Archives
978-0132992282 Chapter 1 Lecture Note
A. Introduce students to the main concepts in macroeconomics (Ch. 1) B. Introduce national income accounting and major economic magnitudes (Ch. 2) II. Section Goals A. Summarize the primary issues addressed in macroeconomics (Sec. 1.1) B. Describe the activities and […]
978-0132992282 Chapter 1 Solution Manual
Additional Issues for Classroom Discussion 1. What Are Society’s Major Economic Problems Today? In the first class session, it may be interesting to discuss students’ perceptions of the major economic problems facing the economy today. Public-opinion polls show that Americans’ […]
978-0132992282 Chapter 10 Lecture Note Part 1
Chapter 10 Classical Business Cycle Analysis: Market-Clearing Macroeconomics Learning Objectives 1. Two key questions about business cycles a. What are the underlying economic causes? b. What should government policymakers do about them? 2. Any business cycle theory has two components […]
978-0132992282 Chapter 10 Lecture Note Part 2
Data Application 3. Why would higher future output cause people to increase money demand? a. Firms, anticipating higher sales, would need more money for transactions to pay for materials and workers b. The Fed would respond to the higher demand […]
978-0132992282 Chapter 10 Solution Manual
Additional Issues for Classroom Discussion 1. Do Wages Adjust to Clear the Labor Market? One of the key assumptions of classical macroeconomic theory is that wages adjust rapidly to bring about equilibrium in the labor market in a relatively short […]
978-0132992282 Chapter 11 Lecture Note Part 1
Chapter 11 Keynesianism: The Macroeconomics of Wage and Price Rigidity Learning Objectives 1. In the classical model, unemployment is due to mismatches between workers and firms 2. Keynesians are skeptical, believing that recessions lead to substantial cyclical unemployment 3. To […]
978-0132992282 Chapter 11 Lecture Note Part 2
III. Monetary and Fiscal Policy in the Keynesian Model (Sec. 11.3) 1. Monetary policy in the Keynesian IS-LM model a. The Keynesian FE line differs from the classical model in two respects (1) The Keynesian level of full employment occurs […]
978-0132992282 Chapter 11 Solution Manual Part 1
Additional Issues for Classroom Discussion 1. Do Lags Eliminate the Effectiveness of Fiscal Policy? Keynesian economists in the past have encouraged the use of fiscal policy to combat recession. They believe that wages and prices do not adjust rapidly enough […]
978-0132992282 Chapter 11 Solution Manual Part 2
Figure 11.15 Figure 11.16 (a) In Figure 11.15, the increase in tax incentives increases investment, shifting the IS curve up and to the right from IS1 to IS2 in Figure 11.15(a), and shifting the AD curve from AD1 to […]
978-0132992282 Chapter 12 Lecture Note Part 1
Chapter 12 1. Unemployment and inflation (this chapter) 2. Policy in an open economy—international trade and finance (Ch. 13) 3. Monetary institutions and policy (Ch. 14) 4. Fiscal institutions and policy (Ch. 15) II. Goals of Chapter 12 A. Describe […]
978-0132992282 Chapter 12 Lecture Note Part 2
2. Measuring the natural rate of unemployment a. Policymakers need a measure of the natural rate of unemployment to use the unemployment rate for setting policy b. Economists disagree about how to measure the natural rate of unemployment and the […]
978-0132992282 Chapter 12 Solution Manual
whose value hasn’t even increased in real terms. Eytan Sheshinski, in “Treatment of Capital Income in Recent Tax Reforms and the Cost of Capital in Industrialized Countries,” in Larry Summers, ed., Tax Policy and the Economy 4, Cambridge, Mass.: MIT […]
978-0132992282 Chapter 13 Lecture Note Part 1
Learning Objectives I. Goals of Chapter 13 A. Describe real and nominal exchange rates, how they are related, and how they change over time (Sec. 13.1) B. Use and supply-and-demand framework to explain how exchange rates are determined (Sec. II. […]
978-0132992282 Chapter 13 Lecture Note Part 2
Figure 13.8) the right c. Three things could increase net exports for a given level of output and real interest rate (1) An increase in foreign output, which increases foreigners’ demand for domestic exports (2) An increase in the foreign […]
978-0132992282 Chapter 13 Solution Manual Part 1
Additional Issues for Classroom Discussion 1. What Other Relationships Are There Between Currencies? In financial markets, there are many relationships between the returns on different assets. In international financial markets, these relationships depend a lot on the exchange rate. Ask […]
978-0132992282 Chapter 13 Solution Manual Part 2
Figure 13.17 Foreign Income The effect of an increase in foreign income on the IEB curve is just the opposite of the effect of an increase in domestic income. Suppose that before the increase in foreign income the current and future […]
978-0132992282 Chapter 14 Lecture Note Part 1
A. Explain how the nation’s money supply is determined (Sec. 14.1) B. Describe the policy tools used by the Federal Reserve to control the money supply (Sec. 14.2) C. Explain the Fed’s setting of monetary policy targets (Sec. 14.3) D. […]
978-0132992282 Chapter 14 Lecture Note Part 2
