[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

Recommendations

Info

Learning GoalsIn this chapter, you will learn12345About the principal investmentalternatives availablefor your savingsThe important characteristicsof each of these investmentoptionsWhy some assets yieldhigher rates of return thanothersWhether it is possible to“beat the market”Some of the basic rules forintelligent investing
Chapter 39A STUDENT’S GUIDETO INVESTING∂The 1990s saw a tremendous rise in the value of the stock market—it seemedas if almost every day some new company was selling shares to the publicand creating new billionaires overnight. This picture all changed abruptlyin 2000 when the stock market collapsed, causing millions to see their paper wealthdisappear. The ups and downs of the stock market are often taken as key signals ofthe economy’s health, and the swings of the financial market that we have seenduring the past ten years are nothing new. When Alexander Hamilton, as the firstU.S. secretary of the treasury under President George Washington, set up the firstmarket for the new government’s bonds in 1791, prices skyrocketed by more than1,000 percent in the first month of trading before collapsing in value.But what can economics tell us about the stock market and how it behaves? Andwhat can economics tell us about how you should invest your money? Every decisionto save is accompanied by a decision about what to do with the savings. They mightgo under the mattress, but usually savings are invested—most often in bank accounts,the stock or bond market, or the real estate market. These financial opportunitiescan be thought of as enticements to defer consumption—to save. Broadly speaking,an investment is the purchase of an asset in the expectation of receiving a return.For the economy as a whole, real investment must be distinguished from financialinvestment. Real investment includes the purchase of new factories andmachines; it is the investment that is part of aggregate expenditures. Financialinvestment is the purchase of financial assets such as stocks and bonds that areexpected to generate income or to appreciate in value.This chapter examines financial investment. It first takes up the major alternativesavailable to savers and discusses the characteristics of those that are importantto investors. From these characteristics, we can establish a simple theory toexplain how the prices of financial assets such as stocks and bonds are determined.We can use what we learn about the characteristics of investment alternatives andthe theory of asset prices to develop some strategies for intelligent investing.865
Page 3 and 4:
∂ECONOMICSFOURTH EDITION
Page 5 and 6:
∂ECONOMICSFOURTH EDITIONBW. W. NO
Page 7 and 8:
ABOUT THE AUTHORSJoseph E. Stiglitz
Page 9 and 10:
CONTENTS IN BRIEFPART 1 INTRODUCTIO
Page 11 and 12:
CONTENTSPREFACEXXXVPART 1 INTRODUCT
Page 13 and 14:
Sources of Shifts in Demand Curves
Page 15 and 16:
Short-Run and Long-Run Cost Curves
Page 17 and 18:
Conditions for the Pareto Efficienc
Page 19 and 20:
THINKING LIKE AN ECONOMIST: Trade-O
Page 21 and 22:
Search and Information Intermediari
Page 23 and 24:
CHAPTER 19 INTERNATIONAL TRADE AND
Page 25 and 26:
Government Deficits and Trade Defic
Page 27 and 28:
Evaluating Government Deficits and
Page 29 and 30:
PART 7MACROECONOMICFLUCTUATIONS 635
Page 31 and 32:
An Expansionary Shift in the ADI Cu
Page 33 and 34:
CHAPTER 35 POLICY IN THE OPEN ECONO
Page 35 and 36:
CASE IN POINT: Fed Policy Statement
Page 37 and 38:
PREFACEThe study of economics has a
Page 39 and 40:
of the economist’s approach to im
Page 41 and 42:
ture also allows an instructor who
Page 43 and 44:
With SmartWork’s intuitive interf
Page 45 and 46:
AcknowledgmentsThe book’s first t
Page 47 and 48:
Alternative Course OutlineIn the Fo
Page 49 and 50:
