CHAPTER 1 - THE ECONOMIC WAY OF THINKING
Economics is NOT about what to think, but HOW to think!
"Economics is not a body of concrete truth, but an engine for the discovery of the
WAY of thinking in a very systematic, rational, logical manner.
Chapter 14: Modern Macroeconomics and Monetary Policy
Prior to the 1970s, most economists thought fiscal policy was far more important than
monetary policy. See opening quote, page 319. Now the consensus is that monetary
policy is more important than fisc
Chapter 13 - MONEY AND THE BANKING SYSTEM
See opening quote, page 290, by Milton Friedman.
We will now switch from fiscal policy to monetary policy in the next two chapters.
We first look at Money and the Banking System and then focus on monetary policy i
Chapter 12 - FISCAL POLICY
See opening quote, page 267.
We now look at Fiscal Policy. We assume that the money supply (MS) is fixed,
monetary policy is held constant so we can isolate and focus on fiscal policy only.
Fiscal policy = Tax policy (T) and gov
Chapter 11 - Keynesian Foundations of Modern Macroeconomics
NOTE: In this chapter we will NOT cover the section titled "Keynesian Model of
Spending and Output" starting on page 250 and ending on the top of page 256 and we
will not cover the section "The M
Chapter 10 - AD/AS MODEL
In Ch. 9, we focused on static, equilibrium conditions in the Aggregate Demand
(AD) / Aggregate Supply (AS) model. We now look at dynamic changes in the macro
model - e.g. acts of nature like droughts or earthquakes, important dis
Chapter 9 - Introduction to Basic Macroeconomic Markets
Quote p. 200 - "Macro. Those essentials lie in the interactions among the goods,
labor and asset markets of the economy."
Four main markets in the economy: 1) market for final goods and services, 2)
Chapter 8 - Economic Fluctuations, Unemployment and Inflation
Output (GDP), inflation and unemployment are the three main economic variables
watched by the media, investors, politicians, businesses to assess the health of the
economy. Some goals of the ec
Chapter 7 - Taking the Nation's Economic Pulse
In this chapter we look at how the economy's output is measured. We use the National
Income and Products Accounts (NIPA), a system of national-income accounting
developed during the 1920s and 1930s to measure
CHAPTER 6 - ECONOMICS OF THE PUBLIC SECTOR (PUBLIC CHOICE
Opening quotes, p. 130:
"Public Choice analyzes the motives and activities of politicians, civil servants and
government officials as people with personal interests that may or may not c
CHAPTER 5 - THE ECONOMIC ROLE OF GOVERNMENT
GOVERNMENT SPENDING AND TAXATION
Exhibit 1 on p. 113 shows the growth of Government Spending as a percent of GDP
during 20th century. Federal spending used to be only 2.5%, now it's close to 20%,
about an 8x inc
CHAPTER 4 - SUPPLY AND DEMAND: APPLICATIONS AND EXTENSIONS
(Note: Skip pages 87-92).
ECONOMICS OF PRICE CONTROLS: REPEALING THE LAWS OF S AND
D (p. 92)
When prices are unregulated, market forces (S and D) will exert strong and relentless
pressure to move
CHAPTER 3 - SUPPLY, DEMAND AND THE MARKET PROCESS
Given the first two principles of economics (We live in a universe of scarcity and We
have unlimited desires), we have to make choices about how to allocate scarce
resources. Resources can be allocated thr
CHAPTER 2 - SOME TOOLS OF THE ECONOMIST
See opening quote, Friedman, page 27.
Choice involves the loss of foregone alternatives. OPPORTUNITY COST is the
highest valued alternative that must be sacrificed when one chooses. (Choosing
between A and B, if you
Chapter 15 - STABILIZATION, OUTPUT AND EMPLOYMENT
See opening quote by Robert. Gordon, p. 346.
We now consider the debate in macroeconomics about whether macro policy
(monetary and fiscal) can be used to effectively stabilize the economic fluctuations of