Mankiw N.G. Macroeconomics 5th ...

Mankiw N.G. Macroeconomics 5th with key, ekonomia

[ Pobierz całość w formacie PDF ]
User SONPR:Job EFF01417:6264_ch01:Pg 0:23907#/eps at 100%
*23907*
Fri, Nov 9, 2001 11:52 AM
part I
Introduction
User SONPR:Job EFF01417:6264_ch01:Pg 1:21266#/eps at 100%
*21266*
Fri, Nov 9, 2001 11:52 AM
CHAPTER
1
ONE
The Science of Macroeconomics
The whole of science is nothing more than the refinement of everyday
thinking.
— Albert Einstein
1-1
What Macroeconomists Study
Why have some countries experienced rapid growth in incomes over the past
century while others stay mired in poverty? Why do some countries have high
rates of inflation while others maintain stable prices? Why do all countries expe-
rience recessions and depressions—recurrent periods of falling incomes and ris-
ing unemployment—and how can government policy reduce the frequency and
severity of these episodes? Macroeconomics, the study of the economy as a
whole, attempts to answer these and many related questions.
To appreciate the importance of macroeconomics, you need only read the
newspaper or listen to the news. Every day you can see headlines such as IN-
COME GROWTH SLOWS, FED MOVES TO COMBAT INFLATION, or
STOCKS FALL AMID RECESSION FEARS. Although these macroeconomic
events may seem abstract, they touch all of our lives. Business executives forecast-
ing the demand for their products must guess how fast consumers’ incomes will
grow. Senior citizens living on fixed incomes wonder how fast prices will rise.
Recent college graduates looking for jobs hope that the economy will boom and
that firms will be hiring.
Because the state of the economy affects everyone, macroeconomic issues play
a central role in political debate.Voters are aware of how the economy is doing,
and they know that government policy can affect the economy in powerful
ways.As a result, the popularity of the incumbent president rises when the econ-
omy is doing well and falls when it is doing poorly.
Macroeconomic issues are also at the center of world politics. In recent years,
Europe has moved toward a common currency, many Asian countries have expe-
rienced financial turmoil and capital flight, and the United States has financed
large trade deficits by borrowing from abroad. When world leaders meet, these
topics are often high on their agendas.
2
|
User SONPR:Job EFF01417:6264_ch01:Pg 2:24475#/eps at 100%
*24475*
Fri, Nov 9, 2001 11:52 AM
CHAPTER 1
The Science of Macroeconomics
|
3
Although the job of making economic policy falls to world leaders, the job of
explaining how the economy as a whole works falls to macroeconomists.Toward
this end, macroeconomists collect data on incomes, prices, unemployment, and
many other variables from different time periods and different countries. They
then attempt to formulate general theories that help to explain these data. Like
astronomers studying the evolution of stars or biologists studying the evolution
of species, macroeconomists cannot conduct controlled experiments. Instead,
they must make use of the data that history gives them. Macroeconomists ob-
serve that economies differ from one another and that they change over time.
These observations provide both the motivation for developing macroeconomic
theories and the data for testing them.
To be sure, macroeconomics is a young and imperfect science. The macro-
economist’s ability to predict the future course of economic events is no better
than the meteorologist’s ability to predict next month’s weather. But, as you will
see, macroeconomists do know quite a lot about how the economy works.This
knowledge is useful both for explaining economic events and for formulating
economic policy.
Every era has its own economic problems. In the 1970s, Presidents Richard
Nixon, Gerald Ford, and Jimmy Carter all wrestled in vain with a rising rate of
inflation. In the 1980s, inflation subsided, but Presidents Ronald Reagan and
George Bush presided over large federal budget deficits. In the 1990s, with Pres-
ident Bill Clinton in the Oval Office, the budget deficit shrank and even turned
into a budget surplus, but federal taxes as a share of national income reached a
historic high. So it was no surprise that when President George W. Bush moved
into the White House in 2001, he put a tax cut high on his agenda. The basic
principles of macroeconomics do not change from decade to decade, but the
macroeconomist must apply these principles with flexibility and creativity to
meet changing circumstances.
CASE STUDY
The Historical Performance of the U.S. Economy
Economists use many types of data to measure the performance of an economy.
Three macroeconomic variables are especially important: real gross domestic
product (GDP), the inflation rate, and the unemployment rate.
Real GDP
mea-
sures the total income of everyone in the economy (adjusted for the level of
prices).The
inflation rate
measures how fast prices are rising.The
unemploy-
ment rate
measures the fraction of the labor force that is out of work. Macro-
economists study how these variables are determined, why they change over
time, and how they interact with one another.
Figure 1-1 shows real GDP per person in the United States. Two aspects
of this figure are noteworthy. First, real GDP grows over time. Real GDP
per person is today about five times its level in 1900.This growth in average
User SONPR:Job EFF01417:6264_ch01:Pg 3:24476#/eps at 100%
*24476*
Fri, Nov 9, 2001 11:52 AM
4
|
PART I
Introduction
figure 1-1
Real GDP per person
(1996 dollars)
World
War I
Great
Depression
World
War II
Korean
War
Vietnam
War
First oil price shock
Second oil price shock
35,000
30,000
20,000
10,000
5,000
3,000
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990
2000
Year
Real GDP per Person in the U.S. Economy
Real GDP measures the total income of everyone in the economy, and real GDP per
person measures the income of the average person in the economy. This figure shows
that real GDP per person tends to grow over time and that this normal growth is
sometimes interrupted by periods of declining income, called recessions or
depressions.
Note:
Real GDP is plotted here on a logarithmic scale. On such a scale, equal distances on the vertical
axis represent equal
percentage
changes. Thus, the distance between $5,000 and $10,000 (a 100
percent change) is the same as the distance between $10,000 and $20,000 (a 100 percent change).
Source:
U.S. Bureau of the Census (
Historical Statistics of the United States: Colonial Times to 1970
) and U.S.
Department of Commerce.
income allows us to enjoy a higher standard of living than our great-grand-
parents did. Second, although real GDP rises in most years, this growth is
not steady. There are repeated periods during which real GDP falls, the
most dramatic instance being the early 1930s. Such periods are called
reces-
sions
if they are mild and
depressions
if they are more severe. Not surpris-
ingly, periods of declining income are associated with substantial economic
hardship.
Figure 1-2 shows the U.S. inflation rate. You can see that inflation varies
substantially. In the first half of the twentieth century, the inflation rate aver-
aged only slightly above zero. Periods of falling prices, called
deflation
,were
almost as common as periods of rising prices. In the past half century, inflation
has been the norm.The inflation problem became most severe during the late
1970s, when prices rose at a rate of almost 10 percent per year. In recent years,
User SONPR:Job EFF01417:6264_ch01:Pg 4:24477#/eps at 100%
*24477*
Fri, Nov 9, 2001 11:52 AM
[ Pobierz całość w formacie PDF ]

zanotowane.pl

doc.pisz.pl

pdf.pisz.pl

mement.xlx.pl