Macroeconomics

by Slavin, Stephen L.

• ISBN13: 9780072854879
• ISBN10: 0072854871
• Edition: 7th
• Format: Paperback
• Copyright: 2004-02-23
• Publisher: McGraw-Hill/Irwin

Summary

Steve Slavin's lively and comprehensive Macroeconomics student-friendly, step-by-step approach, coupled with its low price and built-in Workbook/Study Guide is very attractive to adopters. Instructors and students like the author's humorous anecdotes, direct language, and easy conversational style. The text encourages active rather than passive reading.

Table of Contents

A Brief Economic History of the United States	1	(22)
Introduction	1	(1)
The American Economy in the 19th Century	2	(4)
Agricultural Development	2	(2)
The National Railroad Network	4	(1)
The Age of the Industrial Capitalist	5	(1)
The American Economy in the 20th Century	6	(11)
The Roaring Twenties	7	(1)
The 1930s: The Great Depression	7	(3)
The 1940s: World War II and Peacetime Prosperity	10	(3)
The 1950s: The Eisenhower Years	13	(1)
The Soaring Sixties: The Years of Kennedy and Johnson	14	(1)
The Sagging Seventies: The Stagflation Decade	14	(1)
The 1980s: The Age of Reagan	15	(1)
The State of American Agriculture	16	(1)
The ``New Economy'' of the Nineties	16	(1)
The American Economy in the New Millennium	17	(1)
9/11 and After	17	(1)
Last Word	18	(5)
Resource Utilization	23	(22)
Economics Defined	23	(1)
The Central Fact of Economics: Scarcity	24	(2)
Scarcity and the Need to Economize	24	(1)
The Economic Problem	24	(1)
The Four Economic Resources	24	(1)
Opportunity Cost	25	(1)
Full Employment and Full Production	26	(4)
The Production Possibilities Frontier	30	(5)
Productive Efficiency	35	(1)
Economic Growth	35	(10)
Supply and Demand	45	(22)
Demand	45	(1)
Supply	46	(2)
Equilibrium	48	(1)
Surpluses and Shortages	48	(1)
Shifts in Demand and Supply	49	(4)
Price Ceilings and Price Floors	53	(5)
Applications of Supply and Demand	58	(2)
Interest Rate Determination	58	(1)
College Parking	59	(1)
The Rationing Function of the Price System	59	(1)
Last Word	60	(7)
The Mixed Economy	67	(24)
The Three Questions of Economics	67	(1)
What Shall We Produce?	67	(1)
How Shall These Goods Be Produced?	68	(1)
For Whom Shall the Goods Be Produced?	68	(1)
The Invisible Hand, the Price Mechanism, and Perfect Competition	68	(4)
The Invisible Hand	69	(1)
The Price Mechanism	70	(1)
Competition	70	(1)
Trust	71	(1)
Equity and Efficiency	71	(1)
The Circular Flow Model	72	(1)
The Economic Role of Government	73	(1)
Market Failure	74	(7)
Externalities	74	(3)
Curbing Environmental Pollution	77	(3)
Lack of Public Goods and Services	80	(1)
Capital	81	(2)
The ``Isms'': Capitalism, Communism, Fascism, and Socialism	83	(5)
The Decline and Fall of the Communist System	86	(1)
Transformation in China	86	(2)
Last Word: The Mixed Economy	88	(3)
The Household-Consumption Sector	91	(26)
GDP and Big Numbers	91	(1)
Consumption	92	(1)
Saving	93	(1)
Average Propensity to Consume (APC)	94	(1)
Average Propensity to Save (APS)	94	(2)
Marginal Propensity to Consume (MPC)	96	(1)
Marginal Propensity to Save (MPS)	97	(1)
Graphing the Consumption Function	97	(4)
The Saving Function	101	(3)
What the Consumer Buys	104	(1)
Determinants of the Level of Consumption	105	(2)
The Level of Disposable Income	105	(1)
Credit Availability	106	(1)
Stock of Liquid Assets in the Hands of Consumers	106	(1)
Stock of Durable Goods in the Hands of Consumers	106	(1)
Keeping Up with the Joneses	107	(1)
Consumer Expectations	107	(1)
The Permanent Income Hypothesis	107	(1)
Determinants of the Level of Saving	108	(1)
Why Do We Spend So Much and Save So Little?	109	(1)
Is the Consumer Really King?	110	(1)
