Exam (elaborations)

Solutions for Macroeconomics, 11th Edition Abel (All Chapters included)

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Microeconomics

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Microeconomics

Complete Solutions Manual for Macroeconomics, 11th Edition by Andrew B. Abel, Ben Bernanke, Dean Croushore ; ISBN13: 9780137876082...(Full Chapters included Chapter 1 to 15)...1.Introduction to Macroeconomics 2.The Measurement and Structure of the National Economy 3.Productivity, Output, and Empl...

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macroeconomics
11th edition
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solutions manual

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Macroeconomics
11th Edition by Andrew B. Abel

Complete Chapter Solutions Manual
are included (Ch 1 to 15)

** Immediate Download
** Swift Response
** All Chapters included

,Chapter 1
Introduction to Macroeconomics

 Learning Objectives
I. Goals of Part I
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 objectives of macroeconomists (Sec. 1.2)
C. Differentiate between the classical and Keynesian approaches to macroeconomics (Sec. 1.3)

III. Notes to NTeinth Edition Users: This chapter is little changed; the data were updated.

,2 Abel/Bernanke/Croushore • Macroeconomics, TEleventh Edition

 Teaching Notes
I. What Macroeconomics Is About (Sec. 1.1)
Macroeconomics: the study of structure and performance of national economies and government
policies that affect economic performance. Macroeconomists study:
A. Long-run economic growth
1. Growth of output in United States over time
a. Text Fig. 1.1: Output of United States since 1869
b. Note decline in output during recessions; increase in output during some wars
2. Sources of growth—population, average labor productivity growth

This may be a good place to introduce students to the calculation of a growth rate, which is used
throughout the textbook. You can write it first in general terms, as
%X  [(Xt+1  Xt)/Xt]  100%  [(Xt+1/Xt)  1]  100%.
Then you might use an example with something you’re talking about, such as real GDP growth
over the past year, or the inflation rate.
Throughout the text, students may come across mathematical calculations that are unfamiliar
to them. The appendix to the textbook contains some helpful basic guidance to mathematical
topics, including discussions of functions and graphs, slopes of functions, elasticities, functions of
several variables, shifts of a curve, exponents, and growth-rate formulas.

3. Average labor productivity
a. Average labor productivity: output produced per employed worker
b. Text Fig. 1.2: Average labor productivity of United States since 1900
c. Average labor productivity growth:
(1) 2.6% per year from 1949 to 1973
(2) 1.1% per year from 1973 to 1995
(3) 1.9% per year from 1995 to 2007
(4) 1.30.9% per year from 2007 to 202117
Working with Macroeconomic Data Problem 1 gives students practice in calculating average labor
productivity and dealing with growth rates.
B. Business cycles
1. Business cycle: short-run contractions and expansions in economic activity
2. Downward phase is called recession
C. Unemployment
1. Unemployment: the number of people who are available for work and actively seeking work
but cannot find jobs
2. U.S. experience shown in text Fig. 1.3, showing unemployment rate (unemployment as a
percent of labor force)
3. Recessions cause unemployment rate to rise

Analytical Problem 1 asks students to think about average labor productivity and unemployment
and their relationship to output. Working with Macroeconomic Data Problem 2 has students
examine data on the unemployment rate and to see how it behaves in recessions.

, Chapter 1 Introduction to Macroeconomics 3

D. Inflation

Analytical Problem 2 asks students to think about the welfare consequences of having a higher
price level.

1. U.S. experience shown in text Fig. 1.4
2. Deflation: when prices of most goods and services decline
3. Inflation rate: the percentage increase in the level of prices
4. Hyperinflation: an extremely high rate of inflation

You may wish to discuss how to calculate the inflation rate, which is just the growth rate of the
price level. It can be expressed as   [(Pt+1/Pt)  1]  100%. Numerical Problem 1 gives students
practice calculating growth rates, including the growth rate of average labor productivity and the
inflation rate. Working with Macroeconomic Data Problem 3 requires students to examine and
analyze historical movements in inflation.

E. The international economy
1. Open vs. closed economies
a. Open economy: an economy that has extensive trading and financial relationships with
other national economies
b. Closed economy: an economy that does not interact economically with the rest of
the world
Working with Macroeconomic Data Problem 4 requires students to compare GDP growth rates
across countries.

2. Trade imbalances
a. U.S. experience shown in text Fig. 1.5
b. Trade surplus: exports exceed imports
c. Trade deficit: imports exceed exports
F. Macroeconomic policy
1. Fiscal policy: government spending and taxation
a. Effects of changes in federal budget
b. U.S. experience in text Fig. 1.6
c. Relation to trade deficit?

Numerical Problem 2 serves two purposes: (1) to get students to look at some real data on the
economy and (2) to give them some idea about how large the trade deficit and government budget
deficit are. Working with Macroeconomic Data Problem 5 has students look at the ratio of federal
government debt to GDP and to think about what causes it to rise.

2. Monetary policy: growth of money supply; determined by central bank; the Fed in United
States
G. Aggregation
1. Aggregation: summing individual economic variables to obtain economywide totals
2. Distinguishes microeconomics (disaggregated) from macroeconomics (aggregated)

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