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Macroeconomics

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Edition:
6th
ISBN13:

9780716762133

ISBN10:
0716762137
Format:
Hardcover
Pub. Date:
5/12/2006
Publisher(s):
Worth Publishers
List Price: $241.40

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Summary

This guide offers various ways for students to learn the material in the new edition and assess their understanding

Table of Contents

Preface xxv
part I Introduction
The Science of Macroeconomics
2(14)
What Macroeconomists Study
2(4)
The Historical Performance of the U.S. Economy
3(3)
How Economists Think
6(8)
Theory as Model Building
6(4)
FYI Using Functions to Express Relationships Among Variables
10(1)
A Multitude of Models
11(1)
Prices: Flexible Versus Sticky
11(1)
Microeconomic Thinking and Macroeconomic Models
12(1)
FYI Nobel Macroeconomists
13(1)
How This Book Proceeds
14(2)
The Data of Macroeconomics
16(28)
Measuring the Value of Economic Activity: Gross Domestic Product
17(13)
Income, Expenditure, and the Circular Flow
17(2)
FYI Stocks and Flows
19(1)
Rules for Computing GDP
19(1)
Adding Apples and Oranges
20(1)
Used Goods
20(1)
The Treatment of Inventories
20(1)
Intermediate Goods and Value Added
21(1)
Housing Services and Other Imputations
21(1)
Real GDP versus Nominal GDP
22(1)
The GDP Deflator
23(1)
Chain-Weighted Measures of Real GDP
24(1)
FYI Two Arithmetic Tricks for Working With Percentage Changes
25(1)
The Components of Expenditure
25(1)
FYI What Is Investment?
26(1)
GDP and Its Components
27(1)
Other Measures of Income
28(2)
Seasonal Adjustment
30(1)
Measuring the Cost of Living: The Consumer Price Index
30(4)
The Price of a Basket of Goods
31(1)
The CPI versus the GDP Deflator
31(2)
Does the CPI Overstate Inflation?
33(1)
Measuring Joblessness: The Unemployment Rate
34(5)
The Household Survey
35(1)
Trends in Labor-Force Participation
36(2)
The Establishment Survey
38(1)
Conclusion: From Economic Statistics to Economic Models
39(5)
part II Classical Theory: The Economy in the Long Run
National Income: Where It Comes From and Where It Goes
44(32)
What Determines the Total Production of Goods and Services?
46(2)
The Factors of Production
46(1)
The Production Function
47(1)
The Supply of Goods and Services
47(1)
How Is National Income Distributed to the Factors of Production?
48(11)
Factor Prices
48(1)
The Decisions Facing the Competitive Firm
49(1)
The Firm's Demand for Factors
50(1)
The Marginal Product of Labor
50(1)
From the Marginal Product of Labor to Labor Demand
51(2)
The Marginal Product of Capital and Capital Demand
53(1)
The Division of National Income
53(1)
The Black Death and Factor Prices
54(1)
The Cobb-Douglas Production Function
55(3)
Labor Productivity as the Key Determinant of Real Wages
58(1)
What Determines the Demand for Goods and Services?
59(4)
Consumption
59(2)
Investment
61(1)
Government Purchases
62(1)
FYI The Many Different Interest Rates
63(1)
What Brings the Supply and Demand for Goods and Services Into Equilibrium?
63(8)
Equilibrium in the Market for Goods and Services: The Supply and Demand for the Economy's Output
64(1)
Equilibrium in the Financial Markets: The Supply and Demand for Loanable Funds
65(2)
Changes in Saving: The Effects of Fiscal Policy
67(1)
An Increase in Government Purchases
67(1)
Wars and Interest Rates in the United Kingdom, 1730--1920
68(1)
A Decrease in Taxes
69(1)
Changes in Investment Demand
69(2)
Conclusion
71(5)
Money and Inflation
76(39)
What Is Money?