Total Saving: Individual Saving + Business Saving + Government Saving	111	(1)
Last Word	111	(6)
The Business-Investment Sector	117	(24)
Proprietorships, Partnerships, and Corporations	117	(6)
The Proprietorship	117	(1)
The Partnership	118	(1)
The Corporation	118	(2)
Stocks and Bonds	120	(2)
Capitalization and Control	122	(1)
The Business Population	123	(1)
Investment	123	(3)
How Does Savings Get Invested?	126	(1)
Gross Investment versus Net Investment	127	(1)
Building Capital	128	(1)
The Determinants of the Level of Investment	128	(4)
The Sales Outlook	128	(1)
Capacity Utilization Rate	129	(1)
The Interest Rate	129	(1)
The Expected Rate of Profit	130	(1)
Why Do Firms Invest?	131	(1)
Graphing the C + I Line	132	(1)
The Summing Up of Investment	133	(8)
The Government Sector	141	(26)
Introduction: The Growing Economic Role of Government	141	(1)
Government Spending	142	(4)
Federal Government Spending	142	(2)
State and Local Government Spending	144	(1)
Government Purchases versus Transfer Payments	145	(1)
Graphing the C + I + G Line	146	(1)
Taxes	146	(14)
The Average Tax Rate and the Marginal Tax Rate	147	(2)
Types of Taxes	149	(2)
Sources of Federal Revenue	151	(3)
Recent tax Regulation	154	(2)
Conclusion	156	(1)
Sources of State and Local Revenue	156	(1)
The State and Local Fiscal Dilemma	157	(1)
Comparison of Taxes in the United States and Other Countries	158	(2)
The Economic Role of Government	160	(7)
Provision of Public Goods and Services	160	(1)
Redistribution of Income	160	(1)
Stabilization	161	(1)
Economic Regulation	161	(1)
Conclusion	161	(6)
The Export-Import Sector	167	(16)
The Basis for International Trade	167	(1)
Specialization and Exchange	168	(1)
U.S. Exports and Imports	169	(3)
A Summing Up: C + I + G + Xn	172	(2)
World Trade Agreements and Free Trade Zones	174	(9)
Free Trade Zones	174	(1)
World Trade Agreements	175	(8)
Gross Domestic Product	183	(26)
What Is Gross Domestic Product?	183	(1)
How GDP Is Measured	184	(5)
The Expenditures Approach	185	(1)
The Flow-of-Income Approach	186	(3)
Two Things to Avoid When Compiling GDP	189	(2)
Multiple Counting	189	(2)
Treatment of Transfer Payments	191	(1)
GDP versus Real GDP	191	(5)
International GDP Comparisons	196	(1)
Per Capita Real GDP	197	(3)
Shortcomings of GDP as a Measure of National Economic Well-Being	200	(4)
Production That Is Excluded	200	(2)
Treatment of Leisure Time	202	(1)
Human Costs and Benefits	202	(1)
What Goes into GDP?	203	(1)
The Last Word on GDP	204	(5)
Economic Fluctuations, Unemployment, and Inflation	209	(34)
Economic Fluctuations	209	(3)
Is There a Business Cycle?	209	(1)
Cycle Turning Points: Peaks and Troughs	210	(1)
The Conventional Three-Phase Business Cycle	211	(1)
Business Cycle Theories	212	(1)
Endogenous Theories	212	(1)
Exogenous Theories	213	(1)
Business Cycle Forecasting	213	(1)
Unemployment	214	(8)
The Problem	214	(1)
How the Unemployment Rate Is Computed	215	(4)
Types of Unemployment	219	(3)
Natural Unemployment Rate	222	(1)
Inflation	222	(13)
Defining Inflation	222	(2)
Deflation and Disinflation	224	(2)
The Post--World War II History of Inflation	226	(1)
The Construction of the Consumer Price Index	227	(2)
Anticipated and Unanticipated Inflation: Who Is Hurt by Inflation and Who Is Helped?	229	(2)
Theories of the Causes of Inflation	231	(3)
Inflation as a Psychological Process	234	(1)
Creeping Inflation and Hyperinflation	234	(1)
The Misery Index	235	(8)
Classical and Keynesian Economics	243	(24)
The Classical Economic System	243	(4)
Say's Law	243	(2)
Supply and Demand Revisited	245	(2)
The Classical Equilibrium: Aggregate Demand Equals Aggregate Supply	247	(5)
