Macroeconomics 19th edition mcconnell, brue, flynn

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Macroeconomics Nineteenth Edition McConnell, Brue, and Flynn Brief Editions: Microeconomics and Macroeconomics First Edition Miller Principles of Microeconomics First Edition Samuelson and Nordhaus Economics, Microeconomics, Macroeconomics Nineteenth Edition Schiller The Economy Today, The Micro Economy Today, The Macro Economy Today Twelfth Edition Slavin Economics, Microeconomics, Macroeconomics Tenth Edition ECONOMICS OF SOCIAL ISSUES Guell Issues in Economics Today Fifth Edition Sharp, Register, and Grimes Economics of Social Issues Nineteenth Edition ECONOMETRICS Gujarati and Porter Basic Econometrics Fifth Edition Gujarati and Porter Essentials of Econometrics Fourth Edition MANAGERIAL ECONOMICS Baye Managerial Economics and Business Strategy Seventh Edition change in quantity supplied, 56, 59–60 equilibrium, 56–58 Quasi-public banks, 288 Quasi-public goods, 104 Quotas, import, 411–414 Race See also African Americans Hispanics unemployment and, 176, 178 Ratchet effect, 247, 259, 260–261 Rates of return arbitrage and, 347–348 asset prices and, 347 average expected rate of return, 350, 351 calculating, 347 expected, 199, 237, 350 risk-free, 351–352 Rational expectations theory (RET), 386–389, 387–388, 390–391, 394 Rational self-interest, purposeful behavior and, 4–5 Rationing, prices and, 58, 62 Reagan, Ronald, 376 Real-balances effect, 234–235 Real-business-cycle theory, 384 Real domestic output, 213 Real estate exchange rates and, 431–432 subprime mortgage crisis, 290–291, 324 Real GDP See also Gross domestic product (GDP) adjustment for price changes, 141–142 consumption and, 197 defined, 117, 141 economic growth and, 150–155, 159 nominal GDP versus, 141–143 saving and, 197 taxation and, 377 Real GDP per capita defined, 150 economic growth and, 150–155 as measure of well-being, 150 Real income, 182 Real interest rates changes in aggregate demand and, 237 defined, 184, 199 inflation and, 184 as nonincome determinant of consumption and saving, 197 Recession See also Great Recession of 2007–2009 in aggregate demand-aggregate supply model, 366 in business cycle, 116, 171, 172 decreases in aggregate demand and, 246–248 defined, 116, 171 expansionary monetary policy, 325–326, 330–331, 355 in extended AD-AS model, 366 inventory management and, 124–125 in the U.S., 171 Recessionary expenditure gap, 225–227 defined, 225 inflationary expenditure gap versus, 227 Keynes’ solution to, 226–229 Recognition lag, 267 Redistribution of income, 182–183 Refinancing, of public debt, 271 Regressive taxes, 262–263 Regulation See Government regulation Relative interest rates, exchange rates and, 431 Relative price, 49 Relative scarcity, 285 Rent, income approach to GDP and, 136 Rent controls, 62–63 Required reserves, 289, 302–303, 307–311, 318, 321–322 Research and development (R&D), economies of scale and, 163 Reserve ratio, 302–303, 307–311 defined, 321 discount rate and, 322–323 lowering, 322 raising, 322 term auction facility, 289–290, 323 Reserve requirements, 289, 302–303, 307–311, 318, 321–322 Reserve(s) actual, 303 of commercial banks, 302–303, 307–311, 318, 321–322 excess, 303, 305–306 Resource allocation See also Resource markets economic growth and, 161 supply of energy in See Energy economics Resource markets See also Interest Profit Rent Supply of resources Wage determination in circular flow model, 41 public sector role in reallocation, 104 resource prices and, 54–55, 56 Restrictive monetary policy defined, 326 effects of, 331–332 Retained earnings, income approach to