77(6)
The Functions of Money
77(1)
The Types of Money
78(1)
Money in a POW Camp
79(1)
How Fiat Money Evolves
79(1)
Money and Social Conventions on the Island of Yap
80(1)
How the Quantity of Money Is Controlled
81(1)
How the Quantity of Money Is Measured
81(2)
FYI How Do Credit Cards and Debit Cards Fit into the Monetary System?
83(1)
The Quantity Theory of Money
83(6)
Transactions and the Quantity Equation
83(1)
From Transactions to Income
84(1)
The Money Demand Function and the Quantity Equation
85(1)
The Assumption of Constant Velocity
86(1)
Money, Prices, and Inflation
86(1)
Inflation and Money Growth
87(2)
Seigniorage: The Revenue From Printing Money
89(2)
Paying for the American Revolution
90(1)
Inflation and Interest Rates
91(4)
Two Interest Rates: Real and Nominal
91(1)
The Fisher Effect
91(1)
Inflation and Nominal Interest Rates
92(2)
Two Real Interest Rates: Ex Ante and Ex Post
94(1)
Nominal Interest Rates in the Nineteenth Century
94(1)
The Nominal Interest Rate and the Demand for Money
95(2)
The Cost of Holding Money
95(1)
Future Money and Current Prices
96(1)
The Social Costs of Inflation
97(6)
The Layman's View and the Classical Response
97(1)
What Economists and the Public Say About Inflation
98(1)
The Costs of Expected Inflation
99(1)
The Costs of Unexpected Inflation
100(1)
The Free Silver Movement, the Election of 1896, and the Wizard of Oz
101(1)
One Benefit of Inflation
102(1)
Hyperinflation
103(5)
The Costs of Hyperinflation
103(1)
Life During the Bolivian Hyperinflation
104(1)
The Causes of Hyperinflation
105(1)
Hyperinflation in Interwar Germany
106(2)
Conclusion: The Classical Dichotomy
108(7)
Appendix: The Cagan Model: How Current and Future Money Affect the Price Level
112(3)
The Open Economy
115(44)
The International Flows of Capital and Goods
116(5)
The Role of Net Exports
116(2)
International Capital Flows and the Trade Balance
118(2)
International Flows of Goods and Capital: An Example
120(1)
FYI The Irrelevance of Bilateral Trade Balances
120(1)
Saving and Investment in a Small Open Economy
121(10)
Capital Mobility and the World Interest Rate
121(1)
Why Assume a Small Open Economy?
122(1)
The Model
123(1)
How Policies Influence the Trade Balance
124(1)
Fiscal Policy at Home
124(1)
Fiscal Policy Abroad
125(1)
Shifts in Investment Demand
126(1)
Evaluating Economic Policy
127(1)
The U.S. Trade Deficit
127(3)
Why Doesn't Capital Flow to Poor Countries?
