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THE MARKETING RESEARCH PROJECT MARKET SEGMENTATION AND POSITIONING STUDIES CHOOSING A TOPIC AND WORKING WITH A CLIEN THE RESEARCH PROPOSAL QUESTIONNAIRE DESIGN SAMPLING AND SAMPLE SIZE DETERMINATION DATA COLLECTION AND TABULATION CODING SHEET FOR OPEN ENDED QUESTIONS SPSSX PROGRAMMING DATA ANALYSIS Running SAS Procedures General Flow of Data Analysis The FREQUENCIES Procedure - One-way Distributions The MEANS Procedure - Simple Means The FREQUENCIES Procedure - Cross-tabulation The MEANS Procedure- Group Variables Simplifying Cross-tabulation Tables THE RESEARCH REPORT

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CHART OF ACCOUNT CUSTOMER AND VENDOR LIST KEY DETAILS TO REMEMBER AS JOU JOURNALIZE TRANSACTION BOOTS THE DISK AND ENTER THE DATA.TRANSACTION FOR THE WEEK OF JUNE 3-8 ,1991CHECK IT OUT BLOCK ERROR CORRECTION.TRANSACTION FOR THE WEEK OF JUNE 10-15,1991 CHECK IT OUT BLOCK PRINT LIST.MID-PROJECT EVALUATION. TRANSACTION FOR THE WEEK OF JUNE 17-22,1991 CHECK IT OUT BLOCK. TRANSACTION FOR THE WEEK OF JUNE 24-29,1991 CHECK IT OUT BLOCK. BANK RECONCILIATION. ADJUSTING ENTRIES AND CLOSING THE BOOKS OPTION ONE-THE GRANITE BAY ACCOUNTING SYSTEM. OPTION TWO-THE LOTUS CONNECTION FINAL EVALUATION

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THE NATURE OF ETHICS IN MANAGEMENT Five moral problems encountered by members of one BBA Class Five moral problems encountered by members of one MBA Class The good life at RJR Nabisco MANAGERIAL ETHICS AND MICROECONOMIC THEORY When is it permissible to pay a bribe Financial compensations for the victims of Bhopal The leveraged buyout of RJR Nabisco MANAGERIAL ETHICS AND THE RULE OF LAW When is it permissible to break the law? Susan Saphiro Rigths of the corporate stakeholders MANAGERIAL ETHICS AND NORMATIVE PHILOSOPHY Five moral problems for resolution Tuna, Dolphins, and H.J.Heinz The parable of the Sadhu MANAGERIAL ETHICS AND INDIVIDUAL DECISIONS George Kacmarek Sarah Goodwin Roger Worsham MANAGERIAL ETHICS AND ORGANIZATIONAL DESIGN Three companies in need of moral direction Code of ethics for a school of business admnistration The shortest case in any BBA or MBA Program

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Entry. Cost Behaviors. Direct Costing (CVP Analysis) Budgeting. Product Mix. Job-Order Costing Process Costing. Standard Costing. Variance Analysis Make-or-Buy Decisions. Pricing Decision: Special Order Equipment Replacement Decision. Plant Expansion Decision Effects of Taxes on Decisions. Cash-Flow Analysis Database Tutorial. Spreadsheet and Charting Tutorial

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The Field of Marketing Careers in Marketing The Marketing Environment Marketing Information Systems and Marketing Research Market Segmentation and Demographics Consumer Buying Behavior Business Market Product Planning and Development Product-Mix Strategies Price Determination Brands, Packaging, and Other Product Features Financial Accounting in Marketing Pricing Strategies and Policies Managing Channels of Distribution Wholesaling: Markets and Institutions The Promotional Program Retailing: Markets and Institutions Management of Physical Distribution Management of Personal Selling Relations, and Publicity Marketing of Services International Marketing Management of Advertising, Sales Promotion, Public Marketing in Nonprofit Organizations Marketing Planning and Forecasting Marketing: Appraisal and Prospects Marketing Implementation and Performance Evaluation The Field of Marketing Nature and Scope of Marketing Evolution of Marketing The Marketing Concept The Management Process in Marketing Importance of Marketing AN INTERNATIONAL PERSPECTIVE: How do companies achieve success in foreign markets? Careers in Marketing Choosing a Career What Are the Jobs? Where Are the Jobs? How Do You Get a Job? The Marketing Environment External Macroenvironment AN INTERNATIONAL PERSPECTIVE: The greening of international markets in Europe External Microenvironment Organization's Internal Environment Marketing Information Systems and Marketing Research What Is a Marketing Information System? Scope of Marketing Research Activities Procedure Used in Marketing Research AN INTERNATIONAL PERSPECTIVE: Who Does Marketing Research? Status of Marketing Research What's different about marketing research in Asia? Sierra National Bank Harley-Davidson PART TWO: TARGET MARKETS Selecting a Target Market Market Segmentation and Demographics Nature of Market Segmentation Bases for Consumer Market Segmentation Target-Market Strategies Bases for SegmentationUltimate Consumers and Industrial Users Bases for Business Market Segmentation AN INTERNATIONAL