GDP and, 136 Revenue tariffs, 411 Reverse wealth effect, 196, 236 Ricardo, David, 228, 401 Risk, 348–351 See also Uncertainty average expected rate of return and, 350, 351 comparing risky investments, 349–351 defined, 348 diversification and, 349 exchange-rate, 440–441 international investment risks, 350 mutual funds and, 347 risk-free rate of return, 351–352 Security Market Line and, 352–355 shocks and, 120–124 Risk-free interest rate, 351–355 increase in, 354–355 nature of, 351–352 Security Market Line and, 352–355 Risk-free interest rates, 351–355 Risk premium, 352 Ritter, Joseph A., 145n Ritter, Lawrence S., 390n Rivalry private goods and, 99 private versus public goods and, 100 Rivlin, Alice M., 167n Rodriguez, Alex, Roman Empire, 118 Romer, Christina, 377, 377n Romer, David, 377, 377n Romer, Paul, 159 Rule of 70, 150–151, 179 Russia, command system in, 30, 39 Saffer, Henry, 83n Sahay, Ratna, 187n Salary caps, present value and, 345 Salmon, market for, 70–71 Savings average propensity to save (APS), 195 defined, 119 in equilibrium GDP, 216 income and, 192–198 inflation and, 183 marginal propensity to save (MPS), 195–196, 206 multiplier and, 206 nonincome determinants of, 196–197 paradox of thrift, 198 personal, 192 taxation and, 374–375 Savings accounts, 283 Savings and loan associations (S&Ls), 283 Saving schedule, 193–195 defined, 193 graphical expression of, 194 other considerations, 197–198 shifts in, 196–197 Say, J B., 228 Say’s law, 228 Scalping, 58 Scarcity economic growth and, 150 economic perspective and, economic resources and, 10 marginal analysis and, relative, 285 Schneider, Friedrich, 144n Scientific method defined, 5–6 elements of, 5–6 Search unemployment, 174–175 Sears, 295 Secondhand sales, exclusion from GDP, 132 Securities firms, in U.S financial services industry, 294 Securitization, 291–292 Security Market Line (SML), 352–355 applications, 354–355 during the Great Recession of 2007–2009, 355 Self-correction of economy, 386–389 mainstream view of, 388–389 new classical economics view of, 386–388 Self-interest, in market systems, 31–32, 38 Self-sufficiency output mix, 403 September 11, 2001 terrorist attacks, 14, 332, 392 Service economy, 133 Services defined, 133 private See Private goods and services public See Public goods and services Service Survey, 145 Shocks defined, 120 demand, 121, 122–124 expectations and, 122–124 supply, 120–122, 181, 370–372, 382 Shortage, defined, 57–58 Short run aggregate supply in, 238–240, 362 defined, 85 Phillips Curve in, 373 price elasticity of supply and, 85 production costs in, 240 Short-run aggregate supply curve, 239–240, 362 Silber, William L., 390n Simultaneous consumption, 163 Size of firm See Small business Slope of a nonlinear curve, 25–26 Slope of a straight line, 24–25 infinite, 24–25 marginal analysis and, 24 measurement units and, 24 negative, 24 zero, 24–25 Small business See also Entrepreneurs Start-up firms income approach to GDP and, 136 Small Business Administration (SBA), 293 Smart cards, 295 Smith, Adam, 38, 401, 401n Smith Barney, 294 Smoot-Hawley Tariff Act of 1930, 415 Socialism See Command systems Social issues, modern economic growth and, 152 Social Security program adjustment of benefits for inflation, 179 shortfalls in, 274–275 Society, economizing problem of, 10–11 Sole proprietorships in business population, 41 defined, 41 income approach to GDP and, 136 South Korea international trade, 400 market system in, 39 Soviet Union, former See also Russia command system in, 30, 39–40 Specialization comparative advantage and, 403–404 defined, 33 division of labor and, 33 gains from, 418–420 