The Aggregate Demand Curve	247	(2)
The Long-Run Aggregate Supply Curve	249	(1)
The Short-Run Aggregate Supply Curve	250	(2)
The Keynesian Critique of the Classical System	252	(3)
The Keynesian System	255	(3)
The Keynesian Aggregate Expenditure Model	256	(2)
Disequilibrium and Equilibrium	258	(1)
Aggregate Demand Exceeds Aggregate Supply	258	(1)
Aggregate Supply Exceeds Aggregate Demand	259	(1)
Summary: How Equilibrium Is Attained	259	(1)
Keynesian Policy Prescriptions	259	(8)
Fiscal Policy and the National Debt	267	(26)
Putting Fiscal Policy into Perspective	267	(1)
The Deflationary Gap and the Inflationary Gap	268	(3)
The Deflationary Gap	268	(1)
The Inflationary Gap	269	(2)
The Multiplier and Its Applications	271	(3)
The Multiplier	271	(1)
Applications of the Multiplier	272	(2)
The Automatic Stabilizers	274	(3)
Personal Income and Payroll Taxes	275	(1)
Personal Savings	276	(1)
Credit Availability	276	(1)
Unemployment Compensation	276	(1)
The Corporate Profits Tax	276	(1)
Other Transfer Payments	277	(1)
Discretionary Fiscal Policy	277	(3)
Making the Automatic Stabilizers More Effective	278	(1)
Public Works	278	(1)
Changes in Tax Rates	278	(1)
Changes in Government Spending	279	(1)
Who Makes Fiscal Policy?	279	(1)
The Deficit Dilemma	280	(3)
Deficits, Surpluses, and the Balanced Budget	280	(1)
Deficits and Surpluses: The Record	280	(2)
Why Are Large Deficits So Bad?	282	(1)
Must We Balance the Budget Every Year?	283	(1)
The Crowding-Out and Crowding-In Effects	283	(2)
The Public Debt	285	(2)
Conclusion	287	(6)
Money and Banking	293	(28)
Money	293	(12)
The Four Jobs of Money	293	(1)
Medium of Exchange	294	(1)
Standard of Value	294	(1)
Store of Value	294	(1)
Standard of Deferred Payment	294	(1)
Money versus Barter	295	(1)
M1, M2, and M3	295	(4)
Our Growing Money Supply	299	(1)
The Demand for Money	299	(3)
The Demand Schedule for Money	302	(1)
The Liquidity Trap	302	(1)
Determination of the Interest Rate	303	(2)
Banking	305	(6)
A Short History of Banking	305	(2)
Modern Banking	307	(4)
The Creation and Destruction of Money	311	(1)
The Creation of Money	311	(1)
The Destruction of Money	312	(1)
Limits to Deposit Creation	312	(1)
Bank Regulation	312	(9)
Branch Banking and Bank Chartering	312	(2)
The Federal Deposit Insurance Corporation	314	(1)
The Savings and Loan Debacle	314	(7)
The Federal Reserve and Monetary Policy	321	(28)
The Federal Reserve System	321	(6)
The Federal Reserve District Banks	322	(1)
The Board of Governors	323	(1)
Independence of the Board of Governors	324	(1)
Legal Reserve Requirements	325	(2)
Primary and Secondary Reserves	327	(1)
Deposit Expansion	327	(4)
How Deposit Expansion Works	327	(1)
The Deposit Expansion Multiplier	327	(2)
Cash, Checks, and Electronic Money	329	(2)
The Tools of Monetary Policy	331	(7)
How Open-Market Operations Work	331	(1)
The Federal Open-Market Committee	332	(2)
Discount Rate and Federal Funds Rate Changes	334	(1)
Changing Reserve Requirements	335	(1)
Summary: The Tools of Monetary Policy	336	(2)
The Fed's Effectiveness in Fighting Inflation and Recession	338	(1)
The American Economy According to Chairman Greenspan	339	(2)
The Depository Institutions Deregulation and Monetary Control Act of 1980	341	(1)
The Banking Act of 1999	342	(1)
Fiscal and Monetary Policies Should Mesh	342	(1)
Last Word	343	(6)
Twentieth-Century Economic Theory	349	(32)
The Equation of Exchange	349	(2)
The Quantity Theory of Money	351	(1)
Classical Economics	352	(2)
Keynesian Economics	354	(1)
The Monetarist School	355	(4)
The Importance of the Rate of Monetary Growth	355	(1)
The Basic Propositions of Monetarism	356	(2)
The Monetary Rule	358	(1)