PERSPECTIVE: Market segmentation-a necessary strategy in Europe Consumer Buying Behavior Decision Making as Problem Solving Information and Purchase Decisions Social and Group Forces AN INTERNATIONAL PERSPECTIVE: Cultural and subcultural differences create headaches for marketers in the European community Psychological Factors Situational Influence The Business Market Nature of the Business Market AN INTERNATIONAL PERSPECTIVE: Characteristics of Business Market Demand 144 Determinants of Business Market Demand Business Buying Behavior Business markets are big business internationally 4. Nike, Inc. 5. Parker Pen Company 6. Draper Furniture PART THREE: THEPRODucT The Meaning of Product Product Planning and Development Classifications of Products Importance of Product Innovation Development of New Products AN INTERNATIONAL PERsPECTIVE: New-product development for international markets New-Product Adoption and Diffusion Processes Organizing for Product Innovation Product-Mix Strategies Product Mix and Product Line Major Product-Mix Strategies AN INTERNATIONAL PERSPECTIVE: Product strategies for international markets The Product Life Cycle Planned Obsolescence and Fashion Brands, Packaging, and Other Product Features AN INTERNATIONAL PERSPECTIVE: Strategic branding for international marketing 217 Packaging Other Image-Building Features The Gillette Sensor Razor American Express Company Murata Business Systems THE PRICE Price Determination Meaning of Price Importance of Price Pricing Objectives Factors Influencing Price Determination Cost-Plus Pricing Break-Even Analysis AN INTERNATIONAL PERSPECTIVE: Pricing for export marketing Prices Based on Marginal Analysis Prices Set in Relation to Market Alone Financial Accounting in Marketing The Operating Statement Major Sections Pricing Strategies and Policies Geographic Pricing Strategies Skimming and Penetration Pricing AN INTERNATIONAL PERSPECTIVE: Is a market-skimming strategy appropriate here? One-Price and Flexible-Price Resale Price Maintenance Leader Pricing and Unfair-Practices Acts Odd Pricing Price Versus Nonprice Competition Ponderosa Video Company Winkleman Manufacturing Company Managing Channels of Distribution Middlemen and Distribution Channels Designing Distribution Channels Selecting the Type of Channel Determining Intensity of Distribution AN INTERNATIONAL PERSPECTIVE: companies penetrate the Japanese distribution system? Legal Considerations in Managing Channels Wholesaling: Markets and Institutions Nature and Importance of Wholesaling Profile of Wholesaling Middlemen Merchant Wholesalers Agent Wholesaling Middlemen Wholesaling Challenges and Opportunities AN INTERNATIONAL PERSPECTIVE: Why do gray markets give some producers and middlemen gray Retailing: Markets and Institutions Nature and Importance of Retailing Retailers Classified by Form of Ownership Retailers Classified by Marketing Strategies Nonstore Retailing Retailing Management Trends in Retailing Management of Physical Distribution Importance of Physical Distribution Management 382 Total-System Major Tasks in Physical Distribution Management AN INTERNATIONAL PERSPECTIVE: Competition in global air express package delivery The Future in Physical Diebold Equipment Company Pesco Fastener Corporation PROMOTION The Promotional Program Meaning and Importance of Promotion AN INTERNATIONAL PERSPECTIVE: Will sports open the door to worldwide promotions? The Communication Process Determining the Promotional Mix Determining the Promotional Budget The Campaign Concept Regulation of Promotional Activities Management of Personal Selling The Nature of Personal Selling The Personal Selling Process Sales-Force Management Operating a Sales Force AN INTERNATIONAL PERSPECTIVE: Recruiting sales people overseas-the challenge for multinationals Management of Advertising, Sales Promotion, Public Relat and Publicity Nature of Advertising AN INTERNATIONAL PERSPECTIVE: Who spends the most on advertising outside the United States? Objectives of Advertising Developing an Advertising Campaign Evaluating the Advertising Effort Organizing for Advertising Nature and Importance of Sales Promotion 466 Strategic Management of Sales Promotion Imperial Grandfather Clock Company Eagle Steel Supply Company Nature and Importance of Services The Marketing Concept and Services Marketing Strategic Planning for Services Marketing Marketing in Nonprofit Organizations Nature and Scope of Nonprofit Marketing AN INTERNATIONAL PERSPECTIVE: Nonprofit organizations also engage in international marketing Nonprofits' Attitude toward Marketing Developing a Strategic Program for Nonprofit Marketing Implementation of Marketing International Marketing Domestic Marketing and International Marketing