Test bank for Macroeconomics 11th edition by Robert J. Gordon

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Test bank for Macroeconomics 11th edition by Robert J. Gordon

Table of Contents

Part I: Introduction and Measurement
Chapter 1. What Is Macroeconomics?
1-1 How Macroeconomics Affects Our Everyday Lives
1-2 Defining Macroeconomics
1-3 Actual and Natural Real GDP
1-4 Macroeconomics in the Short Run and Long Run
1-5 Case Study: A Century of Business Cycles
1-6 Macroeconomics at the Extremes
1-7 Taming Business Cycles: Stabilization Policy
1-8 The “Internationalization” of Macroeconomics

Chapter 2. The Measurement of Income, Prices, and Unemployment
2-1 Why We Care About Income
2-2 The Circular Flow of Income and Expenditure
2-3 What Transactions Should Be Included in Income and Expenditure?
2-4 Components of Expenditure
2-5 The “Magic” Equation and the Twin Deficits
2-6 How Much Income Flows from Business Firms to Households?
2-7 Nominal GDP, Real GDP, and the GDP Deflator
2-8 Measuring Unemployment
2-9 Case Study: Conflicting Measurements: Was the 2002-04 Recover “Jobless” or Not?
Appendix: How We Measure Real GDP and the Inflation Rate
Part II: Income, Interest Rates, Policy, and the Open Economy
Chapter 3. Spending, Income, and Interest Rates
3-1 Business Cycles and the Theory of Income Determination
3-2 Income Determination, Unemployment, and the Price Level
3-3 Planned Expenditure
3-4 Case Study: Why Did U.S. Saving Almost Vanish in This Decade?
3-5 The Economy In and Out of Equilibrium
3-6 The Multiplier Effect
3-7 Sources of Shifts in Planned Spending
3-8 How Can Monetary Policy Affect Planned Spending?
3-9 The Relation of Autonomous Planned Spending to the Interest Rate
3-10 The IS Curve
3-11 Conclusion: The Missing Relation
Appendix: Allowing for Income Taxes and Income-Dependent Net Exports

Chapter 4. Monetary and Fiscal Policy in the IS-LM Model
4-1 Introduction: The Power of Monetary and Fiscal Policy
4-2 Why People Use Money
4-3 Income, the Interest Rate, and the Demand for Money
4-4 The LM Curve
4-5 The IS Curve Meets the LM Curve
4-6 Monetary Policy in Action
4-7 How Fiscal Expansion Can “Crowd Out” Investment
4-8 Strong and Weak Effects of Monetary Policy
4-9 Strong and Weak Effects of Fiscal Policy
4-10 Using Fiscal and Monetary Policy Together
Appendix: The Elementary Algebra of the IS-LM Model

Chapter 5. The Government Budget, Foreign Borrowing, and the Twin Deficits
5-1 Introduction
5-2 The Pervasive Effects of the Government Budget
5-3 Case Study: The Government Budget In Historical Perspective
5-4 The Structural Budget
5-5 National Saving and the Consequences of the Government Budge
5-6 Case Study: How the Deficits Rejoined to Become “Twins”
5-7 The Current Account and the Balance of Payments
5-8 Conclusion: Solutions to the National Saving Squeeze

Chapter 6. International Trade, Exchange Rates, and Macroeconomic Policy
6-1 Introduction
6-2 Exchange Rates
6-3 The Market for Foreign Exchange
6-4 Real Exchange Rates and Purchasing Power Parity
6-5 Exchange Rate Systems
6-6 Case Study: Asia Intervenes with Buckets to Buy Dollars and Finance the U.S. Current Account Deficit—How Long Can This Continue?
6-7 Determinants of Net Exports
6-8 The Real Exchange Rate and Interest Rate
6-9 Effects of Monetary and Fiscal Policy with Fixed and Flexible Exchange Rates
6-10 Conclusion: Economic Policy in the Open Economy
Part III: Aggregate Demand, Aggregate Supply, Unemployment and Inflation
Chapter 7. Aggregate Demand, Aggregate Supply, and the Self-Correcting Economy
7-1 Combining Aggregate Demand with Aggregate Supply
7-2 Flexible Prices and the AD Curve
7-3 Shifting the Aggregate Demand Curve with Monetary and Fiscal Policy
7-4 Alternative Shapes of the Short-Run Aggregate Supply Curve
7-5 The Short-Run Aggregate Supply (SAS) Curve When the Nominal Wage Rate Is Constant
7-6 How the Wage Rate Is Set
7-7 Fiscal and Monetary Expansion in the Short and Long Run
7-8 Classical Macroeconomics: The Quantity Theory of Money and the Self-Correcting Economy
7-9 The Keynesian Revolution: The Failure of Self-Correction
7-10 Case Study: What Caused the Great Depression

