Cognella Macroeconomics: Theory and Policy

Macroeconomics Theory and Policy is a full color text that uses real-life examples to develop the basic macroeconomic model step by step. Designed for students taking their first economics course, this text presents macroeconomics in a clear, accessible, and engaging manner. This book aims to teach students how to conduct macroeconomic analysis, rather than simply bombarding them with massive amounts of disparate facts and figures. To achieve learning objectives, each chapter provides the background materials necessary to understand the discussions within the chapter and concludes with a summary of the chapter's main points. This is both an analysis- and policy-oriented book. Macroeconomics Theory and Policy includes several distinctive features, including: GDP is defined as the market value of all the goods and services produced, rather than the final goods. This makes the definition more accurate and intuitive. The relation to the concept of final goods is also described. The concepts of growth, inflation, and unemployment are defined early. This book also defines potential GDP and the natural rate of unemployment. The early introduction of these concepts facilitates the discussion on short run versus long run, as well as the reasons for undertaking demand management policies. The book makes it clear at the outset that the government cannot just increase spending without any consideration of how to finance it. The government can do this either by raising an equal amount of taxes, borrowing, or printing money. The implications of each financing method are fully discussed in the remaining chapters. In view of the topic emerging during the recession of 2007-2008, a discussion of the liquidity trap ― and how the economy can fall into it ― is presented.