Importance of International Marketing Structures for Operating in Foreign Markets A Strategic Program for International Marketing Sandy Point Yacht Club Vancouver Symphony Orchestra Cooper Supply Company Marketing Planning and Forecasting Nature and Scope of Planning Strategic Company Planning Marketing Planning AN INTERNATIONAL PERSPECTIVE: What will European markets look like after EC92? Fundamentals of Forecasting Market Demand Summary Marketing Implementation and Performance Evaluation Implementation in Marketing Management AN INTERNATIONAL PERSPECTIVE: International sales organization Evaluating Marketing Performance Sales Volume Analysis Marketing: Appraisal and Prospects Evaluating the Marketing System Criticisms of Marketing Responses to Marketing Problems Ethics and Marketing Prospects for the Future AN INTERNATIONAL PERSPECTIVE: AT&T has redefined the idea of calling home

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The Field of Marketing Careers in Marketing The Marketing Environment Marketing Information Systems and Marketing Research Market Segmentation and Demographics Consumer Buying Behavior Business Market Product Planning and Development Product-Mix Strategies Price Determination Brands, Packaging, and Other Product Features Financial Accounting in Marketing Pricing Strategies and Policies Managing Channels of Distribution Wholesaling: Markets and Institutions The Promotional Program Retailing: Markets and Institutions Management of Physical Distribution Management of Personal Selling Relations, and Publicity Marketing of Services International Marketing Management of Advertising, Sales Promotion, Public Marketing in Nonprofit Organizations Marketing Planning and Forecasting Marketing: Appraisal and Prospects Marketing Implementation and Performance Evaluation The Field of Marketing Nature and Scope of Marketing Evolution of Marketing The Marketing Concept The Management Process in Marketing Importance of Marketing AN INTERNATIONAL PERSPECTIVE: How do companies achieve success in foreign markets? Careers in Marketing Choosing a Career What Are the Jobs? Where Are the Jobs? How Do You Get a Job? The Marketing Environment External Macroenvironment AN INTERNATIONAL PERSPECTIVE: The greening of international markets in Europe External Microenvironment Organization's Internal Environment Marketing Information Systems and Marketing Research What Is a Marketing Information System? Scope of Marketing Research Activities Procedure Used in Marketing Research AN INTERNATIONAL PERSPECTIVE: Who Does Marketing Research? Status of Marketing Research What's different about marketing research in Asia? Sierra National Bank Harley-Davidson PART TWO: TARGET MARKETS Selecting a Target Market Market Segmentation and Demographics Nature of Market Segmentation Bases for Consumer Market Segmentation Target-Market Strategies Bases for SegmentationUltimate Consumers and Industrial Users Bases for Business Market Segmentation AN INTERNATIONAL PERSPECTIVE: Market segmentation-a necessary strategy in Europe Consumer Buying Behavior Decision Making as Problem Solving Information and Purchase Decisions Social and Group Forces AN INTERNATIONAL PERSPECTIVE: Cultural and subcultural differences create headaches for marketers in the European community Psychological Factors Situational Influence The Business Market Nature of the Business Market AN INTERNATIONAL PERSPECTIVE: Characteristics of Business Market Demand 144 Determinants of Business Market Demand Business Buying Behavior Business markets are big business internationally 4. Nike, Inc. 5. Parker Pen Company 6. Draper Furniture PART THREE: THEPRODucT The Meaning of Product Product Planning and Development Classifications of Products Importance of Product Innovation Development of New Products AN INTERNATIONAL PERsPECTIVE: New-product development for international markets New-Product Adoption and Diffusion Processes Organizing for Product Innovation Product-Mix Strategies Product Mix and Product Line Major Product-Mix Strategies AN INTERNATIONAL PERSPECTIVE: Product strategies for international markets The Product Life Cycle Planned Obsolescence and Fashion Brands, Packaging, and Other Product Features AN INTERNATIONAL PERSPECTIVE: Strategic branding for international marketing 217 Packaging Other Image-Building Features The Gillette Sensor Razor American Express Company Murata Business Systems THE PRICE Price Determination Meaning of Price Importance of Price Pricing Objectives Factors Influencing Price Determination Cost-Plus Pricing Break-Even Analysis AN INTERNATIONAL PERSPECTIVE: Pricing for export marketing Prices Based on Marginal Analysis Prices Set in Relation to Market Alone Financial