Plus any of the optional chapters c
Page 51 and 52:
∂Part 1INTRODUCTION∂1
Page 53 and 54:
Chapter 1MODERNECONOMICS∂The past
Page 55 and 56:
the illegal online sharing of music
Page 57 and 58:
2. In making choices, individuals r
Page 59 and 60:
gal activity, and on the other side
Page 61 and 62:
Internet ConnectionAUCTION SITESAn
Page 63 and 64:
and products. It is hard to imagine
Page 65 and 66:
The primary reliance on private dec
Page 67 and 68:
Microeconomics andMacroeconomics:Th
Page 69 and 70:
does not prove that the coin is not
Page 71 and 72:
Review and PracticeSUMMARY1. Econom
Page 73 and 74:
This page intentionally left blank
Page 75 and 76:
Chapter 2THINKING LIKE ANECONOMIST
Page 77 and 78:
COMPETITIVE MARKETSTo complete the
Page 79 and 80:
new insights into markets and situa
Page 81 and 82:
INCENTIVES VERSUS EQUALITYWhile inc
Page 83 and 84:
line up to buy at that price. (The
Page 85 and 86:
she has more of both goods than at
Page 87 and 88:
Diminishing returns is an important
Page 89 and 90:
Thinking Like an EconomistTRADE-OFF
Page 91 and 92:
computers and textiles. The develop
Page 93 and 94:
To understand sunk costs, let’s g
Page 95 and 96:
Review and PracticeSUMMARY1. The ba
Page 97 and 98:
Appendix: Reading GraphsWhether the
Page 99 and 100:
Now look at point A, where the econ
Page 101 and 102:
∂Part 2PERFECT MARKETS∂51
Page 103 and 104:
Chapter 3DEMAND, SUPPLY,AND PRICE
Page 105 and 106:
you might buy a few, and if the pri
Page 107 and 108:
SHIFTS IN DEMAND CURVES1.25When the
Page 109 and 110:
Case in PointGASOLINE PRICES AND TH
Page 111 and 112:
In practice, both effects are often
Page 113 and 114:
higher performance at that price. A
Page 115 and 116:
Wrap-UpSUPPLY CURVEThe supply curve
Page 117 and 118:
A change in the natural environment
Page 119 and 120:
USING DEMAND AND SUPPLY CURVESThe c
Page 121 and 122:
Internet ConnectionTHE DEMAND AND S
Page 123 and 124:
the demand and supply curves. What
Page 125 and 126:
Page 127 and 128:
Chapter 4USING DEMANDAND SUPPLY∂W
Page 129 and 130:
ABPRICE ($)Demand fororange juice2.
Page 131 and 132:
Table 4.1PRICE ELASTICITY OF DEMAND
Page 133 and 134:
International PerspectiveCOMPARING
Page 135 and 136:
the supply curve becomes close to v
Page 137 and 138:
be reflected more in changes in qua
Page 139 and 140:
to illustrate the market’s failur
Page 141 and 142:
New York City leads, in the short r
Page 143 and 144:
Case in PointRENT CONTROL IN NEW YO
Page 145 and 146:
ment is concerned with low wages pa
Page 147 and 148:
2. Imagine that the short-run price
Page 149 and 150:
fall represents a larger percentage
Page 151 and 152:
Chapter 5THE CONSUMPTIONDECISION∂
Page 153 and 154:
As we learned in Chapter 2, a budge
Page 155 and 156:
450ALL OTHER GOODS ($)300GG'FF'20 3
Page 157 and 158:
The consumption of some goods actua
Page 159 and 160:
Internet ConnectionWHAT WE CONSUMET
Page 161 and 162:
tive or negative. Generally, though
Page 163 and 164:
Normally, demand curves are downwar
Page 165 and 166:
is 30, and that of the last pizza i
Page 167 and 168:
CONSUMER SURPLUSIn Chapter 1, we le
Page 169 and 170:
nomic model of consumer choice can
Page 171 and 172:
The Status Quo Bias Loss aversion a
Page 173 and 174:
of $60,000 per year. Imagine that t
Page 175 and 176:
Moving along the curve in one direc
Page 177 and 178:
number of CDs, having an additional
Page 179 and 180:
candy increases. Now he can buy few
Page 181 and 182:
Chapter 6THE FIRM’S COSTS∂Imagi
Page 183 and 184:
The relationship between the quanti
Page 185 and 186:
COST (THOUSANDS OF DOLLARS)AB175C15
Page 187 and 188:
ABCOST (DOLLARS PER UNIT)Marginalco
Page 189 and 190:
average costs are declining at outp
Page 191 and 192:
Table 6.4DEBORAH’S COSTS IF SHE W
Page 193 and 194:
COST (DOLLARS PER UNIT)ALong-run to
Page 195 and 196:
There is one last case to consider.