Figure 14.1 a. This strategy works well if the main shocks to the economy are to the LM curve (shocks to money supply or money demand) b. The strategy stabilizes output, the real interest rate, and the price level, as […]
978-0132992282 Chapter 14 Solution Manual
Additional Issues for Classroom Discussion 1. Should the Federal Reserve Be More Responsive to the Public? Central banks in different countries vary dramatically in both their degree of independence from political pressure and the degree of accountability for their actions. […]
978-0132992282 Chapter 15 Lecture Note Part 1
Chapter 15 Government Spending and Its Financing Learning Objectives I. Goals of Chapter 15 1. Three categories of government expenditures a. Government purchases (G) (1) Government investment, which is about 1/6 of total government purchases, consists of purchases of capital […]
978-0132992282 Chapter 15 Lecture Note Part 2
3. The deficit is the change in the debt in a year b. B nominal value of government bonds outstanding then began to rise in 2002 and grew dramatically in the Great Recession Data Application In my article “How […]
978-0132992282 Chapter 15 Solution Manual
Additional Issues for Classroom Discussion 1. Should the Tax System Be Reformed? People spend a huge amount of resources both paying taxes and preparing tax returns. Should the U.S. tax system be fundamentally reformed? If so, how? To organize the […]
978-0132992282 Chapter 2 Lecture Note
A. Differentiate among the three approaches to national income accounting (Sec. 2.1) B. Explain how GDP is measured (Sec. 2.2) C. Discuss the measurement of aggregate saving and its relation to wealth (Sec. 2.3) D. Explain the calculations of real […]
978-0132992282 Chapter 2 Solution Manual
Additional Issues for Classroom Discussion 1. Welfare Does Not Equal GDP You can get students involved in a useful discussion of how our national-income accounts fail to measure our well-being. GDP covers only market activity. Ask your students to come […]
978-0132992282 Chapter 3 Lecture Note Part 1
Chapter 3 1. Three markets a. Labor market (this chapter) b. Goods market (Ch. 4) c. Asset market (Ch. 7) II. Goals of Chapter 3 A. Discuss production function properties and changes (Section 3.1) B. Discuss factors that affect the […]
978-0132992282 Chapter 3 Lecture Note Part 2
Figure 3.6 the 1970s and early 1980s had to do with the increased participation rates of women in the labor force. Research on both the causes and consequences of this change occupied many economists and yielded many interesting research results, […]
978-0132992282 Chapter 3 Solution Manual
Additional Issues for Classroom Discussion 1. Is the Unemployment Rate a Good Measure of Economic Distress? Macroeconomists often treat the unemployment rate as the key indicator of the business cycle. But terms 2. What Else Is Important for Production? To […]
978-0132992282 Chapter 4 Lecture Note Part 1
A. Describe the factors that affect consumption and saving decisions (Sec. 4.1) B. Discuss the factors that affect the investment of firms (Sec. 4.2) C. Explain the factors affecting goods market equilibrium (Sec. 4.3) II. Notes to Seventh Edition Users […]
978-0132992282 Chapter 4 Lecture Note Part 2
Policy Application Should tax policy be used to promote savings or investment? Many policymakers and economists have argued that obtaining the correct amount of future economic growth requires us to have a higher capital stock, so that we need more […]
978-0132992282 Chapter 4 Solution Manual Part 1
article, “Are Government Bonds Net Wealth?” appeared in 1974). An interesting debate for students is for them to take sides as to whether or not Ricardian equivalence holds. You can discuss many possible reasons why it might not hold and […]
978-0132992282 Chapter 4 Solution Manual Part 2
3. (a) The temporary increase in the price of oil reduces the marginal product of labor, causing the labor demand curve to shift to the left from ND1 to ND2 in Figure 4.10. At equilibrium, there is a reduced real […]
978-0132992282 Chapter 5 Lecture Note
A. Explain how the balance of payments is calculated (Sec. 5.1) B. Discuss goods market equilibrium in an open economy (Sec. 5.2) C. Describe the factors that affect saving and investment and determine the current account balance in a small […]
978-0132992282 Chapter 5 Solution Manual
Ask your students to list some of the ways in which our country interacts with others. What goods and services do we buy from other countries? What goods and services do other countries buy from us? You might also show […]
978-0132992282 Chapter 6 Lecture Note
A. Discuss the sources of economic growth and the fundamentals of growth accounting (Sec. 6.1) B. Explain the factors affecting long-run living standards in the Solow model (Sec. 6.2) C. Summarize endogenous growth theory (Sec. 6.3) D. Discuss government policies […]
978-0132992282 Chapter 6 Solution Manual
as capital with your class. When computers are part of a firm’s capital, they contribute to production. Suppose, however, that the government counts more computers than there really are. This could happen, for example, if it was using a computer […]
978-0132992282 Chapter 7 Lecture Note
