Instructor’s Resource Manual for Macroeconomics Eva Dziadula
Macroeconomics Eighth Edition Updated Edition
R. Glenn Hubbard Anthony Patrick O’Brien
Copyright © 2023 Pearson Education, Inc.
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CHAPTER 1 | Economics: Foundations and Models
Contents Part 1: Introduction Chapter 1 Economics: Foundations and Models
1
Appendix: Using Graphs and Formulas
15
Chapter 2 Trade-offs, Comparative Advantage, and the Market System
28
Chapter 3 Where Prices Come From: The Interaction of Demand and Supply
49
Chapter 4 Economic Efficiency, Government Price Setting, and Taxes
80
Appendix: Quantitative Demand and Supply Analysis Chapter 5 The Economics of Health Care
88 113
Part 2: Firms in the Domestic and International Economies Chapter 6 Firms, the Stock Market, and Corporate Governance
134
Appendix: Using Present Value
142
Appendix: Income Statements and Balance Sheets
144
Chapter 7 Comparative Advantage and the Gains from International Trade
156
Part 3: Macroeconomic Foundations and Long-Run Growth Chapter 8 GDP: Measuring Total Production and Income
178
Chapter 9 Unemployment and Inflation
201
Chapter 10 Economic Growth, the Financial System, and Business Cycles
233
Chapter 11 Long-Run Economic Growth: Sources and Policies
256
Copyright © 2023 Pearson Education, Inc.
CHAPTER 1 | Economics: Foundations and Models
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Part 4: Short-Run Fluctuations Chapter 12 Aggregate Expenditure and Output in the Short Run
281
Appendix: The Algebra of Macroeconomic Equilibrium
294
Chapter 13 Aggregate Demand and Aggregate Supply Analysis
310
Appendix: Macroeconomic Schools of Thought
321
Part 5: Monetary and Fiscal Policy Chapter 14 Money, Banks, and the Federal Reserve System
338
Chapter 15 Monetary Policy
366
Chapter 16 Fiscal Policy
398
Appendix: A Closer Look at the Multiplier Chapter 17 Inflation, Unemployment, and Federal Reserve Policy
430 434
Part 6: The International Economy Chapter 18 Macroeconomics in an Open Economy Appendix: The Gold Standard and the Bretton Woods System
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CHAPTER 1 | Economics: Foundations and Models
CHAPTER 1 | Economics: Foundations and Models Brief Chapter Summary and Learning Objectives 1.1
Three Key Economic Ideas Explain these three key economic ideas: People are rational, people respond to economic incentives, and optimal decisions are made at the margin. ▪
1.2
Because resources are scarce, people must make choices to attain their goals.
The Economic Problem That Every Society Must Solve Discuss how an economy answers these questions: What goods and services will be produced? How will the goods and services be produced? Who will receive the goods and services produced? ▪
1.3
Because of scarcity, producing more of one good or service means that less of some other good or service will be produced.
Economic Models Explain how economists use models to analyze economic events and government policies. ▪
1.4
Economists use models—simplified versions of reality—to analyze real-world issues.
Microeconomics and Macroeconomics Distinguish between microeconomics and macroeconomics. ▪
1.5
Microeconomics is the study of how households and firms make choices, while macroeconomics is the study of the economy as a whole
Economic Skills and Economics as a Career Describe economics as a career and the key skills you can gain from studying economics. ▪
Individuals, managers, and government policymakers can all benefit from applying economic concepts when they make decisions.
Copyright © 2023 Pearson Education, Inc.
CHAPTER 1 | Economics: Foundations and Models
1.6
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A Preview of Important economic Terms Define important economic terms.
Appendix: Using Graphs and Formulas Use graphs and formulas to analyze economic situations.
Key Terms Allocative efficiency A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.
Marginal analysis Analysis that involves comparing marginal benefits and marginal costs.
Centrally planned economy An economy in which the government decides how economic resources will be allocated.
Market economy An economy in which the decisions of households and firms as they interact in markets determine the allocation of economic resources.
Economic model A simplified version of reality used to analyze real-world economic situations. Economic variable Something measurable that can have different values, such as the number of people employed in manufacturing.
Market A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade.
Microeconomics The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.
Economics The study of the choices people make to attain their goals, given their scarce resources.
Mixed economy An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources.
Equity The fair distribution of economic benefits.
Normative analysis Analysis concerned with what ought to be.
Macroeconomics The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.
Opportunity cost The highest-valued alternative that must be given up to engage in an activity.
Copyright © 2019 Pearson Education, Inc.