The Decline of Monetarism	358	(1)
Supply-Side Economics	359	(3)
The Work Effect	359	(1)
The Saving and Investment Effect	359	(1)
The Elimination of Productive Market Exchanges	360	(1)
The Laffer Curve	360	(2)
Rational Expectations Theory	362	(4)
The Three Assumptions of Rational Expectations Theory	362	(3)
Are Wages Downwardly Flexible?	365	(1)
21st Century Economic Theory	366	(1)
The Supply-Side Revival?	366	(1)
The Economic Behaviorists	366	(1)
Conclusion	367	(6)
Appendix: A Guide to Macropolicy	373	(1)
Fighting Recessions	373	(1)
Conventional Fiscal Policy	373	(1)
Conventional Monetary Policy	374	(1)
Two Policy Dilemmas	374	(1)
Fighting Inflation	374	(1)
Conventional Fiscal Policy	374	(1)
Conventional Monetary Policy	374	(1)
Fighting Inflationary Recessions: Two More Policy Dilemmas	374	(1)
Fiscal and Monetary Policy Lags	375	(2)
The Lags	375	(1)
Fiscal Policy Lags	375	(1)
Monetary Policy Lags	376	(1)
The Limits of Macropolicy	377	(1)
Conclusion	378	(3)
Economic Growth and Productivity	381	(22)
The Industrial Revolution and American Economic Development	381	(1)
The Record of Productivity Growth	382	(8)
How Saving and Investment Affect Productivity Growth	384	(3)
How Labor Force Changes Affect Productivity Growth	387	(1)
The Average Workweek and Workyear	387	(1)
Our Declining Educational System	387	(1)
The Permanent Underclass: Poverty, Drugs, and Crime	388	(1)
Restrictions on Immigration	389	(1)
The Role of Technological Change	390	(1)
Additional Factors Affecting Our Rate of Growth	391	(2)
Summary	393	(2)
Productivity Growth and the ``Jobless Recovery''	395	(1)
Economic Growth in the Less Developed Countries	396	(7)
Income Distribution and Poverty	403	(28)
Income Distribution in the United States	403	(9)
The Poor, the Middle Class, and the Rich	403	(4)
Distribution of Wealth in the United States	407	(2)
Distribution of Income: Equity and Efficiency	409	(1)
What Determines Income Distribution?	410	(2)
Poverty in America	412	(13)
Poverty Defined	412	(2)
Who Are the Poor?	414	(1)
Child Poverty	415	(2)
The Main Government Transfer Programs	417	(1)
Theories of the Causes of Poverty	418	(2)
The Conservative View versus the Liberal View	420	(2)
Solutions	422	(3)
Last Word	425	(6)
International Trade	431	(32)
A Brief History of U.S. Trade	432	(2)
U.S. Trade before 1975	432	(1)
U.S. Trade since 1975	432	(1)
U.S. Government Trade Policy	433	(1)
The Theory of International Trade	434	(15)
Specialization and Trade	434	(2)
Domestic Exchange Equations	436	(1)
The Terms of Trade	436	(2)
Absolute Advantage and Comparative Advantage	438	(5)
The Arguments for Protection	443	(4)
Tariffs or Quotas	447	(1)
Conclusion	448	(1)
The Practice of International Trade	449	(3)
What Are the Causes of Our Trade Imbalance?	449	(3)
Our Trade Deficit with Japan and China	452	(4)
Japanese Trading Practices	453	(2)
Our Trade Deficit with China	455	(1)
Trading with China and Japan: More Differences than Similarities	455	(1)
Final Word	456	(7)
International Finance	463	(22)
The Mechanics of International Finance	463	(4)
Financing International Trade	464	(1)
The Balance of Payments	464	(3)
Exchange Rate Systems	467	(7)
The Gold Standard	467	(1)
The Gold Exchange Standard, 1934--73	468	(1)
The Freely Floating Exchange Rate System, 1973 to the Present	469	(3)
How Well Do Freely Floating (Flexible) Exchange Rates Work?	472	(1)
The Euro	472	(1)
The Yen and the Yuan	472	(2)
Running Up a Tab in the Global Economy	474	(11)
From Largest Creditor to Largest Debtor	474	(3)
Living beyond Our Means	477	(1)
Why We Need to Worry about the Current Account Deficit	478	(7)
Glossary	485	(10)
Index	495