- Version 9.1 | 08-2021
- Version 9.0 | 09-2020 (This Version)
- Version 8.0 | 05-2017
- Published:
- September 2020
- Page Count:
- 572
- ISBN (Digital):
- 978-1-4533-3499-7
Principles of Macroeconomics is suitable for introductory macroeconomics courses usually called principles of macroeconomics, macroeconomics principles, introductory macroeconomics, or similar titles, taught primarily at the undergraduate level at two- and four-year colleges and universities. The course may also be taught at the MBA level. This full-length volume encompasses only macroeconomics chapters and would typically be used in a semester- or quarter-long course. Separate volumes of this book titled Principles of Economics (covering both microeconomics and macroeconomics) and Principles of Microeconomics are also available.
Principles of Macroeconomics is co-written by two acclaimed teachers, one of whom is a globally recognized policy expert and eminent scholar. This highly regarded textbook features a remarkably accessible presentation grounded in the central idea of economics: that people make purposeful choices with scarce resources and interact with others when they make these choices. This engaging text provides simple and precise descriptions of why markets are efficient when the incentives are right and inefficient when the incentives are wrong. In addition to their impeccable credentials, both authors possess recent and extensive classroom-based experiences, which gives rise to authentic real-world examples that enliven the book’s narrative and readily connect with students.
New in This Version
Many graphs are hyperlinked to the underlying Federal Reserve Economic Data (FRED) source. Students can easily link to the most updated data for these graphs and become familiar with manipulating data from the Federal Reserve.
Key updates include:
- Can AI and machine learning improve resource allocations? (Ch. 1)
- Netflix pricing and demand elasticity. (Ch. 4)
- Updated economic data includes increasingly positive economic data prior to 2020, initial recessionary impact of the COVID-19 pandemic as reflected in first- and second-quarter economic data, and fluctuations in labor market strength. (Ch. 5–7)
- New coverage of cryptocurrencies, Venezuela’s hyperinflation, negative interest rates, and Fed tapering. (Ch. 10)
- Fully revised discussion of post-2016 recovery following the Great Recession and impact of the COVID-19 pandemic on the recovery. (Ch. 11)
- New discussion of why inflation was absent from the Great Recession’s recovery—and what considerations might be missing from economic models as a result. (Ch. 13)
- Tax discussions updated to align with Tax Cut and Jobs Act of 2017. (Ch. 14)
- Updated discussion of the Fed’s balance sheet normalization and unwinding of quantitative easing (QE) from 2017–2019. Coverage of renewed growth of the Fed’s balance sheet in response to the impact of the COVID-19 pandemic and prospects for eventual unwinding. New coverage of negative interest rates in Sweden and Switzerland. (Ch. 15)
- Explains the switch from poverty-alleviation goals from Millennium Development Goals to Sustainable Development Goals. China’s Belt and Road initiatives that propel that country to a global leader in funding development projects. (Ch. 17)
- Explores the Trump Administration’s trade policies and their impacts, including the USMCA’s replacement of NAFTA, the brewing trade war with China, and how import tariffs impact U.S. consumers. (Ch. 18)
- Updates specific to the COVID-19 pandemic throughout include:
- New boxed feature on “The Price System During National Disasters.” (Section 1.3)
- Clear illustration of differences between correlation and causation using impact of the pandemic on gas prices and miles traveled. (Section 2.2)
- Ventilators and impact of demand on pricing. (Ch. 3 Introduction)
- Price elasticity of supply for scarce goods in a crisis. (Section 4.4)
- General economic turmoil induced by early reactions to the pandemic including economic slowdown, increase in unemployment, recessionary impact, and initial monetary and fiscal policy responses. (Ch. 5 Introduction, Section 5.2–5.3)
- The pandemic’s impact on unemployment. (Ch. 8 Introduction)
- The pandemic’s impact on labor markets. (Section 8.1)
- Fed interventions and a new round of quantitative easing (QE). (Section 10.2)
- The pandemic-induced recession and its potential duration. (Ch. 11 Introduction and Section 11.1)
- Passage and impact of CARES Act. (Ch. 12 Introduction)
- Unexpected transition to the pandemic-induced recession and using the model to analyze the policy response. (Ch. 13 Introduction and Section 13.5)
- Impact of policy responses to the pandemic on the national debt and differing policy views on the right mix of fiscal interventions (Section 14.1 and 14.2)
- The Fed’s response to the pandemic, new balance sheet expansion, a return to zero interest rate policy, security purchases, and “Main Street” lending program. (Ch. 15 Introduction, Sections 15.1–15.3 and 15.5)
- Global economic shocks caused by the pandemic. (Ch. 17 Introduction)
- National security-based trade restrictions on supply chains for personal protective equipment (PPE) in a health crisis (Section 18.7)
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Additions & Errata
Changes made on 2/22/21:
Section 7.1:
Figure 7.2, text in figure was changed from NX/Y to X/Y.
Section 7.4:
Equation just before Figure 7.11, text in figure was changed from NX/Y to X/Y.
Equation just before Review, text in figure was changed from NX/Y to X/Y.
Section 7.5:
Problems, #2, text in figure was changed from NX/Y to X/Y.
Section 10.2:
Table 10.3, added cross reference to Table 10.2 in caption of this table.
Section 10.3:
First paragraph, updated reference to become cross reference to a previous section: “Early in this chapter, in Chapter 10, Section 1.2 “Commodity Money”, we showed that . . .”
Changes made on 9/2/21:
Section 13.5, Figure 13.11 was corrected.
Section 14.3, Figure 14.13 was corrected.
Section 15.4, Table 15.2 updated for clarity.
Section 18.4, Figure 18.6, caption was corrected to read “Regardless of the size of the market, cost per unit declines as the number of firms increases” rather than “firms decline.”
Change made 8/9/22:
Figure 2.7 updated to reflect correct axis (y=Physical examinations and x= Number of doctors).