Macroeconomics: Principles, Problems, & Policies

Macroeconomics: Principles, Problems, & Policies

Language: English

Pages: 576

ISBN: 0077660773

Format: PDF / Kindle (mobi) / ePub


McConnell/Brue/Flynn has long set the standard for providing high-quality content to instructors and students all over the world. It has remained the most widely used principles of economics product as a result of persistent innovation.

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addition, the firm’s books will show a profit of $500 per vehicle on each of the 900 vehicles that it builds and expects to sell each week at that price. Here is the key point. If expectations are always fulfilled, Buzzer Auto will never contribute to any of the short-run fluctuations in output and unemployment that affect real-world economies. First, if everything always goes according to plan and Buzzer Auto’s expectations always come true, then the factory will always produce and sell at its

income less consumption (S = DI – C), we need only subtract consumption (Table 10.1, column 2) from disposable income (column 1) to find the amount saved (column 3) at each DI. Thus, columns 1 and 3 in Table 10.1 are the saving schedule, represented in Figure 10.2 b. The graph shows that there is a direct relationship between saving and DI but that saving is a smaller proportion of a small DI than of a large DI. If households consume a smaller and smaller proportion of DI as DI increases, then

responsible for maintaining money’s purchasing power? LO2 6. How is the chairperson of the Federal Reserve System selected? Describe the relationship between the Board of Governors of the Federal Reserve System and the 12 Federal Reserve Banks. What is the purpose of the Federal Open Market Committee (FOMC)? What is its makeup? LO3 7. The following are two hypothetical ways in which the Federal Reserve Board might be appointed. Would you favor either of these two methods over the present

demonstrated, an increase in the price level from P1 to P2 will move the economy from point a1 to a2 along the short-run aggregate supply curve AS1. At a2, the economy is producing at more than its potential output. This implies very high demand for productive inputs, so that input prices will begin to rise. In particular, the high demand for labor will drive up nominal wages, which will increase per unit production costs. As a result, the short-run supply curve shifts leftward from AS1 to AS2,

elasticity of supply depends on how easily—and therefore quickly—producers can shift resources between alternative uses. The easier and more rapidly producers can shift resources between alternative uses, the greater the price elasticity of supply. Take the case of Christmas trees. A firm’s response to, say, an increase in the price of trees depends on its ability to shift resources from the production of other products (whose prices we assume remain constant) to the production of trees. And

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