1.2 Brief Contents

Section 1

Basic Economic Concepts 1

   MODULE 1 The Study of Economics 3

   MODULE 2 The Production Possibility Frontier Model 11

   MODULE 3 Comparative Advantage and Trade 18

Section 2

Supply and Demand 31

   MODULE 4 Demand 32

   MODULE 5 Supply and Equilibrium 43

   MODULE 6 Changes in Equilibrium 56

   MODULE 7 Price Controls and Quantity Controls 63

   MODULE 8 International Trade 77

Section 3

Macroeconomic Measurement 95

   MODULE 9 Introduction to Macroeconomics 96

   MODULE 10 The Circular-Flow Diagram and the National Accounts 105

   MODULE 11 Gross Domestic Product (GDP) 111

   MODULE 12 Interpreting Real Gross Domestic Product 118

Section 4

Unemployment and Inflation 131

   MODULE 13 Defining Unemployment 132

   MODULE 14 Categories of Unemployment 140

   MODULE 15 The Costs of Inflation 149

   MODULE 16 Measuring Inflation 157

Section 5

Long-Run Economic Growth 171

   MODULE 17 Sources of Long-Run Economic Growth 172

   MODULE 18 Productivity and Growth 179

   MODULE 19 Long-Run Growth Policy 189

Section 6

Savings, Investment Spending, and the Financial System 205

   MODULE 20 Savings and Investment Spending 206

   MODULE 21 The Market for Loanable Funds 212

   MODULE 22 The Time Value of Money 222

   MODULE 23 The Financial System 228

Section 7

Income and Expenditure 241

   MODULE 24 The Multiplier 242

   MODULE 25 Consumption and Investment Spending 247

   MODULE 26 The Income–Expenditure Model 258

Section 8

Aggregate Demand and Aggregate Supply 273

   MODULE 27 Aggregate Demand 274

   MODULE 28 Aggregate Supply 284

   MODULE 29 The AD–AS Model 296

Section 9

Fiscal Policy 313

   MODULE 30 Fiscal Policy Basics 314

   MODULE 31 Fiscal Policy and the Multiplier 323

   MODULE 32 Budget Deficits and Public Debt 328

Section 10

Money, Banking, and the Federal Reserve System 345

   MODULE 33 Defining and Measuring Money 346

   MODULE 34 Banking and Money Creation 353

   MODULE 35 The Federal Reserve System 362

Section 11

Monetary Policy 377

   MODULE 36 The Federal Reserve and Monetary Policy 378

   MODULE 37 The Money Market 383

   MODULE 38 Monetary Policy and the Interest Rate 392

   MODULE 39 Money, Output, and Prices in the Long Run 402

Section 12

Policy Responses to Unemployment and Inflation 413

   MODULE 40 Inflation, Disinflation, and Deflation 414

   MODULE 41 The Phillips Curve 423

   MODULE 42 Crises and Consequences 435

Section 13

Open-Economy Macroeconomics 453

   MODULE 43 Capital Flows and the Balance of Payments 454

   MODULE 44 The Foreign Exchange Market 469

   MODULE 45 Exchange Rate Policy 473

   MODULE 46 Exchange Rates and Macroeconomic Policy 479

Section 14

Macroeconomics: Events and Ideas 489

   MODULE 47 History and Alternative Views of Macroeconomics 490

   MODULE 48 The Modern Macroeconomic Consensus 502

Appendices

APPENDIX A Graphs in Economics A-1

APPENDIX B Macroeconomic Data Tables B-1

xii