Principles of Macroeconomics
first Edition

Principles of Macroeconomics

by Douglas Curtis, Ian Irvine

Principles of Macroeconomics is an adaptation of the textbook, Macroeconomics: Theory, Markets, and Policy by D. Curtis and I. Irvine, and presents a complete and concise examination of introductory macroeconomics theory and policy suitable for a first introductory course.

Examples are domestic and international in their subject matter and are of the modern era — financial markets, monetary and fiscal policies aimed at inflation and debt control, globalization and the importance of trade flows in economic structure, and concerns about slow growth and the risk of deflation, are included.

This textbook is intended for a one-semester course, and can be used in a two-semester sequence with the companion textbook, Principles of Microeconomics. The three introductory chapters are common to both textbooks.

Principles of Macroeconomics
About the Authors
1. Introduction to key ideas
1.1. What’s it all about?
1.2. Understanding through the use of models
1.3. Opportunity cost and the market
1.4. A model of exchange and specialization
1.5. Economy-wide production possibilities
1.6. Aggregate output, growth and business cycles
2. Theories, models and data
2.1. Data analysis
2.2. Data, theory and economic models
2.3. Ethics, efficiency and beliefs
3. The classical marketplace – demand and supply
3.1. The marketplace – trading
3.2. The market’s building blocks
3.3. Demand and supply curves
3.4. Non-price influences on supply
3.5. Non-price determinants of supply
3.6. Simultaneous supply and demand impacts
3.7. Market interventions – governments and interest groups
3.8. Individual and market functions
3.9. Useful techniques – demand and supply equations
4. Economic activity & performance
4.1. Macroeconomic performance
4.2. Canadian economic performance
4.3. National accounts
4.4. Measuring GDP
4.5. Nominal GDP, real GDP & the GDP deflator
4.6. Per capita real GDP
5. Output, business cycles, growth & employment
5.1. Aggregate demand & aggregate supply
5.2. Equilibrium output and potential output
5.3. Growth in potential output
5.4. Business cycles and output gaps
5.5. Output gaps and unemployment rates
5.6. Adjustments to output gaps?
5.7. The role of macroeconomic policy
6. Aggregate expenditure & aggregate demand
6.1. Short-run aggregate demand and output
6.2. Aggregate expenditure
6.3. Aggregate expenditure and equilibrium output in the short run
6.4. The multiplier: Changes in aggregate expenditure and equilibrium output
6.5. Equilibrium output and the AD curve
7. The government sector
7.1. Government in Canada
7.2. Government expenditure & taxes
7.3. The government’s budget function
7.4. Fiscal policy & government budget balances
7.5. Automatic and discretionary fiscal policy
7.6. The public debt and the budget balance
7.7. Aggregate demand & equilibrium output
8. Money, banking & money supply
8.1. Money and the functions of money
8.2. Measures of the Canadian money supply
8.3. Banking in Canada today
8.4. Money created by banks
8.5. The monetary base and the money supply
9. Financial markets, interest rates, foreign exchange rates & AD
9.1. Portfolio choices between money and other assets
9.2. The demand for money balances
9.3. Financial market equilibrium and interest rates
9.4. Interest rates and foreign exchange rates
9.5. Interest rates, exchange rates, and aggregate demand
9.6. The transmission mechanism
10. Central banking and monetary policy
10.1. Central banking and the Bank of Canada
10.2. Central bank operating techniques
10.3. Monetary policy objectives & instruments targets
10.4. Monetary policy rules
10.5. Monetary policy indicators
11. Inflation, real GDP, monetary policy & fiscal policy
11.1. Inflation and aggregate demand
11.2. Aggregate supply
11.3. The equilibrium inflation rate
11.4. Adjustment to output gaps
11.5. Monetary & fiscal policy
11.6. Recession, disinflation and deflation
12. Exchange rates, monetary policy, and fiscal policy
12.1. The balance of payments
12.2. The foreign exchange market
12.3. Flexible exchange rates and fixed exchange rates
12.4. Monetary and fiscal policy under flexible exchange rates
12.5. Monetary and fiscal policy under fixed exchange rates
13. Economic growth
13.1. Patterns of economic growth
13.2. Growth in potential output
13.3. Growth in per capita GDP
13.4. Technology & growth in per capita output
13.5. Recent growth studies and policy issues
14. Glossary
15. Solutions To Exercises
15.1. Chapter 1 Solutions
15.2. Chapter 2 Solutions
15.3. Chapter 3 Solutions
15.4. Chapter 4 Solutions
15.5. Chapter 5 Solutions
15.6. Chapter 6 Solutions
15.7. Chapter 7 Solutions
15.8. Chapter 8 Solutions
15.9. Chapter 9 Solutions
15.10. Chapter 10 Solutions
15.11. Chapter 11 Solutions
15.12. Chapter 12 Solutions
15.13. Chapter 13 Solutions

Doug Curtis is a specialist in macroeconomics. He is the author of numerous research papers on fiscal policy, monetary policy, and economic growth and structural change. He has also prepared research reports for Canadian industry and government agencies and authored numerous working papers. He completed his PhD at McGill University, and has held visiting appointments at the University of Cambridge and the University of York in the United Kingdom. His current research interests are monetary and fiscal policy rules, and the relationship between economic growth and structural change. He is Professor Emeritus of Economics at Trent University in Peterborough, Ontario, and also held an appointment as Sessional Adjunct Professor in the Department of Economics at Queen’s University in Kingston, Ontario from 2003 until 2013.

Ian Irvine is a specialist in microeconomics, public economics, economic inequality and health economics. He is the author of numerous research papers in these fields. He completed his PhD at the University of Western Ontario, has been a visitor at the London School of Economics, the University of Sydney, the University of Colorado, University College Dublin and the Economic and Social Research Institute. His current research interests are in tobacco use and taxation, and Canada’s Employment Insurance and Welfare systems. He has done numerous studies for the Government of Canada, and is currently a Professor of Economics at Concordia University in Montreal.

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