Page 11 - Economics

CONFIRMING PAGES

x PREFACE

Early and Extensive Treatment of Gov- looks at productivity growth, and addresses some controver-
ernment Government is an integral component of sies surrounding economic growth. Chapter 7’s Last Word
modern capitalism. This book introduces the economic examines the rapid economic growth in China. Chapter
functions of government early and accords them system- 16Web focuses on developing countries and the growth ob-
atic treatment in Chapter 4. Chapter 28 examines govern- stacles they confront. Chapter 24 provides an explicit and
ment and market failure in further detail, and Chapter 29 cohesive discussion of the microeconomics of technological
looks at salient facets of public choice theory and taxation. advance, including topics such as invention, innovation, and
Both the macro and the micro sections of the text include diffusion; start-up firms; R&D decision making; market
issue- and policy-oriented chapters. structure and R&D effort; and creative destruction.

Step-by-Step, Two-Path Macro We system- Stress on the Theory of the Firm We have
atically present macroeconomics by: given much attention to microeconomics in general and to
• Examining the national income and product accounts the theory of the firm in particular, for two reasons. First,
and previewing economic growth, unemployment, the concepts of microeconomics are difficult for most be-
and inflation. ginning students; abbreviated expositions usually com-
• Discussing three key macro relationships. pound these difficulties by raising more questions than
• Presenting the aggregate expenditures model (AE they answer. Second, we wanted to couple analysis of the
model) in a single chapter. various market structures with a discussion of the impact
• Developing the aggregate demand–aggregate supply of each market arrangement on price, output levels, re-
source allocation, and the rate of technological advance.
model (AD-AS model).
• Using the AD-AS model to discuss fiscal policy. Focus on Economic Policy and Issues For
• Introducing monetary considerations into the many students, the macro chapters on fiscal policy and
AD-AS model. monetary policy, along with the micro chapters on anti-
• Using the AD-AS model to discuss monetary policy. trust, agriculture, income inequality, health care, and labor
• Extending the AD-AS model to include both short- issues are where the action is centered. We guide that ac-
run and long-run aggregate supply. tion along logical lines through the application of appro-
• Applying the “extended AD-AS model” to macroeco- priate analytical tools. In the micro, we favor inclusiveness;
nomic instability, economic growth, and disagree- instructors can effectively choose two or three chapters
ments on macro theory and policy. from Part 9.
We organized Chapters 8, 9, and 10 to provide two alter-
native paths through macro. We know that nearly all in- Integrated Text and Web Site Economics and
structors like to cover somewhere in their macro course its Web site are highly integrated through in-text Web
the basic relationships between income and consumption, buttons, Web-based end-of-chapter questions, bonus Web
the real interest rate and investment, and changes in spend- chapters, multiple-choice self-tests at the Web site, online
ing and changes in output (the multiplier, conceptually newspaper articles, math notes, and other features. Our
presented). All of these topics are found in Chapter 8, “Ba- Web site is part and parcel of our student learning pack-
sic Macroeconomic Relationships.” The instructor can age, customized to the book.
proceed from Chapter 8 directly to either Chapter 9, “The
Aggregate Expenditures Model,” or Chapter 10, “Aggre-
gate Demand and Aggregate Supply.” This organization Organizational Alternatives
allows those instructors who prefer not to teach the equi- Although instructors generally agree on the content of
librium AE model to skip it without loss of continuity. As principles of economics courses, they sometimes differ on
before, the remainder of the macro is AD-AS based. how to arrange the material. Economics includes 10 parts,
and thus provides considerable organizational flexibility.
Emphasis on Technological Change and We chose to move from macroeconomics to microeco-
Economic Growth This edition continues to em- nomics because that is the course sequence at the majority
phasize economic growth. Chapter 1 uses the production of colleges and universities. The introductory material of
possibilities curve to show the basic ingredients of growth. Part 1, however, can be followed immediately by the mi-
Chapter 7 explains how growth is measured and presents the croanalysis of Parts 6 and 7. Similarly, the two-path macro
facts of growth. Chapter 16 discusses the causes of growth, enables covering the full aggregate expenditures model or

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