Accounting in Marketing The Operating Statement Major Sections Pricing Strategies and Policies Geographic Pricing Strategies Skimming and Penetration Pricing AN INTERNATIONAL PERSPECTIVE: Is a market-skimming strategy appropriate here? One-Price and Flexible-Price Resale Price Maintenance Leader Pricing and Unfair-Practices Acts Odd Pricing Price Versus Nonprice Competition Ponderosa Video Company Winkleman Manufacturing Company Managing Channels of Distribution Middlemen and Distribution Channels Designing Distribution Channels Selecting the Type of Channel Determining Intensity of Distribution AN INTERNATIONAL PERSPECTIVE: companies penetrate the Japanese distribution system? Legal Considerations in Managing Channels Wholesaling: Markets and Institutions Nature and Importance of Wholesaling Profile of Wholesaling Middlemen Merchant Wholesalers Agent Wholesaling Middlemen Wholesaling Challenges and Opportunities AN INTERNATIONAL PERSPECTIVE: Why do gray markets give some producers and middlemen gray Retailing: Markets and Institutions Nature and Importance of Retailing Retailers Classified by Form of Ownership Retailers Classified by Marketing Strategies Nonstore Retailing Retailing Management Trends in Retailing Management of Physical Distribution Importance of Physical Distribution Management 382 Total-System Major Tasks in Physical Distribution Management AN INTERNATIONAL PERSPECTIVE: Competition in global air express package delivery The Future in Physical Diebold Equipment Company Pesco Fastener Corporation PROMOTION The Promotional Program Meaning and Importance of Promotion AN INTERNATIONAL PERSPECTIVE: Will sports open the door to worldwide promotions? The Communication Process Determining the Promotional Mix Determining the Promotional Budget The Campaign Concept Regulation of Promotional Activities Management of Personal Selling The Nature of Personal Selling The Personal Selling Process Sales-Force Management Operating a Sales Force AN INTERNATIONAL PERSPECTIVE: Recruiting sales people overseas-the challenge for multinationals Management of Advertising, Sales Promotion, Public Relat and Publicity Nature of Advertising AN INTERNATIONAL PERSPECTIVE: Who spends the most on advertising outside the United States? Objectives of Advertising Developing an Advertising Campaign Evaluating the Advertising Effort Organizing for Advertising Nature and Importance of Sales Promotion 466 Strategic Management of Sales Promotion Imperial Grandfather Clock Company Eagle Steel Supply Company Nature and Importance of Services The Marketing Concept and Services Marketing Strategic Planning for Services Marketing Marketing in Nonprofit Organizations Nature and Scope of Nonprofit Marketing AN INTERNATIONAL PERSPECTIVE: Nonprofit organizations also engage in international marketing Nonprofits' Attitude toward Marketing Developing a Strategic Program for Nonprofit Marketing Implementation of Marketing International Marketing Domestic Marketing and International Marketing Importance of International Marketing Structures for Operating in Foreign Markets A Strategic Program for International Marketing Sandy Point Yacht Club Vancouver Symphony Orchestra Cooper Supply Company Marketing Planning and Forecasting Nature and Scope of Planning Strategic Company Planning Marketing Planning AN INTERNATIONAL PERSPECTIVE: What will European markets look like after EC92? Fundamentals of Forecasting Market Demand Summary Marketing Implementation and Performance Evaluation Implementation in Marketing Management AN INTERNATIONAL PERSPECTIVE: International sales organization Evaluating Marketing Performance Sales Volume Analysis Marketing: Appraisal and Prospects Evaluating the Marketing System Criticisms of Marketing Responses to Marketing Problems Ethics and Marketing Prospects for the Future AN INTERNATIONAL PERSPECTIVE: AT&T has redefined the idea of calling home

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The Field of Marketing Careers in Marketing The Marketing Environment Marketing Information Systems and Marketing Research Market Segmentation and Demographics Consumer Buying Behavior Business Market Product Planning and Development Product-Mix Strategies Price Determination Brands, Packaging, and Other Product Features Financial Accounting in Marketing Pricing Strategies and Policies Managing Channels of Distribution Wholesaling: Markets and Institutions The Promotional Program Retailing: Markets and Institutions Management of Physical Distribution Management of Personal Selling Relations, and Publicity Marketing of Services International Marketing Management of Advertising, Sales Promotion, Public Marketing in Nonprofit Organizations Marketing Planning and Forecasting