The Asset Market, Money, and Prices Learning Objectives I. Goals of Chapter 7 A. Define money, discuss its functions, and describe how it is measured in the United States (Sec. II. Notes to Seventh Edition Users A. Table 7.1 now […]
978-0132992282 Chapter 7 Solution Manual
Additional Issues For Classroom Discussion 1. How Has Technology Changed Money? Ask your students how they think improved technology has changed the role of money in the economy. They might mention such things as ATMs, which allow better access […]
978-0132992282 Chapter 8 Lecture Note
Business Cycles Learning Objectives I. Goals of Part 3 A. What causes business cycles? B. How should policymakers respond to cyclical fluctuations? 1. Classical economists see little need for government action 2. Keynesian economists think government intervention can smooth the […]
978-0132992282 Chapter 8 Solution Manual
Additional Issues for Classroom Discussion 1. Should the Government Try to Prevent Recessions? Ask your class if they think the government should try to prevent recessions. Most people do, but some 2. Should Government Policy Prevent the Seasonal Cycle? Most […]
978-0132992282 Chapter 9 Lecture Note Part 1
Chapter 9 The IS–LM/AD-AS Model: A General Framework for Macroeconomic Analysis Learning Objectives 1. Describe the factors that explain the full-employment (FE) line (Sec. 9.1) 2. Discuss the factors that affect the IS curve, which represents equilibrium in the goods […]
978-0132992282 Chapter 9 Lecture Note Part 2
4. Since the FE, IS, and LM curves don’t intersect, the price level adjusts, shifting the LM curve until a general equilibrium is reached 5. The inflation rate rises temporarily, not permanently 6. Summary: The real wage, employment, and output […]
978-0132992282 Chapter 9 Solution Manual
Additional Issues for Classroom Discussion 1. Where Would We Be Without Equilibrium Forces? Economists generally take for granted that markets work so that powerful economic forces return the 2. What Assumptions Are Unrealistic? In developing our model of the economy, […]
Economics Chapter 1 1 The main reason that the United States has such a high standard of living is
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 1 Introduction to Macroeconomics 1.1 What Macroeconomics Is About 1) The two major reasons for the tremendous growth in output in the U.S. economy over the last 125 years are […]
Economics Chapter 10 1 The theory that real shocks to the economy are the primary cause of business cycles is
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 10 Classical Business Cycle Analysis 10.1 Business Cycles in the Classical Model 1) The theory that real shocks to the economy are the primary cause of business cycles is A) […]
Economics Chapter 10 2 The basic classical model can account for the procyclical behavior of money if there
Copyright © 2014 Pearson Education, Inc. 3) Davis and Haltiwanger showed that ________ churning of jobs occurs and that this churning reflects closing of old plants and opening of new ones ________. A) little; in different industries B) little; within […]
Economics Chapter 11 1 According to the efficiency wage model, firms will pay the real wage that
1 11.1 Real-Wage Rigidity 1) The existence of labor unions could contribute to real-wage rigidity, except that in the United States A) labor unions are outlawed. B) most workers aren’t in unions. C) unions are interested in benefits, not wages. […]
Economics Chapter 11 2 The Keynesian Theory of Business Cycles and Macroeconomic Stabilization
Copyright © 2014 Pearson Education, Inc. 15) Using the Keynesian model, the effect of a decrease in the effective tax rate on capital would be to cause ________ in the real interest rate and ________ in output in the long […]
Economics Chapter 12 1 The negative relationship between unemployment and inflation is known as the
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 12 Unemployment and Inflation 12.1 Unemployment and Inflation: Is There a Trade-Off? 1) The origin of the idea of a trade-off between inflation and unemployment was a 1958 article by […]
Economics Chapter 12 2 The idea that new policies change the economic rules and affect economic behavior
Copyright © 2014 Pearson Education, Inc. 2) The Lucas critique is an objection to the assumption that A) inflation is always and everywhere a monetary phenomenon. B) there is a negative relationship between inflation and unemployment. C) historical relationships between […]
Economics Chapter 13 1 When the domestic currency strengthens under a fixed-exchange-rate system
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 13 Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy 13.1 Exchange Rates 1) The price of one currency in terms of another is called A) the exchange […]
Economics Chapter 13 2 A decline in the exchange rate could have been caused by which of these factors
Copyright © 2014 Pearson Education, Inc. 10) A decline in the exchange rate could have been caused by which of these factors? A) A decline in domestic output (income) B) An increase in the domestic real interest rate C) A […]
Economics Chapter 15 1 Which of the following would not act as an automatic stabilizer