Chapter 8. Inflation: Its Causes and Cures
8-1 Introduction
8-2 Real GDP, the Inflation Rate, and the Short-Run Phillips Curve
8-3 The Adjustment of Expectations
8-4 Nominal GDP Growth and Inflation
8-5 Effects of an Acceleration in Nominal GDP Growth
8-6 Expectations and the Inflation Cycle
8-7 Recession as a Cure for Inflation
8-8 The Importance of Supply Shocks
8-9 The Response of Inflation and the Output Ratio to a Supply Shock
8-10 Case Study: Why Did Inflation Creep Up After 2003?
8-11 Inflation and Output Fluctuations: Recapitulation of Causes and Cures
8-12 How Is the Unemployment Rate Related to the Inflation Rate?
Appendix: The Elementary Algebra of the SP-DG Model

Chapter 9. The Goals of Stabilization Policy: Low Inflation and Low Unemployment
9-1 The Costs and Causes of Inflation
9-2 Money and Inflation
9-3 Why Inflation Is Not Harmless
9-4 Indexation and Other Reforms to Reduce the Costs of Inflation
9-5 The Government Budget Constraint and the Inflation Tax
9-6 Starting and Stopping in Hyperinflation
9-7 Why the Unemployment Rate Cannot Be Reduced to Zero
9-8 Sources of Mismatch Unemployment
9-9 Turnover Unemployment and Job Search
Part IV: Macroeconomics in the Long Run: Growth and Public Finance
Chapter 10. The Theory of Economic Growth
10-1 The Importance of Economic Growth
10-2 Standards of Living as the Consequence of Economic Growth
10-3 The Production Function and Economic Growth
10-4 Solow’s Theory of Economic Growth
10-5 Technology in Theory and Practice
10-6 Puzzles That Solow’s Theory Cannot Explain
10-7 Human Capital, Immigration, and the Solow Puzzles
10-8 Endogenous Growth Theory: How Is Technological Change Produced?
10-9 Conclusion: Are There Secrets of Growth?
Appendix: General Functional Forms and the Production Function

Chapter 11. The Big Questions of Economic Growth
11-1 Answering the Big Questions
11-2 The Standard of Living and Concepts of Productivity
11-3 The Failure of Convergence
11-4 Human Capital and Technology
11-5 Political Capital, Infrastructure, and Geography
11-6 Case Study: Uneven U.S. Growth Across Eras: Why Did U.S. Productivity Growth Slow Down and Then Revive?
11-7 Labor Supply Shifts as a Source of Faster or Slower Productivity Growth
11-8 Case Study: The Productivity Growth Contrast Between Europe and the United States
11-9 Conclusion to the Great Questions of Growth