Marketing: Appraisal and Prospects Marketing Implementation and Performance Evaluation The Field of Marketing Nature and Scope of Marketing Evolution of Marketing The Marketing Concept The Management Process in Marketing Importance of Marketing AN INTERNATIONAL PERSPECTIVE: How do companies achieve success in foreign markets? Careers in Marketing Choosing a Career What Are the Jobs? Where Are the Jobs? How Do You Get a Job? The Marketing Environment External Macroenvironment AN INTERNATIONAL PERSPECTIVE: The greening of international markets in Europe External Microenvironment Organization's Internal Environment Marketing Information Systems and Marketing Research What Is a Marketing Information System? Scope of Marketing Research Activities Procedure Used in Marketing Research AN INTERNATIONAL PERSPECTIVE: Who Does Marketing Research? Status of Marketing Research What's different about marketing research in Asia? Sierra National Bank Harley-Davidson PART TWO: TARGET MARKETS Selecting a Target Market Market Segmentation and Demographics Nature of Market Segmentation Bases for Consumer Market Segmentation Target-Market Strategies Bases for SegmentationUltimate Consumers and Industrial Users Bases for Business Market Segmentation AN INTERNATIONAL PERSPECTIVE: Market segmentation-a necessary strategy in Europe Consumer Buying Behavior Decision Making as Problem Solving Information and Purchase Decisions Social and Group Forces AN INTERNATIONAL PERSPECTIVE: Cultural and subcultural differences create headaches for marketers in the European community Psychological Factors Situational Influence The Business Market Nature of the Business Market AN INTERNATIONAL PERSPECTIVE: Characteristics of Business Market Demand 144 Determinants of Business Market Demand Business Buying Behavior Business markets are big business internationally 4. Nike, Inc. 5. Parker Pen Company 6. Draper Furniture PART THREE: THEPRODucT The Meaning of Product Product Planning and Development Classifications of Products Importance of Product Innovation Development of New Products AN INTERNATIONAL PERsPECTIVE: New-product development for international markets New-Product Adoption and Diffusion Processes Organizing for Product Innovation Product-Mix Strategies Product Mix and Product Line Major Product-Mix Strategies AN INTERNATIONAL PERSPECTIVE: Product strategies for international markets The Product Life Cycle Planned Obsolescence and Fashion Brands, Packaging, and Other Product Features AN INTERNATIONAL PERSPECTIVE: Strategic branding for international marketing 217 Packaging Other Image-Building Features The Gillette Sensor Razor American Express Company Murata Business Systems THE PRICE Price Determination Meaning of Price Importance of Price Pricing Objectives Factors Influencing Price Determination Cost-Plus Pricing Break-Even Analysis AN INTERNATIONAL PERSPECTIVE: Pricing for export marketing Prices Based on Marginal Analysis Prices Set in Relation to Market Alone Financial Accounting in Marketing The Operating Statement Major Sections Pricing Strategies and Policies Geographic Pricing Strategies Skimming and Penetration Pricing AN INTERNATIONAL PERSPECTIVE: Is a market-skimming strategy appropriate here? One-Price and Flexible-Price Resale Price Maintenance Leader Pricing and Unfair-Practices Acts Odd Pricing Price Versus Nonprice Competition Ponderosa Video Company Winkleman Manufacturing Company Managing Channels of Distribution Middlemen and Distribution Channels Designing Distribution Channels Selecting the Type of Channel Determining Intensity of Distribution AN INTERNATIONAL PERSPECTIVE: companies penetrate the Japanese distribution system? Legal Considerations in Managing Channels Wholesaling: Markets and Institutions Nature and Importance of Wholesaling Profile of Wholesaling Middlemen Merchant Wholesalers Agent Wholesaling Middlemen Wholesaling Challenges and Opportunities AN INTERNATIONAL PERSPECTIVE: Why do gray markets give some producers and middlemen gray Retailing: Markets and Institutions Nature and Importance of Retailing Retailers Classified by Form of Ownership Retailers Classified by Marketing Strategies Nonstore Retailing Retailing Management Trends in Retailing Management of Physical Distribution Importance of Physical Distribution Management 382 Total-System Major Tasks in Physical Distribution Management AN INTERNATIONAL PERSPECTIVE: Competition in global air express package delivery The Future in Physical Diebold Equipment Company Pesco Fastener Corporation PROMOTION The Promotional Program Meaning and Importance of Promotion AN INTERNATIONAL PERSPECTIVE: Will sports open the door to worldwide promotions? The Communication Process Determining the Promotional