geographic, 33 international trade, 401 in market systems, 33 offshoring and, 418–420 Specialized inputs, 163 Speculation in currency markets, 440–441 in determination of exchange rates, 432 Stability fiscal policy and, 261–263 flexible exchange rates and, 434 government role in promoting, 261–263, 286, 289–290, 382–385 increases in aggregate supply and, 248–250 macroeconomic, 198 monetary policy and, 286, 382–385 of purchasing power of money, 286 self-correction of economy, 386–389 shifts in income and savings schedules, 198 shifts in investment demand curve, 202–203 sources of macroeconomic instability, 382–385 Stagflation, 371–372 Standard & Poor’s 500 Index, 347 Starbucks, 295 Start-up firms See also Entrepreneurs Small business defined, 163 economic growth and, 163–164 entrepreneurial ability and, 10–11 information technology, 163 productivity acceleration and, 163–164 State government, fiscal policies of, 268 Steam engine, 152 Sticky (inflexible) prices business cycles and, 124–125 categorizing macroeconomic models using, 126 demand shocks and, 121–123 Stock exchanges, 48 Stock market bubbles and, 186, 265 economy and, 186 exclusion from GDP, 132 Stock market crash of 1929, 17 Stock(s) defined, 345 exchange rates and, 431–432 limited liability rule, 345–346 nature of, 345–346 Stored-value cards, 295 Store of value, money as, 281, 284–286 Street entertainers, 100 Structural unemployment, 175 Subprime mortgage loans, 290–291, 324 Subsidies aggregate supply and, 243 change in supply and, 55, 56 for consumers, 107 in correcting for positive externalities, 107–108 export, 412 as government intervention, 107–108 government provision, 107–108 for suppliers, 107 Substitute goods change in demand and, 52 change in supply and, 55, 56 cross elasticity of demand and, 87–88 defined, 52 prices of, 52 substitutability and price elasticity of demand, 81–82 Substitution effect, 49 Supply, 53–56 See also Market supply aggregate See Aggregate supply change in demand and, 69–72 change in quantity supplied, 56, 59–60 change in supply, 54–56, 59–60, 69–72 defined, 53 determinants of, 54, 56 law of supply, 53 market supply, 54 price elasticity of, 84–87 resource See Supply of resources supply curve, 53–54 Supply curve, 53–54 for Federal funds, 325 Supply factors defined, 156 economic growth and, 156–157 Supply-of-pounds curve, 429 Supply of resources, increase in, 15–16 Supply schedule, 53 Supply shocks, 120–122, 181, 370–372, 382 Supply-side economics, 375–378 defined, 374 incentives to save and invest, 374–375 incentives to work, 374 Laffer Curve and, 375–378 Supply-side market failures, 93 Surplus balance of payments, 429 budget, 260 defined, 57 Survey of Manufacturers, 145 Sushi, market for, 71–72 T Rowe Price, 294 Tariffs defined, 411 direct effects, 412–413 economic impact of, 412–413 indirect effects, 413 international economic linkages, 220–221 net costs of, 413–414 Tastes change in demand and, 51, 52 in determination of exchange rates, 431 in market systems, 37 Taxation aggregate supply and, 243, 375–378 business, 201 changes in aggregate demand and, 236, 237 changes in supply and, 55, 56 clipping coins in, 181 corporate, 136, 201, 237, 243 equilibrium GDP and, 222–226 excise, 83 fiscal policy and increase in, 261 fiscal policy and reduction of, 259 as government intervention, 107 incentives and, 374–375 Laffer Curve and, 375–378 negative externalities and, 107–108 personal, 236 on production and imports, 136–137 progressive, 262–263 proportional, 262–263 public debt and, 271 public sector, 222–226 real GDP and, 377 regressive, 262–263 shifts in income and savings schedules, 