Type:
Solution Manual
Resource:
Macroeconomics Global Edition
Edition:
6th Edition
Author(s):
Oliver Blanchard David R. Johnson
Instructor’s Manual for
Microeconomics 6th Edition Global Edition By Dr. LaTanya Brown-Robertson Bowie State University
CONTENTS CHAPTER 1
A Tour of the World
1
CHAPTER 2
A Tour of the Book
7
CHAPTER 3
The Goods Market
12
CHAPTER 4
Financial Markets
17
CHAPTER 5
Goods and Financial Markets: The IS-LM Model
23
CHAPTER 6
The Labor Market
29
CHAPTER 7
Putting All Markets Together: The AS-AD Model
34
CHAPTER 8
The Phillips Curve, the Natural Rate of Unemployment, and Inflation
43
CHAPTER 9
The Crisis
47
CHAPTER 10 The Facts of Growth
55
CHAPTER 11 Saving, Capital Accumulation, and Output
59
CHAPTER 12 Technological Progress and Growth
64
CHAPTER 13 Technological Progress: The Short, the Medium, and the Long Run
68
CHAPTER 14 Expectations: The Basic Tools
72
CHAPTER 15 Financial Markets and Expectations
77
CHAPTER 16 Expectations, Consumption, and Investment
82
CHAPTER 17 Expectations, Output, and Policy
87
CHAPTER 18 Openness in Goods and Financial Markets
90
CHAPTER 19 The Goods Market in an Open Economy
95
CHAPTER 20 Output, the Interest Rate, and the Exchange Rate
101
CHAPTER 21 Exchange Rate Regimes
107
CHAPTER 22 Should Policymakers Be Restrained?
113
CHAPTER 23 Fiscal Policy: A Summing Up
117
.
CHAPTER 24 Monetary Policy: A Summing Up
121
CHAPTER 25 Epilogue: The Story of Macroeconomics
125
Answers to End-of-Chapter Problems
129
.
CHAPTER 1 A TOUR OF THE WORLD I.
MOTIVATING QUESTION
What is macroeconomics? The chapter does not provide an explicit or formal answer. Instead, it begins with an overview of the macroeconomic crisis then moves to describe the issues of concern to macroeconomists who study the United States, Europe, and China. A working definition of macroeconomics at this point is the study of output, unemployment, and inflation, terms that will be defined precisely in Chapter 2.
II. WHY THE ANSWER MATTERS This chapter attempts to provide students an incentive to master the theoretical material that follows in the remainder of the text. The implicit promise is that the theoretical model developed in the text will allow students to make sense of the macroeconomic crisis which has impacted countries around the world.
III. KEY TOOLS, CONCEPTS, AND ASSUMPTIONS 1. Tools and Concepts Chapter 1 does not provide any analytical tools. However, it does force students to confront some basic data and introduces data sources for various regions of the world. In addition, the chapter introduces and defines briefly the concepts of output, growth, the unemployment rate, and the inflation rate. A precise definition of these terms follows in Chapter 2. Chapter 1 mentions in passing the terms standard of living, productivity and purchasing power parity. All of these terms and concepts will be explored in later chapters in the text. 2. Assumptions Implicit in the Tour of the World is the assumption that the same basic macroeconomic tools can be used to analyze economies throughout the world. It might be worth making this point explicitly. The macroeconomic framework developed in the text would be neither terribly useful, nor compelling as a theory, if it applied only to the United States, and not to the other market economies.
IV. SUMMARY OF THE MATERIAL 1. The Crisis Included in the 6th edition of the textbook is a discussion around the major macroeconomic crisis that occurred in 2008. Table 1-1 outlines the output growth rates for the world economy, the advanced economics and for the other countries separately since 2000. From 2000 to 2007 the world economy had a sustained expansion. Annual average world output growth was 3.2%, with advanced economies growing at 2.6% per year, and emerging and developing economies growing at an even faster 6.5% per year. By 2008, the world, advanced and emerging economy output growth rate began to decline marking the beginning of the macroeconomic crisis. Highlights of the Macroeconomic Crisis: • U.S. Housing prices, which had doubled since 2000, started to decline in 2007. • Mortgage loans which had been given out during the earlier expansion were of poor quality causing many borrowers to increasingly be unable to make mortgage payments. .