Mix Determining the Promotional Budget The Campaign Concept Regulation of Promotional Activities Management of Personal Selling The Nature of Personal Selling The Personal Selling Process Sales-Force Management Operating a Sales Force AN INTERNATIONAL PERSPECTIVE: Recruiting sales people overseas-the challenge for multinationals Management of Advertising, Sales Promotion, Public Relat and Publicity Nature of Advertising AN INTERNATIONAL PERSPECTIVE: Who spends the most on advertising outside the United States? Objectives of Advertising Developing an Advertising Campaign Evaluating the Advertising Effort Organizing for Advertising Nature and Importance of Sales Promotion 466 Strategic Management of Sales Promotion Imperial Grandfather Clock Company Eagle Steel Supply Company Nature and Importance of Services The Marketing Concept and Services Marketing Strategic Planning for Services Marketing Marketing in Nonprofit Organizations Nature and Scope of Nonprofit Marketing AN INTERNATIONAL PERSPECTIVE: Nonprofit organizations also engage in international marketing Nonprofits' Attitude toward Marketing Developing a Strategic Program for Nonprofit Marketing Implementation of Marketing International Marketing Domestic Marketing and International Marketing Importance of International Marketing Structures for Operating in Foreign Markets A Strategic Program for International Marketing Sandy Point Yacht Club Vancouver Symphony Orchestra Cooper Supply Company Marketing Planning and Forecasting Nature and Scope of Planning Strategic Company Planning Marketing Planning AN INTERNATIONAL PERSPECTIVE: What will European markets look like after EC92? Fundamentals of Forecasting Market Demand Summary Marketing Implementation and Performance Evaluation Implementation in Marketing Management AN INTERNATIONAL PERSPECTIVE: International sales organization Evaluating Marketing Performance Sales Volume Analysis Marketing: Appraisal and Prospects Evaluating the Marketing System Criticisms of Marketing Responses to Marketing Problems Ethics and Marketing Prospects for the Future AN INTERNATIONAL PERSPECTIVE: AT&T has redefined the idea of calling home

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Accounting: A Dynamic Discipline The Accounting Equation and the Three Fundamental Financial Statements The Accounting Cycle Accruing Revenues and Expenses Measuring and Reporting Revenues Valuation of Assets: Cash and Marketable Securities Receivables and Payables Inventories and Cost of Goods Sold Long-Lived Assets and the Allocation of Their Costs Liabilities and Related Expenses Transactions Between a Firm and Its Owners Special Problems of Measuring and Reporting Dividends and Earnings Intercorporate Investments and Earnings Statement of Cash Flows Accounting for Changes in Prices Financial Reporting and Analysis in Perspective Glossary

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Accounting: A Dynamic Discipline The Accounting Equation and the Three Fundamental Financial Statements The Accounting Cycle Accruing Revenues and Expenses Measuring and Reporting Revenues Valuation of Assets: Cash and Marketable Securities Receivables and Payables Inventories and Cost of Goods Sold Long-Lived Assets and the Allocation of Their Costs Liabilities and Related Expenses Transactions Between a Firm and Its Owners Special Problems of Measuring and Reporting Dividends and Earnings Intercorporate Investments and Earnings Statement of Cash Flows Accounting for Changes in Prices Financial Reporting and Analysis in Perspective Glossary

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Concepts and Principles of Accounting Accounting for Service and Merchandising Enterprises The Matching Process and the Adjusting Process Periodic Reporting Accounting Systems and Cash Receivables and Temporary Investments Inventories . Plant Assets and Intangible Assets Payroll, Notes Payable, and Other Current Liabilities Forms of Business Organization Stockholders' Equity, Earnings, and Dividends Long-Term Liabilities and Investments in Bonds Investments in Stocks; Consolidated Statements; International Operations Statement of Cash Flows. Financial Statement Analysis and Annual Reports Accounting for Not-for-Profit Organizations

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Public relation writing : A different breed of cat Thinking about the writing Problem The plan is nothing : planning is everything Gathering secondary information interviewing for public relation writing Writing the public relation message Basics of Effective public relations writing Writing Print Messages Writing for sound and sight Organizational communication : strategies for internal audiences Managing public relations writing Programs Testing your writing effectiveness Surveys and Experiments in public relation writing Legal and Ethical implication of public relations writing