Page 197 and 198:
produce the same output in several
Page 199 and 200:
Hydroelectric power being generated
Page 201 and 202:
Review and PracticeSUMMARY1. A firm
Page 203 and 204:
Page 205 and 206:
Chapter 7THE COMPETITIVEFIRM∂Whet
Page 207 and 208:
Internet ConnectionFIRMS’ PROFIT-
Page 209 and 210:
Figure 7.3 develops the graphical a
Page 211 and 212:
ABCOST OR PRICE (DOLLARS PER UNIT)p
Page 213 and 214:
COST OR PRICE (DOLLARS PER UNIT)c m
Page 215 and 216:
e-InsightTHE 2001 RECESSION: CUTBAC
Page 217 and 218:
invested in this enterprise would p
Page 219 and 220:
In some cases, supplies of inputs a
Page 221 and 222:
Wrap-UpACCOUNTANTS’ VERSUS ECONOM
Page 223 and 224:
ant, who helps him to draw up the f
Page 225 and 226:
CHAPTER 8LABOR MARKETS∂The previo
Page 227 and 228:
“standard” workweek—the 40-ho
Page 229 and 230:
Wrap-UpWAGE CHANGES AND LABOR SUPPL
Page 231 and 232:
656055Female labor forceparticipati
Page 233 and 234:
Thus, in Figure 8.5, at the price p
Page 235 and 236:
market is in equilibrium, the deman
Page 237 and 238:
constraint has a kink at 37 hours o
Page 239 and 240:
AOriginal budgetconstraintBOriginal
Page 241 and 242:
Chapter 9CAPITAL MARKETS∂At any g
Page 243 and 244:
Joan chooses among the points on th
Page 245 and 246:
past twenty years computer prices h
Page 247 and 248:
The slope of the budget constraint
Page 249 and 250:
gests that the personal saving rate
Page 251 and 252:
would have earned $1,000 in interes
Page 253 and 254:
Despite offering important insights
Page 255 and 256:
e-InsightFINANCING THE NEW ECONOMYW
Page 257 and 258:
Review and PracticeSUMMARY1. The in
Page 259 and 260:
Appendix A: IndifferenceCurves and
Page 261 and 262:
increase in the interest rate, we n
Page 263 and 264:
Page 265 and 266:
Chapter 10THE EFFICIENCY OFCOMPETIT
Page 267 and 268:
CONSUMER AND PRODUCERSURPLUSTo unde
Page 269 and 270:
unable to find an apartment when re
Page 271 and 272:
PRICE OF CIGARETTESPrice paid bycon
Page 273 and 274:
Exchange Efficiency Exchange effici
Page 275 and 276:
COMPETITIVE MARKETS ANDPARETO EFFIC
Page 277 and 278:
more extensive government intervent
Page 279 and 280:
households determine their saving,
Page 281 and 282:
AUnskilled laborsupply (SU )BSkille
Page 283 and 284:
today, but it will also depend on p
Page 285 and 286:
Review and PracticeSUMMARY1. Genera
Page 287 and 288:
∂Part 3IMPERFECT MARKETS∂237
Page 289 and 290:
Chapter 11INTRODUCTION TOIMPERFECTM
Page 291 and 292:
price. The basic competitive model
Page 293 and 294:
is called monopoly. Your local elec
Page 295 and 296:
How much the price must change as s
Page 297 and 298:
Imperfect InformationThe model of p
Page 299 and 300:
MARKETS FOR INFORMATIONInformation
Page 301 and 302:
ness scandals in recent years have
Page 303 and 304:
Thinking Like an EconomistINCENTIVE
Page 305 and 306:
practical matter, this can be done
Page 307 and 308:
Review and PracticeSUMMARY1. By and
Page 309 and 310:
Page 311 and 312:
Chapter 12MONOPOLY,MONOPOLISTICCOMP
Page 313 and 314:
In Chapter 7, we used a graph that
Page 315 and 316:
of $9,000, it sells 2 units; and at
Page 317 and 318:
United StatesJapanPRICE (p )p 1PRIC
Page 319 and 320:
A natural monopoly occurs whenever
Page 321 and 322:
Table 12.2DEGREE OF COMPETITION IN
Page 323 and 324:
Equilibrium with MonopolisticCompet
Page 325 and 326:
A firm that is part of an oligopoli
Page 327 and 328:
and still be better off. However, t
Page 329 and 330:
backward through time, this logic w
Page 331 and 332:
