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summary macroeconomics campbell mc connell stanley brue sean flynn
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lOMoARcPSD|11700591Summary Macroeconomics - Campbell Mc Connell, Stanley
Brue, Sean Flynn
Principles of Macroeconomics (Simon Fraser University)
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Summary
Macroeconomics
Campbell McConnell, Stanley Brue, Sean Flynn
19th Edition
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Contents
1. Limits, Alternatives, and choices ......................................................................................................... 6
1.1. The Economic Perspective ............................................................................................................ 6
1.2. Theories, Principles, and Models.................................................................................................. 7
1.3. Microeconomics and Macroeconomics........................................................................................ 8
1.4. Individual's Economizing Problem ................................................................................................ 8
1.5. Society's Economizing Problem .................................................................................................. 10
1.6. Production Possibilities Model ................................................................................................... 10
1.7. Unemployment, Growth, and the Future................................................................................... 12
2. The Market System and the Circular Flow ........................................................................................ 16
2.1. Economic Systems ...................................................................................................................... 16
2.2. Characteristics of the Market System ........................................................................................ 17
2.3. Five Fundamental Questions ...................................................................................................... 20
2.4. The "Invisible Hand" ................................................................................................................... 22
2.5. The Demise of the Command Systems ....................................................................................... 23
2.6. The Circular Flow Model ............................................................................................................. 24
3. Demand, Supply, and Market Equilibrium ........................................................................................ 26
3.1. Markets....................................................................................................................................... 26
3.2. Demand ...................................................................................................................................... 27
3.3. Supply ......................................................................................................................................... 33
3.4. Market Equilibrium ..................................................................................................................... 37
3.5. Application: Government-Set Prices .......................................................................................... 43
4. Elasticity ............................................................................................................................................. 47
4.1. Price Elasticity of Demand .......................................................................................................... 47
4.2. Price Elasticity of Supply ............................................................................................................. 55
4.3. Cross Elasticity and Income Elasticity of Demand ...................................................................... 59
5. Market Failures: Public Goods and Externalities ............................................................................... 63
5.1. Market Failures in Competitive Markets .................................................................................... 63
5.2. Efficiently Functioning Markets .................................................................................................. 64
5.3. Public Goods ............................................................................................................................... 71
5.4. Externalities ................................................................................................................................ 79
5.5. Government's Role in the Economy ........................................................................................... 85
6. An Introduction to Macroeconomics ................................................................................................ 87
6.1. Performance and Policy .............................................................................................................. 87
6.2. The Miracle of Modern Economic Growth ................................................................................. 89
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6.3. Uncertainty, Expectations, and Shocks ...................................................................................... 90
6.4. How Sticky Are Prices? ............................................................................................................... 95
6.5. Categorizing Macroeconomic Models Using Price Stickiness .................................................... 95
7. Measuring Domestic Output and National Income........................................................................... 97
7.1. Assessing the Economy's Performance ...................................................................................... 97
7.2. Gross Domestic Product ............................................................................................................. 98
7.3. The Expenditures Approach ..................................................................................................... 100
7.4. The Income Approach .............................................................................................................. 104
7.5. Other National Accounts .......................................................................................................... 107
7.6. Nominal GDP versus Real GDP ................................................................................................. 110
7.7. Shortcomings of GDP ................................................................................................................ 111
8. Economic Growth ............................................................................................................................ 114
8.1. Economic Growth ..................................................................................................................... 114
8.2. Modern Economic Growth ....................................................................................................... 117
8.3. Institutional Structures That Promote Growth ........................................................................ 121
8.4. Determinants of Growth .......................................................................................................... 122
8.5. Production Possibilites Analysis ............................................................................................... 123
8.6. Accounting for Growth ............................................................................................................. 126
8.7. The Rise in the Average Rate of Productivity Growth .............................................................. 129
8.8. Is Growth Desirable and Sustainable? ...................................................................................... 135
9. Business Cycles, Unemployment, and Inflation .............................................................................. 138
9.1. The Business Cycle .................................................................................................................... 138
9.2. Unemployment......................................................................................................................... 141
9.3. Inflation .................................................................................................................................... 149
9.4. Redistribution Effects of Inflation ............................................................................................ 153
9.5. Does Inflation Affect Output? .................................................................................................. 157
10. Basic Marcoeconomic Relationships ............................................................................................. 160
10.1. The Income-Consumption and Income-Saving Relationships ................................................ 160
10.2. The Interest Rate-Investment Relationship............................................................................ 168
10.3. The Multiplier Effect ............................................................................................................... 174
11. The Aggregate Expenditures Model .............................................................................................. 176
11.1. Assumptions and Simplifications ............................................................................................ 176
11.2. Consumption and Investment Schedules ............................................................................... 177
11.3. Equilibrium GDP: C + I = GDP .................................................................................................. 178
11.4. Other Features of Equilibrium GDP ........................................................................................ 182
11.5. Changes in Equilibrium GDP and the Multiplier ..................................................................... 184
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