130(1)
Exchange Rates
131(14)
Nominal and Real Exchange Rates
131(1)
The Nominal Exchange Rate
131(1)
FYI How Newspapers Report the Exchange Rate
132(1)
The Real Exchange Rate
133(1)
The Real Exchange Rate and the Trade Balance
134(1)
The Determinants of the Real Exchange Rate
135(1)
How Policies Influence the Real Exchange Rate
136(1)
Fiscal Policy at Home
136(1)
Fiscal Policy Abroad
136(1)
Shifts in Investment Demand
137(1)
The Effects of Trade Policies
138(1)
The Determinants of the Nominal Exchange Rate
139(1)
Inflation and Nominal Exchange Rates
140(1)
The Special Case of Purchasing-Power Parity
141(2)
The Big Mac Around the World
143(2)
Conclusion: The United States as a Large Open Economy
145(14)
Appendix: The Large Open Economy
149(1)
Net Capital Outflow
149(2)
The Model
151(1)
The Market for Loanable Funds
151(1)
The Market for Foreign Exchange
152(1)
Policies in the Large Open Economy
153(1)
Fiscal Policy at Home
153(2)
Shifts in Investment Demand
155(1)
Trade Policies
155(1)
Shifts in Net Capital Outflow
156(1)
Conclusion
157(2)
Unemployment
159(27)
Job Loss, Job Finding, and the Natural Rate of Unemployment
160(2)
Job Search and Frictional Unemployment
162(3)
Public Policy and Frictional Unemployment
163(1)
Unemployment Insurance and the Rate of Job Finding
164(1)
Real-Wage Rigidity and Structural Unemployment
165(7)
Minimum-Wage Laws
166(1)
The Characteristics of Minimum-Wage Workers
167(1)
Unions and Collective Bargaining
168(2)
Efficiency Wages
170(1)
Henry Ford's $5 Workday
171(1)
Labor Market Experience: The United States
172(4)
The Duration of Unemployment
172(1)
Variation in the Unemployment Rate Across Demographic Groups
173(1)
Trends in Unemployment
174(1)
Demographics
174(1)
Sectoral Shifts
174(1)
Productivity
174(1)
Transitions Into and Out of the Labor Force
175(1)
Labor Market Experience: Europe
176(6)
The Rise in European Unemployment
176(2)
Unemployment Variation within Europe
178(1)
The Secrets to Happiness
179(1)
The Rise of European Leisure
180(2)
Conclusion
182(4)
part III Growth Theory: The Economy in the Very Long Run
Economic Growth I: Capital Accumulation and Population Growth
186(30)
The Accumulation of Capital
187(11)
The Supply and Demand for Goods
187(1)
The Supply of Goods and the Production Function
188(1)
The Demand for Goods and the Consumption Function
188(2)
Growth in the Capital Stock and the Steady State
190(2)
Approaching the Steady State: A Numerical Example
192(2)
The Miracle of Japanese and German Growth
194(1)
How Saving Affects Growth
195(1)
Saving and Investment Around the World
196(2)
The Golden Rule Level of Capital
198(8)
Comparing Steady States
198(4)
Finding the Golden Rule Steady State: A Numerical Example
202(1)
The Transition to the Golden Rule Steady State
203(1)
Starting With Too Much Capital
204(1)
Starting With Too Little Capital
205(1)
Population Growth
206(6)
The Steady State With Population Growth
206(2)
The Effects of Population Growth
208(1)
Population Growth Around the World
209(1)
Alternative Perspectives on Population Growth
210(1)
The Malthusian Model
211(1)
The Kremerian Model
211(1)
Conclusion
212(4)
Economic Growth II: Technology, Empirics, and Policy
216(36)
Technological Progress in the Solow Model
217(3)
The Efficiency of Labor
217(1)
The Steady State With Technological Progress
218(1)
The Effects of Technological Progress
219(1)
From Growth Theory to Growth Empirics
220(4)
Balanced Growth
220(1)
Convergence
221(1)
Factor Accumulation Versus Production Efficiency
222(1)
Is Free Trade Good for Economic Growth?
223(1)
Policies to Promote Growth
224(11)
Evaluating the Rate of Saving
225(1)
Changing the Rate of Saving
226(1)
Allocating the Economy's Investment
227(2)
Establishing the Right Institutions
229(1)
The Colonial Origins of Modern Institutions
229(1)
Encouraging Technological Progress
230(1)
The Worldwide Slowdown in Economic Growth: 1972--1995
231(1)
Measurement Problems
232(1)
Oil Prices
232(1)
Worker Quality
232(1)
The Depletion of Ideas
233(1)
Information Technology and the New Economy: 1995--????