198 shifts in investment demand curve and, 201–202 specific taxes, 107 supply-side economics, 375–378 underground economy and, 144 Taylor, John, 393, 393n Taylor rule, 326–327, 393 Teamsters Union, 294 Technology See also Innovation advances in, 16, 37, 159 changes in aggregate demand and, 237 changes in supply and, 55, 56 computerized inventory management, 124–125 economic growth and, 16, 155, 156, 159, 163–164 in market systems, 33, 37 productivity changes and, 163 shifts in investment demand curve and, 201–202 Term Asset-Backed Securities Loan Facility (TALF), 293 Term auction facility, 289–290, 323 Term Securities Lending Facility (TSLF), 293 Terms of trade comparative advantage and, 404 defined, 404 flexible exchange rates and, 434 Terrorist attacks of September 11, 2001, 14, 332, 392 Thrift institutions defined, 283 in Federal Reserve System, 289 in U.S financial services industry, 294 TIAA-CREF, 294 Ticket scalping, 58 Time duration of unemployment, 178 price elasticity of demand and, 83 price elasticity of supply and, 85 specialization and, 33 supply-side economics and, 375 timing problems in fiscal policy, 267 Time deposits, 283–284 Time preference, 351 Time-value of money applications, 344–345 compound interest, 342–343 present value, 342–345 Token money, 282 Total cost (TC), in market systems, 35 Total money demand, 316–317 Total output See Gross domestic product (GDP) Output Total revenue (TR) defined, 77 in market systems, 35 price elasticity and, 81 total-revenue test for price elasticity, 77–81 Toyota, 130 Trade Adjustment Assistance Act of 2002, 418 Trade barriers net costs of, 413–414 types of, 411–414 See also Import quotas Tariffs Trade barrier wars, 415 Trade deficits causes of, 438–439 defined, 399, 426 implications of, 439 increased current consumption, 439 increased U.S indebtedness, 439 of the U.S., 438–439 Trademarks, 31 Trade-offs, budget line, 9–10 Trade surplus, 399, 426–427 Trading possibilities line, 404–405 Training See Education and training Transactions demand for money, 315, 317 Transfer payments See also Income distribution exclusion from GDP, 131–132 public debt as, 271–272 public versus private, 131–132 Treasury bills, 269–270 Treasury bonds, 270 Federal Reserve purchases of, 320 Federal Reserve sale of, 321 Troubled Asset Relief Program (TARP), 292–293 Trough, of business cycle, 171 Trump, Donald, Unanticipated inflation, 182 Unattainable combinations, Uncertainty See also Risk flexible exchange rates and, 433–434 shocks and, 120–124 Underground economy See also Black markets gross domestic product and, 144 Unemployment, 173–178 in China, 166 cyclical, 175, 246–248 defined, 117 definition of full employment, 175 economic cost of, 175–178 education and, 176, 178 gender and, 176, 178 measurement of, 173–174 minimum wage and, 183 noneconomic costs of, 178 in production possibilities model, 14–15 structural, 175 trends in, 371 types of, 174–175 in the U.S., 118, 173–174 Unemployment equilibrium, 385 Unemployment rate, 173–174 Unions See Labor unions United Kingdom, modern economic growth and, 154 U.S Bureau of Economic Analysis (BEA), 145 U.S Bureau of Engraving and Printing, 282, 299 U.S Bureau of Labor Statistics, 162n, 173, 174, 178, 179, 180n, 372 U.S Census Bureau, 145, 160n U.S Department of Commerce, 130, 145, 425, 426n United States dollar See also Exchange rate(s) economic growth measures and, 118, 119–120 purchasing power of, 285–286 United States economy See also Federal government accounting statement, 135 balance of payments, 425–429 business cycles in, 171 capital-intensive goods, 400 capitalism in, 30 circular flow model