Wrap-UpFORMS OF RESTRICTIVE PRACTIC
Page 333 and 334:
Page 335 and 336:
Review and PracticeSUMMARY1. Both m
Page 337 and 338:
9. Explain why frequent-flier progr
Page 339 and 340:
Chapter 13GOVERNMENTPOLICIES TOWARD
Page 341 and 342:
MANAGERIAL SLACKChapter 6 argued th
Page 343 and 344:
e-InsightUSING THE INTERNET TO ENHA
Page 345 and 346:
marginal cost and to make up the de
Page 347 and 348:
let us first review why competition
Page 349 and 350:
deregulation, government had retain
Page 351 and 352:
demeanor.” (A 1974 amendment made
Page 353 and 354:
demand for them would increase. And
Page 355 and 356:
arguments brought by a small Virgin
Page 357 and 358:
If we plug in the 34 percent share
Page 359 and 360:
long-distance service between major
Page 361 and 362:
Chapter 14STRATEGICBEHAVIOR∂Durin
Page 363 and 364:
Figure 14.1, which reproduces a dia
Page 365 and 366:
Consider the case of politicians A
Page 367 and 368:
International PerspectiveBEGGAR-THY
Page 369 and 370:
Internet ConnectionTHE ZERO-SUM GAM
Page 371 and 372:
REPUTATIONSDeveloping good reputati
Page 373 and 374:
If you have a deposit in a commerci
Page 375 and 376:
competes peacefully. Assume Microso
Page 377 and 378:
to actually carry out the threat wh
Page 379 and 380:
Review and PracticeSUMMARY1. In per
Page 381 and 382:
summer her parents decide whether o
Page 383 and 384:
Chapter 15IMPERFECTINFORMATION INTH
Page 385 and 386:
quantity demanded will actually fal
Page 387 and 388:
The Incentive ProblemProviding ince
Page 389 and 390:
REPUTATION SOLUTIONSReputation play
Page 391 and 392:
Case in PointBUYING HEALTH INSURANC
Page 393 and 394:
Thinking Like an EconomistINCENTIVE
Page 395 and 396:
Internet ConnectionJOB SEARCHThe In
Page 397 and 398:
stores’ buyers seek out literally
Page 399 and 400:
remains the same, so the second sou
Page 401 and 402:
Review and PracticeSUMMARY1. The ba
Page 403 and 404:
Page 405 and 406:
Chapter 16IMPERFECTIONS INTHE LABOR
Page 407 and 408:
unions had claimed that when they n
Page 409 and 410:
ECONOMIC EFFECTSThe source of union
Page 411 and 412:
When a union goes on strike, the fi
Page 413 and 414:
firm long enough to make his traini
Page 415 and 416:
machines have one advantage over hu
Page 417 and 418:
These “wages of trust” may expl
Page 419 and 420:
by the firm: the company can try to
Page 421 and 422:
Review and PracticeSUMMARY1. The pr
Page 423 and 424:
∂Part 4ISSUES INPUBLIC POLICY∂3
Page 425 and 426:
Chapter 17THE PUBLIC SECTOR∂Throu
Page 427 and 428:
Why Does the GovernmentIntervene in
Page 429 and 430:
The lifetime prospects for children
Page 431 and 432:
e-InsightTHE NEW ECONOMY AND INEQUA
Page 433 and 434:
Wrap-UpCRITERIA FOR EVALUATING A TA
Page 435 and 436:
The income tax is only one of sever
Page 437 and 438:
1997, the program commonly known as
Page 439 and 440:
SOCIAL INSURANCEThe United States h
Page 441 and 442:
Government FailuresDecisions about
Page 443 and 444:
BUDGETING AND SPENDING PROCEDURESTh
Page 445 and 446:
campaign contributions affect the b
Page 447 and 448:
that point, additional sources of r
Page 449 and 450:
Health care is different from most
Page 451 and 452:
Review and PracticeSUMMARY1. Govern
Page 453 and 454:
Page 455 and 456:
Chapter 18ENVIRONMENTALECONOMICS∂
Page 457 and 458:
Consider what happens if, in the pr
Page 459 and 460:
matters? Some economists, led by th
Page 461 and 462:
in such developments. The end of lo
Page 463 and 464:
the socially optimal level of produ
Page 465 and 466:
by 2 units and plant B by 4 units.