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 15 Government Spending and Its Financing 15.1 The Government Budget: Some Facts and Figures 1) Subtracting government investment from government purchases gives us the amount of government A) outlays. B) […]
Economics Chapter 15 2 Social Security benefits could be reduced in each of the following ways
Copyright © 2014 Pearson Education, Inc. 22) An example of tax smoothing is provided by evidence of A) temporary changes in defense expenditures by the government. B) reductions in tax rates prior to presidential elections. C) Keynesian tax cuts designed […]
Economics Chapter 2 1 National saving equals private saving plus government saving, which in turn equals
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 2 The Measurement and Structure of the National Economy 2.1 National Income Accounting 1) The accounting framework used in measuring current economic activity is called A) the U.S. expenditure accounts. […]
Economics Chapter 2 2 The uses-of-saving identity says that an economy’s private saving is used for
Copyright © 2014 Pearson Education, Inc. 10) The uses-of-saving identity says that an economy’s private saving is used for A) investment, interest expenses, and the government budget deficit. B) investment, the government budget deficit, and the current account. C) investment, […]
Economics Chapter 3 1 How Much Does the Economy Produce? The Production Function
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 3 Productivity, Output, and Employment 3.1 How Much Does the Economy Produce? The Production Function 1) A mathematical expression relating the amount of output produced to quantities of capital and […]
Economics Chapter 3 2 What are the implications for the size of the income and substitution effects
Copyright © 2014 Pearson Education, Inc. 10) How would each of the following events affect Cheryl Shirker’s supply of labor? (a) Cheryl’s firm announces a reorganization plan, in which she will get a big promotion and raise in six months. […]
Economics Chapter 4 1 An increase in expected future output while holding today’s output constant would
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 4 Consumption, Saving, and Investment 4.1 Consumption and Saving 1) Desired national saving equals A) Y – – G. B) + + G. C) + G. D) Y – – […]
Economics Chapter 4 2 Cummins, Hubbard, and Has sett studied the effects of taxes on investment by
Copyright © 2014 Pearson Education, Inc. 19) Suppose your company is in equilibrium, with its capital stock at its desired level. A permanent increase in the depreciation rate now has what effect on your desired capital stock? A) Raises it, […]
Economics Chapter 5 1 If a country’s merchandise exports exceed its merchandise imports it has
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 5 Saving and Investment in the Open Economy 5.1 Balance of Payments Accounting 1) Net exports of goods are known as A) the balance of payments. B) the merchandise trade […]
Economics Chapter 5 2 Consider a small open economy in equilibrium with a current account deficit
Copyright © 2014 Pearson Education, Inc. 14) Consider a small open economy with desired national saving of Sd = 200 + 10,000rw and desired investment of Id = 1,000 – 5,000rw. If rw = 0.05, and output = 5,000, then […]
Economics Chapter 6 1 According to the Solow model, an increase in the capital-labor ratio will
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 6 Long-Run Economic Growth 6.1 The Sources of Economic Growth 1) Between 1870 and 2008, among the United States, Germany, Japan, and Australia, ________ grew at the fastest rate and […]
Economics Chapter 6 2 How would you expect this to affect the capital-labor ratio in the long run
Copyright © 2014 Pearson Education, Inc. 19) In the Solow model, if k = 8, y = 20, and s = 0.2, what is c? A) 24 B) 20 C) 16 D) 12 Answer: C Diff: 3 Topic: Section: 6.2 […]
Economics Chapter 7 1 The use of money is more efficient than barter because the introduction of money
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 7 The Asset Market, Money, and Prices 7.1 What Is Money? 1) A disadvantage of the barter system is that A) no trade occurs. B) people must produce all their […]
Economics Chapter 7 2 Define asset market equilibrium and state the asset market equilibrium condition
Copyright © 2014 Pearson Education, Inc. 7) An increase in expected inflation is likely to cause A) a decline in the demand for real balances. B) an increase in the demand for real balances. C) no change in the demand […]
Economics Chapter 8 1 When aggregate economic activity is increasing, the economy is said to be in
Copyright © 2014 Pearson Education, Inc. Macroeconomics, 8e (Abel/Bernanke/Croushore) Chapter 8 Business Cycles 8.1 What Is a Business Cycle? 1) One of the first organizations to investigate the business cycle was A) the Federal Reserve System. B) the National Bureau […]
Economics Chapter 8 2 Which of the following macroeconomic variables is procyclical and leads the business cycle
Copyright © 2014 Pearson Education, Inc. 11) Which of the following macroeconomic variables is procyclical and leads the business cycle? A) Business fixed investment B) Residential investment C) Nominal interest rates D) Unemployment Answer: B Diff: 2 Topic: Section: 8.3 […]