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Cost Terms, Cost Behavior, and Systems Design Cost Terms, Concepts, and Classifications Systems Design: Job-Order Costing Systems Design: Process Costing Cost Behavior: Analysis and Use Planning and Control Cost-Volume-Profit Relationships Segmented Reporting and the Contribution Approach to Costing Standard Costs and JIT/FMS Performance Measures Flexible Budgets and Overhead Analysis Control of Decentralized Operations Cost Terms, Cost Behavior, and Systems Design 2Cost Terms, Concepts, and Classifications Systems Design: Job-Order Costing Systems Design: Process Costing Cost Behavior: Analysis and Use THE CENTRAL THEME Planning and Control Cost-Volume-Profit Relationships Segmented Reporting and the Contribution Approach to Costing Profit Planning Standard Costs and JIT/FMS Performance Measures Flexible Budgets and Overhead Analysis Control of Decentralized Operations Using Cost Data in Decision Making Pricing of Products and Services Relevant Costs for Decision Making Capital Budgeting Decisions Further Aspects of Investment Decisions 16 Service Department Cost Allocations 17 "How Well Am I Doing?" "How Well Am I Doing?" SELECTED TOPICS FOR FURTHER STUDY Statement of Cash Flows Financial Statement Analysis 1 Managerial Accounting-A Perspective Organizations and Their Objectives Setting Objectives Strategic Planning The Work of Management The Planning and Control Cycle Organizational Structure Decentralization Line and Staff Relationships The Controller Basic Similarities among Organizations The Manager's Need for Information Accounting Information Information Must Be in Summary Flexible Manufacturing Systems and Costs for Planning, Control, and Decision Making Variable and Fixed Costs Direct and Indirect Costs Controllable and Noncontrollable Differential Costs Opportunity Costs 3 Systems Design: Job-Order Costing The Need for Unit Cost Data Types of Costing Systems Process Costing 66 Job-Order Costing Summary of Costing Methods Job-Order Costing-An Measuring Direct Materials Job Cost Sheet Measuring Direct Labor Cost Application of Manufacturing Overhead What Drives Overhead Cost? Computation of Unit Costs Summary of Document Flows Job-Order Costing-The Flow of The Purchase and Issue of Materials Labor Cost Manufacturing Overhead Costs The Application of Manufacturing Nonmanufacturing Costs Cost of Goods Manufactured Cost of Goods Sold Summary of Cost Flows 82 Problems of Overhead Inventory Purchases-Merchandising The Direct Materials Budget 315 The Direct Labor Budget The Manufacturing Overhead Ending Finished Goods Inventory The Selling and Administrative Expense Budget The Cash Budget The Budgeted Income The Budgeted Balance Sheet 9 Standard Costs and JIT/FMS Performanc Standard Costs-Management by Who Uses Standard Costs? Setting Standard Costs Ideal versus Practical Setting Direct Materials Standards Setting Direct Labor Standards Setting Variable Overhead Standards Are Standards the Same as Budgets? A General Model for Variance Analysis Price and Quantity Variances Using Standard Costs-Direct Material Variances Materials Price Variance-A Closer Materials Quantity Variance-A Using Standard Costs-Direct Labor Variances Labor Rate Variance-A Closer Labor Efficiency Variance-A Closer Look Using Standard Costs-Variable Overhead Variances 10 Flexible Budgets and Overhead Analysis Flexible Budgets 409 Characteristics of a Flexible Expanding the Budgeted Income JIT Purchasing Zero-Base Budgeting The Need for Further Budgeting Key Terms for Review and the Reorder Point Appendix Economic Order Quantity Key Terms for Review ce Measures Overhead Variances-A Closer Variance Analysis and Management by Exception Performance Measures in an Automated Environment Standard Costs and Automation New Performance Measures Quality Control Measures Material Control Measures Inventory Control Measures Machine Performance Measures Delivery Performance Measures Use in a Nonautomated Environment Review Problem on Standard Key Terms for Review Appendix General Ledger Entries to Record Variances Deficiencies of the Static Budget How the Flexible Budget