Page 467 and 468:
operation causes. Thus, the price h
Page 469 and 470:
Review and PracticeSUMMARY1. Govern
Page 471 and 472:
Page 473 and 474:
Chapter 19INTERNATIONALTRADE AND TR
Page 475 and 476:
relative to the size of the populat
Page 477 and 478:
Internet ConnectionDAVID RICARDOThe
Page 479 and 480:
e-InsightTHE UNITED STATES’ COMPA
Page 481 and 482:
has a comparative advantage in fine
Page 483 and 484:
But trade among individuals and tra
Page 485 and 486:
restrict the importation of goods.
Page 487 and 488:
OTHER NONTARIFF BARRIERSVERs and qu
Page 489 and 490:
they can raise prices. In such a ca
Page 491 and 492:
BEGGAR-THY-NEIGHBOR POLICIESConcern
Page 493 and 494:
Thinking Like an EconomistDISTRIBUT
Page 495 and 496:
parent: everyone can see that it is
Page 497 and 498:
Environmental and human rights issu
Page 499 and 500:
Internet ConnectionTHE WORLD TRADE
Page 501 and 502:
9. How is it possible that while th
Page 503 and 504:
Chapter 20TECHNOLOGICALCHANGE∂For
Page 505 and 506:
e-InsightTHE NEW ECONOMY AND INNOVA
Page 507 and 508:
uncertain about whether it will be
Page 509 and 510:
Soon after Henry Ford’s Model T h
Page 511 and 512:
Because expenditures on R & D are f
Page 513 and 514:
SCHUMPETERIAN COMPETITIONAlthough c
Page 515 and 516:
even the existence of certain mater
Page 517 and 518:
increasing awareness of the importa
Page 519 and 520:
Review and PracticeSUMMARY1. Ideas
Page 521 and 522:
∂Part 5INTRODUCTIONTO MACROECONOM
Page 523 and 524:
Chapter 21MACROECONOMICSAND THEECON
Page 525 and 526:
302520PERCENT1510501900 1910 1920 1
Page 527 and 528:
Today, a slight rise in the unemplo
Page 529 and 530:
GOVERNMENT DEFICITS AND TRADE DEFIC
Page 531 and 532:
significant periods of deflation si
Page 533 and 534:
Review and PracticeSUMMARY1. The th
Page 535 and 536:
Chapter 22MEASURINGOUTPUT ANDUNEMPL
Page 537 and 538:
Table 22.1CALCULATING GDPPrices and
Page 539 and 540:
MEASURING GDP: THE VALUE OF OUTPUTT
Page 541 and 542:
Wrap-UpGDP equals consumption plus
Page 543 and 544:
spending represents income for thos
Page 545 and 546:
International PerspectiveWHAT GETS
Page 547 and 548:
Measuring Nonmarket Goods Nonmarket
Page 549 and 550:
ment represents economic hardship.