233(2)
Beyond the Solow Model: Endogenous Growth Theory
235(5)
The Basic Model
235(1)
A Two-Sector Model
236(1)
The Microeconomics of Research and Development
237(2)
Economic Growth as a Process of Creative Destruction
239(1)
Conclusion
240(12)
Appendix: Accounting for the Sources of Economic Growth
244(1)
Increases in the Factors of Production
244(1)
Increases in Capital
245(1)
Increases in Labor
245(1)
Increases in Capital and Labor
245(1)
Technological Progress
246(2)
The Sources of Growth in the United States
248(1)
Growth in the East Asian Tigers
248(4)
part IV Business Cycle Theory: The Economy in the Short Run
Introduction to Economic Fluctuations
252(26)
The Facts about the Business Cycle
253(6)
GDP and Its Components
253(2)
Unemployment and Okun's Law
255(3)
Leading Economic Indicators
258(1)
Time Horizons in Macroeconomics
259(3)
How the Short Run and Long Run Differ
260(1)
The Puzzle of Sticky Magazine Prices
260(1)
The Model of Aggregate Supply and Aggregate Demand
261(1)
Aggregate Demand
262(3)
The Quantity Equation as Aggregate Demand
263(1)
Why the Aggregate Demand Curve Slopes Downward
264(1)
Shifts in the Aggregate Demand Curve
264(1)
Aggregate Supply
265(5)
The Long Run: The Vertical Aggregate Supply Curve
265(2)
The Short Run: The Horizontal Aggregate Supply Curve
267(1)
From the Short Run to the Long Run
268(2)
Gold, Greenbacks, and the Contraction of the 1870s
270(1)
Stabilization Policy
270(6)
Shocks to Aggregate Demand
271(1)
Shocks to Aggregate Supply
272(2)
How OPEC Helped Cause Stagflation in the 1970s and Euphoria in the 1980s
274(2)
Conclusion
276(2)
Aggregate Demand I: Building the IS-LM Model
278(25)
The Goods Market and the IS Curve
280(12)
The Keynesian Cross
280(1)
Planned Expenditure
280(2)
The Economy in Equilibrium
282(1)
Fiscal Policy and the Multiplier: Government Purchases
283(2)
Fiscal Policy and the Multiplier: Taxes
285(2)
Cutting Taxes to Stimulate the Economy: The Kennedy and Bush Tax Cuts
287(1)
The Interest Rate, Investment, and the IS Curve
288(1)
How Fiscal Policy Shifts the IS Curve
289(1)
A Loanable-Funds Interpretation of the IS Curve
290(2)
The Money Market and the LM Curve
292(7)
The Theory of Liquidity Preference
292(3)
Does a Monetary Tightening Raise or Lower Interest Rates?
295(1)
Income, Money Demand, and the LM Curve
295(2)
How Monetary Policy Shifts the LM Curve
297(1)
A Quantity-Equation Interpretation of the LM Curve
298(1)
Conclusion: The Short-Run Equilibrium
299(4)
Aggregate Demand II: Applying the IS-LM Model
303(31)
Explaining Fluctuations With the IS-LM Model
304(9)
How Fiscal Policy Shifts the IS Curve and Changes the Short-Run Equilibrium
304(1)
Changes in Government Purchases
304(1)
Changes in Taxes
305(1)
How Monetary Policy Shifts the LM Curve and Changes the Short-Run Equilibrium
306(1)
The Interaction Between Monetary and Fiscal Policy
307(2)
Policy Analysis With Macroeconometric Models
309(1)
Shocks in the IS-LM Model
310(1)
The U.S. Recession of 2001
311(1)
What Is the Fed's Policy Instrument--The Money Supply or the Interest Rate?
312(1)
IS-LM as a Theory of Aggregate Demand
313(4)
From the IS-LM Model to the Aggregate Demand Curve
313(2)
The IS-LM Model in the Short Run and Long Run
315(2)
The Great Depression
317(9)
The Spending Hypothesis: Shocks to the IS Curve
318(2)
The Money Hypothesis: A Shock to the LM Curve
320(1)
The Money Hypothesis Again: The Effects of Falling Prices
321(1)
The Stabilizing Effects of Deflation
321(1)
The Destabilizing Effects of Deflation
321(2)
Could the Depression Happen Again?
