Page 18 - Krugmans Economics for AP Text Book_Neat

Contents

Module 39 Growth Policy: Why Economic Inflation and Real Exchange Rates 423
Growth Rates Differ 387 Purchasing Power Parity 427
Why Growth Rates Differ 387 FYI: Burgernomics 428
Capital, Technology, and Growth Differences 387 FYI: Low-Cost America 429
FYI: Inventing R&D 389 Module 42 AP Review 429
The Role of Government in Promoting Economic
Growth 389
Module 43 Exchange Rate Policy 431
FYI: The Brazilian Breadbasket 390
Exchange Rate Policy 431
Is World Growth Sustainable? 391
Exchange rate Regimes 431
Natural Resources and Growth, Revisited 391
How Can an Exchange Rate Be Held Fixed? 432
Economic Growth and the Environment 392
The Exchange Rate Regime Dilemma 433
FYI: Coal Comfort on Resources 393
FYI: China Pegs the Yuan 434
FYI: The Cost of Climate Protection 395
Module 43 AP Review 435
Module 39 AP Review 396
Module 44 Exchange Rates and
Module 40 Economic Growth in Macroeconomic Macroeconomic Policy 437
Models 398
Exchange Rates and Macroeconomic Policy 437
Long-run Economic Growth and the Production Devaluation and Revaluation of fixed Exchange Rates 437
Possibilities Curve 398
FYI: From Bretton Woods to the Euro 438
Long-run Economic Growth and the Aggregate Demand
and Supply Model 401 Monetary Policy Under a Floating Exchange Rate
Regime 439
Distinguishing Between Long-run Growth and Short-run
Fluctuations 402 International Business Cycles 440
Module 40 AP Review 403 FYI: The Joy of a Devalued Pound 441
Section 7 Review 404 Module 44 AP Review 441

Section 8 Module 45 Putting It All Together 443
The Open Economy: International Trade and A Structure for Macroeconomics Analysis 443
Finance 409 The Starting Point 444
The Pivotal Event 444
Module 41 Capital Flows and the Balance The Initial Effect of the Event 447
of Payments 410 Secondary and Long-Run Effects of the Event 447
Capital Flows and the Balance of Payments 410 Analyzing Our Scenario 448
Balance of Payments Accounts 410 Module 45 AP Review 450
FYI: GDP, GNP, and the Current Account 414 Section 8 Review 452
Modeling the Financial Account 415
Underlying Determinants of International Capital Section 9
Flows 417
Behind the Demand Curve: Consumer Choice 457
FYI: A Global Savings Glut? 418
Two-way Capital Flows 418
Module 46 Income Effects, Substitution
FYI: The Golden Age of Capital Flows 419 Effects, and Elasticity 458
Module 4 AP Review 419
Explaining the Law of Demand 458
The Substitution Effect 458
Module 42 The Foreign Exchange Market 421
The Income Effect 459
The Role of the Exchange Rate 421
FYI: Giffen Goods 459
Understanding Exchange Rates 421
Defining and Measuring Elasticity 460
The Equilibrium Exchange Rate 422

xvi CONTENTS