and, 139, 140 commercial banks in, 289, 294 comparative advantage, 401–403 economic growth in, 150–155, 162–167, 185–187 economics of war and, 14 export supply, 408–409 fiscal policy in, 263–267, 269–271 gasoline market in, 61–62, 71 Great Depression and, 14, 17, 123, 134, 171, 175, 212, 221, 228, 229, 268, 310, 361, 384 Great Recession of 2007–2009 See Great Recession of 2007–2009 gross domestic product (GDP) of, 118–119 import demand, 409 inflation in, 179, 180, 185–187 infrastructure of, 160 international trade and, 399, 400–407 See also International trade monetary policy in, 332–336 mortgage default crisis, 324 multilateral trade agreements, 416–418 North American Free Trade Agreement (NAFTA), 164, 418 offshoring of jobs and, 418–420 opportunity-cost ratio, 402 productivity acceleration and, 162–164 public sector, 222–225 recent fiscal policy, 264–266 recent monetary policy, 332–333 recessions in, 171 specialization and, 418–420 supply and demand analysis for international trade, 408–411 terrorist attacks of September 11, 2001, 14, 332, 392 trade adjustment assistance, 418 trade deficits, 438–439 unemployment in, 118, 173–174 U.S Mint, 282, 299 U.S Office of Personnel Management, 145 U.S savings bonds, 270 U.S securities assets of Federal Reserve Banks, 318 liabilities of Federal Reserve Banks, 318–319 nature of, 269–270 open-market operations and, 319–321 purchase by commercial banks, 306 U.S Small Business Administration (SBA), 293 U.S Treasury Department, 269, 318 Unit elasticity of demand, 77, 80 Unit of account, money as, 281 Unplanned changes, 216–217 Unrelated goods, 52 UPS, 242–243 Uruguay Round, 417 Utility defined, marginal utility See Marginal utility Vaccination, as positive externality, 105–106 Value added defined, 131 in production process, 131 Vanguard, 294 Variables dependent, 23 independent, 23 Vault cash, 301 Végh, Carlos, 187n Velocity, of money, 383 Vertical axis, 22 Vertical intercept, 25 Visa card, 284, 295 Voluntary export restriction (VER), 412 Wachovia, 292 Wage contracts, 247 Wage determination downward wage inflexibility and, 388 pay for performance, 100 Wage(s) See also Wage determination efficiency, 388–389 income approach to GDP and, 136 Wait unemployment, 174–175 Walgreens, 295 Wall Street Reform and Consumer Protection Act, 296 Walmart, 41, 295 War See also National defense economics of, 14 price wars, 247 Watt, James, 152 Wealth aggregate demand and, 236 changes in aggregate demand and, 236 household, 196–197 as nonincome determinant of consumption and saving, 196 Wealth effect, 186, 196–197, 236 Wealth of Nations, The (Smith), 38 Well-being, noneconomic sources of, 144 Wells Fargo, 292, 294 Wheat, price floors on, 63–64 Williams, Raburn, 187n Winfrey, Oprah, Wizzit, 295 Women economic growth and, 159, 160 in the labor force, 159, 160 unemployment and, 176, 178 World Economic Forum, 165 World price, 408 World Trade Organization (WTO), 164, 166, 221n, 417 Yahoo!, 163 Yücel, Mine K., 249n Zero slopes, 24–25 Zimbabwe, hyperinflation in, 187 ... Microeconomics, Macroeconomics Nineteenth Edition McConnell, Brue, and Flynn Brief Editions: Microeconomics and Macroeconomics First Edition Miller Principles of Microeconomics First Edition Samuelson... of Macroeconomics Fourth Edition Frank and Bernanke Brief Editions: Principles of Economics, Principles of Microeconomics, Principles of Macroeconomics Second Edition McConnell, Brue, and Flynn. .. Nineteenth Edition Macroeconomics Principles, Problems, and Policies The McGraw-Hill Series: Economics ESSENTIALS OF ECONOMICS Brue, McConnell, and Flynn Essentials of Economics Second Edition Mandel