323(1)
The Japanese Slump of the 1990s
324(1)
FYI The Liquidity Trap
325(1)
Conclusion
326(8)
Appendix: The Simple Algebra of the IS-LM Model and the Aggregate Demand Curve
329(1)
The IS Curve
329(1)
The LM Curve
330(1)
The Aggregate Demand Curve
331(1)
The Effectiveness of Monetary and Fiscal Policy
332(2)
The Open Economy Revisited: The Mundell-Fleming Model and the Exchange-Rate Regime
334(39)
The Mundell-Fleming Model
335(5)
The Key Assumption: Small Open Economy With Perfect Capital Mobility
336(1)
The Goods Market and the IS* Curve
336(2)
The Money Market and the LM* Curve
338(1)
Putting the Pieces Together
338(2)
The Small Open Economy Under Floating Exchange Rates
340(4)
Fiscal Policy
340(2)
Monetary Policy
342(1)
Trade Policy
343(1)
The Small Open Economy Under Fixed Exchange Rates
344(7)
How a Fixed-Exchange-Rate System Works
345(1)
The International Gold Standard
346(1)
Fiscal Policy
347(1)
Monetary Policy
348(1)
Devaluation and the Recovery From the Great Depression
349(1)
Trade Policy
349(1)
Policy in the Mundell-Fleming Model: A Summary
350(1)
Interest-Rate Differentials
351(5)
Country Risk and Exchange-Rate Expectations
351(1)
Differentials in the Mundell-Fleming Model
352(1)
International Financial Crisis: Mexico 1994--1995
353(2)
International Financial Crisis: Asia 1997--1998
355(1)
Should Exchange Rates Be Floating or Fixed?
356(5)
Pros and Cons of Different Exchange-Rate Systems
356(1)
Monetary Union in the United States and Europe
357(1)
Speculative Attacks, Currency Boards, and Dollarization
358(1)
The Impossible Trinity
359(1)
The Chinese Currency Controversy
360(1)
From the Short Run to the Long Run: The Mundell-Fleming Model With a Changing Price Level
361(3)
A Concluding Reminder
364(9)
Appendix: A Short-Run Model of the Large Open Economy
368(1)
Fiscal Policy
369(2)
Monetary Policy
371(1)
A Rule of Thumb
372(1)
Aggregate Supply and the Short-run Tradeoff Between Inflation and Unemployment
373(33)
Three Models of Aggregate Supply
374(11)
The Sticky-Price Model
375(2)
The Sticky-Wage Model
377(2)
The Cyclical Behavior of the Real Wage
379(1)
The Imperfect-Information Model
380(2)
International Differences in the Aggregate Supply Curve
382(1)
Summary and Implications
383(2)
Inflation, Unemployment, and the Phillips Curve
385(12)
Deriving the Phillips Curve From the Aggregate Supply Curve
385(2)
FYI The History of the Modern Phillips Curve
387(1)
Adaptive Expectations and Inflation Inertia
387(1)
Two Causes of Rising and Falling Inflation
388(1)
Inflation and Unemployment in the United States
389(1)
The Short-Run Tradeoff Between Inflation and Unemployment
390(2)
FYI How Precise Are Estimates of the Natural Rate of Unemployment?
392(1)
Disinflation and the Sacrifice Ratio
392(1)
Rational Expectations and the Possibility of Painless Disinflation
393(2)
The Sacrifice Ratio in Practice
395(1)
Hysteresis and the Challenge to the Natural-Rate Hypothesis
396(1)
Conclusion
397(9)
Appendix: A Big, Comprehensive Model
401(1)
Special Case 1: The Classical Closed Economy
401(1)
Special Case 2: The Classical Small Open Economy
402(1)
Special Case 3: The Basic Model of Aggregate Demand and Aggregate Supply
402(1)
Special Case 4: The IS-LM Model
402(1)
Special Case 5: The Mundell-Fleming Model With a Floating Exchange Rate
402(1)
Special Case 6: The Mundell-Fleming Model With a Fixed Exchange Rate
402(4)
part V Macroeconomic Policy Debates
Stabilization Policy
406(25)
Should Policy Be Active or Passive?
