      3. The Axes of the Expenditure-Output Diagram
        1. The Aggregate Expenditure Schedule
        2. The Potential GDP Line and the 45-degree Line
      4. Equilibrium in the Keynesian Cross Model
        1. FINDING EQUILIBRIUM
        2. Recessionary and Inflationary Gaps
        3. Where Equilibrium Occurs
      5. Key Concepts and Summary
      6. Self-Check Questions
        1. References
        2. Review Questions
        3. Self-Check Question 4
        4. Self-Check Question 4
        5. Critical Thinking Questions
        6. Self-Check Question 1
        7. Self-Check Question 2
        8. Self-Check Question 3
    2. The Use of Mathematics in Principles of Economics
      1. Displaying Data Graphically and Interpreting the Graph
        1. Bar Graphs
        2. Line Graphs
        3. Comparing Line Graphs with Pie Charts and Bar Graphs
        4. Pie Graphs
        5. Key Concepts and Summary
        6. Review Questions
        7. How Graphs Can Be Misleading
      2. Growth Rates
      3. Algebraic Models
        1. Solving Models with Algebra
        2. Interpreting the Slope
        3. Solving Models with Graphs
        4. Expressing Equations Graphically
by Spatial Bookworm
About this document
“Principles of Macroeconomics” is a 3D textbook derived from the same title available at OpenStax under the Creative Commons Attribution License (by 4.0). The original linear textbook is available for free download at http://cnx.org/contents/QGHIMgmO@10.216:JgDXaOLP@11/Introduction The book is designed for a one-semester course. It provides a balanced approach to economics, includes current examples, theory and application of economic concepts. The 3D format makes the book more compact and easy to use, and it aids the learning process. You are welcome to copy this document into your account and modify it as you see fit.
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