Page 551 and 552:
1412FranceUNEMPLOYMENT RATE (%)1086
Page 553 and 554:
Wrap-UpFORMS OF UNEMPLOYMENTSeasona
Page 555 and 556:
Flows and StocksGDP is a measure of
Page 557 and 558:
produces two products, lectures and
Page 559 and 560:
Chapter 23THE COST OFLIVING ANDINFL
Page 561 and 562:
a variety of transactions, inflatio
Page 563 and 564:
JANUARY 1918 = 10010 1310 1210 1110
Page 565 and 566:
To see how a price index like the C
Page 567 and 568:
The second major problem is “qual
Page 569 and 570:
purchase foreign goods, so their pr
Page 571 and 572:
Review and PracticeSUMMARY1. The in
Page 573 and 574:
∂Part 6FULL-EMPLOYMENTMACROECONOM
Page 575 and 576:
Chapter 24THE FULL-EMPLOYMENTMODEL
Page 577 and 578:
In macroeconomics, we stress aggreg
Page 579 and 580:
duction and hire more workers. Seco
Page 581 and 582:
REAL WAGE (w/P )ALabor supply curve
Page 583 and 584:
capital markets to ensure that the
Page 585 and 586:
to firms and in return receive paym
Page 587 and 588:
est rate (perhaps rising slightly w
Page 589 and 590:
REAL INTEREST RATE (r )ASavingcurve
Page 591 and 592:
USING THE GENERAL EQUILIBRIUM MODEL
Page 593 and 594:
Review and PracticeSUMMARY1. Macroe
Page 595 and 596:
Page 597 and 598:
Chapter 25GOVERNMENTFINANCE AT FULL
Page 599 and 600:
Adding the GovernmentIntroducing go
Page 601 and 602:
From this perspective, the first eq
Page 603 and 604:
revenues match expenditures. In 199
Page 605 and 606:
International PerspectiveDEFICITS I
Page 607 and 608:
investment increases the capital st
Page 609 and 610:
400AThe Federal Deficit300200BILLIO
Page 611 and 612:
collected fell; Congress passed a l
Page 613 and 614:
Review and PracticeSUMMARY1. When t
Page 615 and 616:
Page 617 and 618:
Chapter 26THE OPENECONOMY AT FULLEM
Page 619 and 620:
domestic economy is borrowing more
Page 621 and 622:
The discussion so far has also assu
Page 623 and 624:
to be a simple matter: the buyer pa
Page 625 and 626:
2520DomesticinvestmentPERCENTAGE OF
Page 627 and 628:
50,000Exports40,00030,000MILLIONS O
Page 629 and 630:
curve for dollars represents the do
Page 631 and 632:
Trade deficits mean the country is
Page 633 and 634:
Review and PracticeSUMMARY1. In an
Page 635 and 636:
Chapter 27GROWTH ANDPRODUCTIVITY∂
Page 637 and 638:
3.53.03.122.66PERCENT2.52.01.52.202
Page 639 and 640:
The growth rate of output is the su
Page 641 and 642:
production function: the relationsh
Page 643 and 644:
telecommunications industry, other
Page 645 and 646:
its marginal cost is therefore zero
Page 647 and 648:
residual (i.e., TFP). The decrease
Page 649 and 650:
because the United States has been
Page 651 and 652:
Page 653 and 654:
2. Explain why a rapid influx of wo
Page 655 and 656:
Chapter 28MONEY, THE PRICELEVEL, AN
Page 657 and 658:
2015RATE OF INFLATION IN CPI (%)105
Page 659 and 660:
Since we are interested in the dema
Page 661 and 662:
807060INFLATION RATE (%)50403020100
Page 663 and 664:
important of these are banks, but t
Page 665 and 666:
pay their workers. How could the lo
Page 667 and 668:
Money as a Store of Value People wi
Page 669 and 670:
Table 28.2GLOSSARY OF FINANCIAL TER
Page 671 and 672:
Table 28.3AMERICABANK BALANCE SHEET
Page 673 and 674:
e-InsightELECTRONIC CASHA TV ad sho
Page 675 and 676:
Table 28.5SUPERBANK BALANCE SHEETAs
Page 677 and 678:
The Federal Reserve was created by
Page 679 and 680:
the banking system as a whole remai
Page 681 and 682:
If (for good reasons or bad) many d
Page 683 and 684:
Review and PracticeSUMMARY1. In the
Page 685 and 686:
∂Part 7MACROECONOMICFLUCTUATIONS
Page 687 and 688:
Chapter 29INTRODUCTION TOMACROECONO
Page 689 and 690:
A11,0001960-1961recession1969-1970r
