Modern Principles: Macroeconomics & Study Guide

Business & Money

Cowen, Tyler

Tabarrock

Economics

Worth Publishers

From the authors:See the Invisible Hand. Understand Your World. That's the tagline of Modern Principles and our teaching philosophy. Nobel laureate Vernon Smith put it this way: At the heart of economics is a scientific mystery… a scientific mystery as deep, fundamental and inspiring as that of the expanding universe or the forces that bind matter… How is order produced from freedom of choice? We want students to be inspired by this mystery and by how economists have begun to solve it. Thus, we show how markets interconnect and respond in surprising ways to changes in resources and preferences. Consider, for example, how markets respond to a reduction in the supply of oil. Of course, the price of oil increases giving consumers an incentive to use less and suppliers an incentive to discover more. But an increase in the price of oil also encourages Brazilian sugar cane farmers to devote more of their production to ethanol and less to sugar thereby driving up the price of sugar. An increase in the price of sugar means a reduction in the quantity of candy demanded. So one way the market responds to a reduction in the supply of oil is by encouraging consumers to eat less candy! In analyses like this, we teach students to see the invisible hand and in so doing to understand their world. Similarly, we offer a unique and simple proof of the amazing invisible hand theorem that without any central direction competitive markets allocate production across firms in a way that minimizes aggregate costs! To understand their world students must understand when self-interest promotes the social interest and when it does not. Thus, Modern Principles has in-depth analyses of externalities, public goods, and ethical issues with market incomes and trade. Moreover, we always discuss economic theory in the context of real world problems such as the decline of the ocean fisheries, climate change, and the shortage of human organs for transplant.

Modern Principles of Economics (Loose Leaf)

From the authors: Modern. Simpler. These were our goals. We knew that to reflect modern macroeconomics we had to cover the Solow Model and the economics of ideas, Real Business Cycles, and New Keynesian economics. While most texts now cover the rudiments of economic growth, the importance of ideas is rarely even mentioned. Similarly, other texts do not offer a balanced treatment of Real Business Cycle theory and New Keynesian theory, instead favoring one theory and relegating the other to a few pages that are poorly integrated with the overall macro model. We also knew that our efforts to reflect modern macroeconomics would be wasted if we reached only a small percentage of the students. We had to make the material simpler, more compelling, and more intuitive. By boiling the Solow model down to its essence and by providing multiple paths through the material, we have made it accessible to all principles students. Our modern approach to business fluctuations is also simpler and yet more advanced at the same time. It is simpler because we model business fluctuations as fluctuations in the growth rate of output, rather than in the level of output. That creates a natural progression from growth theory to business fluctuations. It is simpler because we develop our balanced approach to Real Business Cycles and New Keynesian economics within a single, unified dynamic AD-AS model. And no other textbook offers the same depth of analysis of monetary and fiscal policy in response to both real and nominal shocks. That's why we call our text Modern Principles: Macroeconomics. We have taken recent advances in how economists think and describe macroeconomics and we have integrated them throughout the text. Growth theory is given full treatment and it is integrated with our dynamic macroeconomic model. Insights from Real Business Cycle theory and New Keynesian theory appear early in the text, not tacked on at the end as an afterthought. We are certain you will see that this text provides the best coverage of the new principles that macroeconomists use today.

Loose-leaf Version for Modern Principles of Microeconomics

Loose-leaf Version for Modern Principles of Economics

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