407(8)
Lags in the Implementation and Effects of Policies
407(2)
The Difficult Job of Economic Forecasting
409(1)
Mistakes in Forecasting
409(2)
Ignorance, Expectations, and the Lucas Critique
411(1)
The Historical Record
412(1)
Is the Stabilization of the Economy a Figment of the Data?
413(1)
The Remarkable Stability of the Modern Economy
413(2)
Should Policy Be Conducted by Rule or by Discretion?
415(10)
Distrust of Policymakers and the Political Process
416(1)
The Time Inconsistency of Discretionary Policy
416(2)
Alexander Hamilton Versus Time Inconsistency
418(1)
Rules for Monetary Policy
419(1)
Inflation Targeting: Rule or Constrained Discretion?
420(1)
John Taylor's Rule for Monetary Policy
421(2)
Central-Bank Independence
423(2)
Conclusion: Making Policy in an Uncertain World
425(6)
Appendix: Time Inconsistency and the Tradeoff Between Inflation and Unemployment
428(3)
Government Debt
431(25)
The Size of the Government Debt
432(3)
The Troubling Outlook for Fiscal Policy
434(1)
Problems in Measurement
435(4)
Measurement Problem 1: Inflation
435(1)
Measurement Problem 2: Capital Assets
436(1)
Measurement Problem 3: Uncounted Liabilities
437(1)
Measurement Problem 4: The Business Cycle
438(1)
Summing Up
438(1)
The Traditional View of Government Debt
439(2)
FYI Taxes and Incentives
440(1)
The Ricardian View of Government Debt
441(7)
The Basic Logic of Ricardian Equivalence
442(1)
Consumers and Future Taxes
443(1)
Myopia
443(1)
Borrowing Constraints
443(1)
George Bush's Withholding Experiment
444(1)
Future Generations
444(2)
Why Do Parents Leave Bequests?
446(1)
Making a Choice
446(1)
FYI Ricardo on Ricardian Equivalence
447(1)
Other Perspectives on Government Debt
448(4)
Balanced Budgets Versus Optimal Fiscal Policy
448(1)
Stabilization
448(1)
Tax Smoothing
448(1)
Intergenerational Redistribution
448(1)
Fiscal Effects on Monetary Policy
449(1)
Debt and the Political Process
449(1)
International Dimensions
450(1)
The Benefits of Indexed Bonds
451(1)
Conclusion
452(4)
part VI More on the Microeconomics Behind Macroeconomics
Consumption
456(31)
John Maynard Keynes and the Consumption Function
457(4)
Keynes's Conjectures
457(1)
The Early Empirical Successes
458(1)
Secular Stagnation, Simon Kuznets, and the Consumption Puzzle
459(2)
Irving Fisher and Intertemporal Choice
461(10)
The Intertemporal Budget Constraint
461(2)
FYI Present Value, or Why a $1,000,000 Prize Is Worth Only $623,000
463(1)
Consumer Preferences
464(1)
Optimization
465(1)
How Changes in Income Affect Consumption
466(1)
How Changes in the Real Interest Rate Affect Consumption
467(1)
Constraints on Borrowing
468(2)
The High Japanese Saving Rate
470(1)
Franco Modigliani and the Life-Cycle Hypothesis
471(5)
The Hypothesis
472(1)
Implications
472(3)
The Consumption and Saving of the Elderly
475(1)
Milton Friedman and the Permanent-Income Hypothesis
476(2)
The Hypothesis
476(1)
Implications
477(1)
The 1964 Tax Cut and the 1968 Tax Surcharge
478(1)
Robert Hall and the Random-Walk Hypothesis
478(3)
The Hypothesis
479(1)
Implications
479(1)
Do Predictable Changes in Income Lead to Predictable Changes in Consumption?