Page 691 and 692:
broken only by two brief recessions
Page 693 and 694:
Thinking Like an EconomistEMPLOYMEN
Page 695 and 696:
L 1 - L 0 , is the level of cyclica
Page 697 and 698:
Thinking Like an EconomistINFORMATI
Page 699 and 700:
market. Once this has happened, the
Page 701 and 702:
assuming that the firm’s output i
Page 703 and 704:
labor markets. Conversely, wages wi
Page 705 and 706:
Fundamentals of Fluctuations 4INFLA
Page 707 and 708:
Review and PracticeSUMMARY1. Econom
Page 709 and 710:
Page 711 and 712:
Chapter 30AGGREGATEEXPENDITURES AND
Page 713 and 714:
THE NATIONAL INCOME-OUTPUT IDENTITY
Page 715 and 716:
the final increase in equilibrium o
Page 717 and 718:
ical questions. First, why does the
Page 719 and 720:
8,0007,000REAL CONSUMPTION(BILLIONS
Page 721 and 722:
lion. If any of the components of E
Page 723 and 724:
2018INVESTMENT (AS % OF GDP)1614121
Page 725 and 726:
without waiting; otherwise, they ma
Page 727 and 728:
The effect of exports and imports o
Page 729 and 730:
became less expensive, imports rose
Page 731 and 732:
Calculating Equilibrium OutputAt th
Page 733 and 734:
Wrap-UpAGGREGATE EXPENDITURES AND O
Page 735 and 736:
Review and PracticeSUMMARY1. Income
Page 737 and 738:
Page 739 and 740:
Chapter 31AGGREGATEDEMAND ANDINFLAT
Page 741 and 742:
When we discuss interest rates and
Page 743 and 744:
Because equilibrium GDP is determin
Page 745 and 746:
Fiscal Policy A change in governmen
Page 747 and 748:
Wrap-UpFACTORS THAT SHIFT THE AGGRE
Page 749 and 750:
But the story does not end there. A
Page 751 and 752:
offsetting amount. But the contract
Page 753 and 754:
Thinking Like an EconomistTOUGH TRA
Page 755 and 756:
bank could cut interest rates at ea
Page 757 and 758:
Case in PointTHE 1990SNow that we h
Page 759 and 760:
to sustained increases in productiv
Page 761 and 762:
Review and PracticeSUMMARY1. Aggreg
Page 763 and 764:
Page 765 and 766:
Chapter 32THE FEDERALRESERVE ANDINT
Page 767 and 768:
987INTEREST RATES (%)65432TargetFed
Page 769 and 770:
The position of the demand curve fo
Page 771 and 772:
equilibrium funds rate rises. If th
Page 773 and 774:
tity of money increases. When the m
Page 775 and 776:
Page 777 and 778:
Chapter 33THE ROLE OFMACROECONOMICP
Page 779 and 780:
THE NEW TRADE-OFF:OUTPUT STABILITY-
Page 781 and 782:
AggregatedemandinflationcurvesPoten
Page 783 and 784:
ADI 1E 1Aggregatedemand-inflationcu
Page 785 and 786:
765Actual deficitPOTENTIAL GDP (%)4
Page 787 and 788:
Conducting Monetary Policy The FOMC
Page 789 and 790:
The Committee perceives the upside
Page 791 and 792:
stimulate aggregate expenditures, e
Page 793 and 794:
Case in PointTHE INTEREST RATE CUT
Page 795 and 796:
economy and lead to a resurgence of
Page 797 and 798:
The Inflation Target The position o
Page 799 and 800:
This discussion returns us to the t
Page 801 and 802:
Wrap-UpDIFFERENCES BETWEEN MONETARY
Page 803 and 804:
3. Assume that the economy is curre
Page 805 and 806:
∂Part 8THE GLOBAL ECONOMY∂755
Page 807 and 808:
Chapter 34THEINTERNATIONALFINANCIAL
Page 809 and 810:
The foreign exchange market in Yere
Page 811 and 812:
that wants to use the euros to buy
Page 813 and 814:
States than moving it to Europe or
Page 815 and 816:
Expectations about changes in the e
Page 817 and 818:
expressed in terms of the value of
Page 819 and 820:
One of the attractions of the Europ
Page 821 and 822:
As speculators withdrew capital, th
Page 823 and 824:
Under a currency board, the exchang
Page 825 and 826:
Review and PracticeSUMMARY1. In a f
Page 827 and 828:
Page 829 and 830:
Chapter 35POLICY IN THEOPEN ECONOMY
Page 831 and 832:
While this discussion has focused o