Chapter 12. The Government Budget, the Public Debt, and Social Security
12-1 Introduction: The Government Budget and Long-Run Economic Growth
12-2 Long-Run Effects of Fiscal Policy on Economic Growth and Welfare
12-3 The Future Burden of the Government Debt
12-4 Will the Government Remain Solvent?
12-5 Case Study: Historical Behavior of the Debt-GDP Ratio Since 1790
12-6 Why the Budget Deficit Disappeared Temporarily and the Reappeared
12-7 Alternative Views of Fiscal Policy: Supply-Side Economics
12-8 Alternative Views of Fiscal Policy: The Barro-Ricardo Equivalence Theorem
12-9 The Great Debate over Social Security
12-10 Long-Run Economic Growth and the Fiscal Debate
Part V: Stabilization Policy in an Open Economy
Chapter 13. Money and Financial Markets
13-1 Money in a World of Many Financial Assets and Liabilities
13-2 Financial Institutions, Markets, and Instruments
13-3 Definitions of Money
13-4 High-Powered Money and Determinants of the Money Supply
13-5 The Fed’s Three Tools for Changing the Money Supply
13-6 Theories of the Demand for Money
13-7 Case Study: Why Interest Rates Were More Volatile in the 1980s and Less Volatile in the 1990s
13-8 Why the Federal Reserve “Sets” Interest Rates

Chapter 14. Stabilization Policy in the Closed and Open Economy
14-1 The Central Role of Demand Shocks
14-2 Stabilization Targets and Instruments in the Activists’ Paradise
14-3 Policy Rules
14-4 Policy Pitfalls: Lags and Uncertain Multipliers
14-5 Case Study: Was the Fed Responsible for the Great Moderation?
14-6 Time Inconsistency, Credibility, and Reputation
14-7 Case Study: The Taylor Rule and the Changing Fed Attitude Toward Inflation and Output
14-8 Rules Versus Discretion: An Assessment
14-9 Case Study: Should Monetary Policy Target the Exchange Rate?
Part VI: Stability and Instability in the Private Economy
Chapter 15. The Economics of Consumption Behavior
15-1 Consumption and Economic Stability
15-2 Case Study: Main Features of U.S. Consumption Data
15-3 Background: The Conflict Between the Time-Series and Cross-Section Evidence
15-4 Forward-Looking Behavior: The Permanent-Income Hypothesis
15-5 Forward-Looking Behavior: The Life-Cycle Hypothesis
15-6 Rational Expectations and Other Amendments to the Simple Forward-Looking Theories
15-7 Bequests and Uncertainty
15-8 Case Study: Did Souring Household Assets Cause the Collapse in the Household Saving Rate?
15-9 Why the Official Household Saving Data Are Misleading
15-10 Conclusion: Consumption and the Case For and Against Activism

Chapter 16. The Economics of Investment Behavior
16-1 Investment and Economic Stability
16-2 Case Study: The Historical Instability of Investment
16-3 The Accelerator Hypothesis of Net Investment
16-4 Case Study: The Simple Accelerator and the Postwar U.S. Economy
16-5 The Flexible Accelerator
16-6 The Neoclassical Theory of Investment Behavior
16-7 User Cost and the Role of Monetary and Fiscal Policy
16-8 Business Confidence and Speculation
16-9 Case Study: The Boom and Bust in the “New Economy” Investment
16-10 Investment as a Source of Instability of Output and Interest Rates
16-11 Conclusion: Investment and the Case For and Against Activism
Part VII: Debates at the Macroeconomic Frontier
Chapter 17. New Classical Macro Confronts New Keynesian Macro
17-1 Introduction: Classical and Keynesian Economics, Old and New
17-2 Imperfect Information and the “Fooling Model”
17-3 The Lucas Model and the Policy Ineffectiveness Proposition
17-4 The Real Business Cycle Model
17-5 New Classical Macroeconomics: Limitations and Positive Contributions
17-6 Essential Features of the New Keynesian Economics
17-7 Why Small Nominal Rigidities Have Large Macroeconomic Effects
17-8 Coordination Failures and Indexation
17-9 Long-Term Labor Contracts as a Source of the Business Cycle
17-10 “Real” Sources of Wage Stickiness
17-11 Assessment of the New Keynesian Model

Chapter 18. Conclusion: Where We Stand
18-1 The Evolution of Events and Ideas
18-2 The Reaction of Ideas to Events, 1923–47
18-3 The Reaction of Ideas to Events, 1947–69
18-4 The Reaction of Ideas to Events, 1970–2007
18-5 The Reaction of Ideas to Events in the World Economy
18-6 Macro Mysteries: Unsettled Issues and Debates