480(1)
David Laibson and the Pull of Instant Gratification
481(2)
How to Get People to Save More
482(1)
Conclusion
483(4)
Investment
487(23)
Business Fixed Investment
488(13)
The Rental Price of Capital
489(1)
The Cost of Capital
490(2)
The Determinants of Investment
492(2)
Taxes and Investment
494(1)
The Stock Market and Tobin's q
495(1)
The Stock Market as an Economic Indicator
496(1)
Alternative Views of the Stock Market: The Efficient Markets Hypothesis Versus Keynes's Beauty Contest
497(2)
Financing Constraints
499(1)
Banking Crises and Credit Crunches
500(1)
Residential Investment
501(3)
The Stock Equilibrium and the Flow Supply
501(1)
Changes in Housing Demand
502(1)
FYI What Price House Can You Afford?
503(1)
The Tax Treatment of Housing
504(1)
Inventory Investment
504(3)
Reasons for Holding Inventories
504(1)
The Accelerator Model of Inventories
505(2)
Inventories and the Real Interest Rate
507(1)
Conclusion
507(3)
Money Supply and Money Demand
510(18)
Money Supply
510(8)
100-Percent-Reserve Banking
511(1)
Fractional-Reserve Banking
512(2)
A Model of the Money Supply
514(1)
The Three Instruments of Monetary Policy
515(1)
Bank Failures and the Money Supply in the 1930s
516(2)
Money Demand
518(7)
Portfolio Theories of Money Demand
518(1)
Currency and the Underground Economy
519(1)
Transactions Theories of Money Demand
520(1)
The Baumol-Tobin Model of Cash Management
520(3)
Empirical Studies of Money Demand
523(1)
Financial Innovation, Near Money, and the Demise of the Monetary Aggregates
524(1)
Conclusion
525(3)
Advances in Business Cycle Theory
528(19)
The Theory of Real Business Cycles
529(8)
The Economics of Robinson Crusoe
529(2)
The Interpretation of the Labor Market
531(1)
Looking for Intertemporal Substitution
532(1)
The Importance of Technology Shocks
533(1)
The Solow Residual and the Business Cycle
534(1)
The Neutrality of Money
535(1)
Testing for Monetary Neutrality
536(1)
The Flexibility of Wages and Prices
537(1)
New Keynesian Economics
537(7)
Small Menu Costs and Aggregate-Demand Externalities
538(1)
How Large Are Menu Costs?
539(1)
Recessions as Coordination Failure
539(2)
The Staggering of Wages and Prices
541(1)
If You Want to Know Why Firms Have Sticky Prices, Ask Them
542(2)
Conclusion
544(3)
Epilogue: What We Know, What WeDon't
547(8)
The Four Most Important Lessons of Macroeconomics
547(3)
Lesson 1: In the long run, a country's capacity to produce goods and services determines the standard of living of its citizens.
548(1)
Lesson 2: In the short run, aggregate demand influences the amount of goods and services that a country produces.
548(1)
Lesson 3: In the long run, the rate of money growth determines the rate of inflation, but it does not affect the rate of unemployment.
549(1)
Lesson 4: In the short run, policymakers who control monetary and fiscal policy face a tradeoff between inflation and unemployment.
549(1)
The Four Most Important Unresolved Questions of Macroeconomics
550(4)
Question 1: How should policymakers try to promote growth in the economy's natural level of output?
550(1)
Question 2: Should policymakers try to stabilize the economy?
551(1)
Question 3: How costly is inflation, and how costly is reducing inflation?
552(1)
Question 4: How big a problem are government budget deficits?
553(1)
Conclusion
554(1)
Glossary 555(10)
Index 565


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