Solution Manual For Macroeconomics, 6th edition Stephen D. Williamson Chapter 1-18
Chapter 1 Introduction
Teaching Goals
Macroeconomics primarily studies economic growth and business cycles. Over time, there is a prevailing upward trend in the standard of living. However, such growth can be rather erratic. There are some periods of very rapid growth, some periods of rather anemic growth, and also some periods of temporary economic decline. Explanations for the overall upward trend in standards of living are the subject of economic growth analysis. Explanations of variations in growth over shorter time horizons are the subject of business cycle analysis. Students should be able to distinguish between microeconomic topics and macroeconomic topics. Students should understand the distinction between growth analysis and business cycle analysis. Although microeconomics and macroeconomics are separate branches of study, both branches are guided by the same set of economic principles. Standard economic theory is guided by the assumption of maximizing behavior. As a first approximation, we therefore view the macroeconomy as a collection of markets with maximizing participants. These participants are price-taking agents and the economy is closely approximated by a competitive equilibrium. Because the economy as a whole is extremely complex, macroeconomists must rely on somewhat abstract models. Although the structure of such models does not correspond to all of the details of life in a complex society, these models offer the best hope of providing simple, yet accurate descriptions of how the macroeconomy works, and how government policies may affect macroeconomic outcomes. Economists are in broad consensus about the mechanisms of economic growth. There is less agreement about the causes and consequences of business cycles. While there are strong regularities in macroeconomic data, competing theories have been developed that each has a claim to explaining those regularities. There are Keynesian and non-Keynesian models of the business cycle. Examples of the former are Keynesian coordination failure models and New Keynesian sticky price models. Examples of the latter are the Lucas-Friedman money surprise model, the real business cycle model, and new monetarist models.
Classroom Discussion Topics
One good way to get the ball rolling is to list some macroeconomic concerns like stagnant economic growth, unemployment, inflation, the recent recession, government budget deficits, tax burdens, balance of trade deficits, financing of Social Security, and the like. Draw on current news or look at various policy proposals discussed in Washington. Ask or poll students as to whether they are personally concerned about such problems and what ideas they might have about causes and effects. Sometimes students express concerns about topics that are perhaps more microeconomic in nature, like inequality in the distribution of income and environmental concerns. These topics are certainly outside of the realm of what we can Copyright ©2018 Pearson Education, Inc.