Page 833 and 834:
rises and its appreciation reduces
Page 835 and 836:
Internet ConnectionFOREIGN EXCHANGE
Page 837 and 838:
exports are a large fraction of tot
Page 839 and 840:
Central Bank had increased the inte
Page 841 and 842:
3. Suppose a fall in net exports du
Page 843 and 844:
Chapter 36DEVELOPMENTAND TRANSITION
Page 845 and 846:
$5,500$5,000$4,50019912002$4,000$3,
Page 847 and 848:
LIFE IN A LESS-DEVELOPED COUNTRYJus
Page 849 and 850:
Some of this inequality is simply d
Page 851 and 852:
changes served to level the playing
Page 853 and 854:
policies, together with macroeconom
Page 855 and 856:
Trade Giving less-developed economi
Page 857 and 858:
eroded significantly in 2001 as a r
Page 859 and 860:
calculations of this kind allowed i
Page 861 and 862:
with ethnic strife or conflicts wit
Page 863 and 864: the value of existing savings. Mafi
Page 865 and 866: 6. What are some of the roles that
Page 867 and 868: ∂Part 9FURTHER TOPICS INMACROECON
Page 869 and 870: Chapter 37INFLATION ANDUNEMPLOYMENT
Page 871 and 872: curve. A. W. Phillips was a New Zea
Page 873 and 874: 1614INFLATION RATE (%)1210861960-19
Page 875 and 876: on the rate of inflation. The posit
Page 877 and 878: An important implication of this co
Page 879 and 880: Internet ConnectionWINNERS OF THE N
Page 881 and 882: the oil embargo imposed by the Orga
Page 883 and 884: expected inflation rate equal to π
Page 885 and 886: unemployment rate is 5 percent (i.e
Page 887 and 888: Chapter 38CONTROVERSIES INMACROECON
Page 889 and 890: ing a large tax cut through Congres
Page 891 and 892: rather than raising taxes to financ
Page 893 and 894: ity.” The Humphrey-Hawkins Act se
Page 895 and 896: Thinking Like an EconomistTRADE-OFF
Page 897 and 898: THE INTERVENTIONIST PERSPECTIVEThe
Page 899 and 900: ceed in keeping the unemployment ra
Page 901 and 902: they argue that if the Fed is held
Page 903 and 904: These actions were taken in light o
Page 905 and 906: International PerspectiveCENTRAL BA
Page 907 and 908: rate−1 percent expected inflation
Page 909 and 910: but doing so leads to bigger swings
Page 911 and 912: between fluctuations in unemploymen
Page 913: This page intentionally left blank
Page 917 and 918: Internet ConnectionCALCULATING INTE
Page 919 and 920: regarding the prospects of the econ
Page 921 and 922: Table 39.1ALTERNATIVE INVESTMENTS A
Page 923 and 924: A crowd protests rate hikes by the
Page 925 and 926: 12,000ADow Jones Industrial Average
Page 927 and 928: Investing in housing, particularly
Page 929 and 930: Thinking Like an EconomistTHE DISTR
Page 931 and 932: subsides. Thus, if a person knows t
Page 933 and 934: can expect to earn only a normal le
Page 935 and 936: Strategies for Intelligent Investin
Page 937 and 938: Review and PracticeSUMMARY1. Invest
Page 939 and 940: This page intentionally left blank
Page 941 and 942: capital goods: the machines and bui
Page 943 and 944: Federal Open Market Committee(FOMC)
Page 945 and 946: M1, M2, M3: measures of the money s
Page 947 and 948: price system: the economic system i
Page 949 and 950: substitution effect: the reduced co
Page 955 and 956: banks:assets of, 621-22, 625balance
Page 957 and 958: currency (continued)inflation and,
Page 959 and 960: exchange rates (continued)appreciat
Page 961 and 962: horizontal restrictions, oligopolie
Page 963 and 964: investment, investments, 672-76, 69
Page 965 and 966:
monetary policy (continued)trade-of
Page 967 and 968:
price takers, 27, 131, 218price war
Page 969 and 970:
Social Security (continued)as pay-a
Page 971:
unions (continued)strikes by, 355su
show all

[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?