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Contents Brief PART IV BUSINESS CYCLES Chapter9 Business Cycles 321 Chapter 10 The Labor Market Chapter 11 Classical Business Cycle Analysis: Market-Clearing Macroeconomics 397 PART I INTRODUCTION Chapter 1 Introduction to Macroeconomics 8 Chapter2 The Measurement and Structure of the National Eeonomy 26 Chapter 12 Keynesianism: The Macroeconomics of Wage and Price Rigidity 447 Chapter 13 Business Cycles and Macroeconomic Policy in the Open Economy 498 PART II A BASIC FRAMEWORK FOR MACROECONOMIC ANALYSIS: THE CLASSICAL IS-LM MODEL Chapter 3 The Real Economy: Output, Employment, and Investment 65 PART V MACROECONOMIC POLICY: A DEEPER LOOK Chapter4 The Asset Market, Money, and Prices Chapter 14 Unemployment and Inflation 553 Chapter 15 Monetary Policy and the Federal Reserve 598 PART III SAVING, INVESTMENT, AND GROWTH Chapter 16 Government Spending and Its Financing 642 Chapter 5 Consumption and Saving: The Present Versus the Future 153 684 Appendix A: Some Useful Analytical Chapter 17 Financial Markets and the Macroeconomy Tools 721 Chapter 6 Saving, Investment, and the Real Interest Rate 189 Glossary 728 Subject Index 742 Name Index 740 Chapter 7 Saving and Investment Chapter 8 Long-Run Economic in the Open Economy 236 Growth 281 Contents CHAPTER 2 THE MEASUREMENT AND STRUCTURE OF THE NATIONAL ECONOMY 26 Preface vii 2.1 National Income Accounting: The Measurement of Production, Income, and Expenditure 26 Why the Three Approaches Are Equivalent 28 In Touch with the Macroeconomy: Part I Introduction The National Income and Product Accounts 29 2.2 Gross National Product 30 CHAPTER 1 INTRODUCTION TO MACROECONOMICS 3 The Product Approach to Measuring GNP 30 The Expenditure Approach to Measuring GNP 33 The Income Approach to Measuring GNP 35 Box 2.1: Natural Resources, the Environment, and the National Income Accounts 37 1.1 What Macroeconomics Is About 3 Long-Run Economic Growth Business Cycles 6 Unemployment 7 Inflation 8 The Circular Flow of Product, Expenditure, and Income 38 The International Economy 9 Macroeconomic Policy 10 Aggregation 2.3 Saving and Wealth 41 Measures of Aggregate Saving 42 Application: The Uses of Saving and the The Uses of Private Saving 44 1.2 What Macroeconomists Do Macroeconomic Forecasting 13 Macroeconomic Analysis 13 Macroeconomic Research Data Development 15 Government Budget Deficit in the 1980s 46 Application: An International Comparison of Relating Saving and Wealth 47 National Saving and Investment Rates 48 Macroeconomic Research: Learning About the Economy 16 Box 1.1: Developing and Testing an Economic Theory 18 2.4 Price Indexes, Inflation, and Interest Rates 50 Real Versus Nominal GNP Why Macroeconomists Disagree 19 Classicals Versus Keynesians Price Indexes and Inflation Interest Rates 55 Macroeconomics:A Unified Approach 22 5 Chapter Summary 23 2.5 Chapter Summary 58 Key Terms 24 60 Key Terms 59 Key Equations Review Questions 60 Numerical Problems 61 Analytical Problems 62 Review Questions 24 Numerical Problems 25 Analytical Problems 25 CONTENTS THE ASSET MARKET, MONEY, AND CHAPTER 4 PRICES Part II A Basie Framework for Macroeconomie Analysis: The Classical /SL W Model 4.1 What Is Money? Box 4.1: Money in a Prisoner-of-War Camp 112 The Monetary Measuring Money: Aggregates 114 The Functions of Money The Money Supply CHAPTER 3 THE REAL ECONOMY: OUTPUT, EMPLOYMENT, AND INVESTMENT 65 In Touch with the Macroeconomy: 3.1 The IS-LM Model: An Overview 66 3.2 How Much Does the Economy Produce? The Production Function 68 The Monetary Aggregates 117 4.2 Portfolio Allocation and the Demand for Expected Return Assets Liquidity 118 Asset Demands Risk 118 Application: The Production Function of the U.S. Economy and U.S. Productivity Growth 69 The Shape of the Production Function 70 Supply Shocks 75 3.3 Determining Output and Employment: The Labor Labor Demand Labor Supply 77 Market 76 4.3 The Demand for Money 119 The Price Level 120 Interest Rates 120 Real Income Labor Market Equilibrium 78 Application: Output, Employment, and the Real Wage During Oil Price Shocks 82 Application: Financial Innovation and the "Case of Other Factors Affecting Money Demand The Money Demand Function the Missing Money" 124 121 3.4 Goods Market Equilibrium: Balancing Saving and Investment 84 Velocity 125 Determinants of Desired National Saving 85 Determinants of Desired Investment The Saving-Investment Diagram 89 4.4 Asset Market Equilibrium and the LM Curve 126 Application: The Effects of Wars on Investment and the Real Interest Rate 93 Asset Market Equilibrium: An Aggregation Assumption 127 3.5 The IS Curve and the Full-Employment Line 94 The IS Curve 94 The LM Curve: Money Supplied Equals Money Shifts of the LM Curve Demanded 4.5 Money and Prices in the Complete IS-LM Model 135 Equilibrium in the Goods and Labor Markets 96 Application: 0il Price Shocks and Investment 102 The Full-Employment (FE) Line 96 3.6 Chapter Summary 103 Application: Inflation in Low-Money-Growth and The Effects of a Monetary Expansion 136 High-Money-Growth Countries 141 Key Diagram # 1: The Production Function 104 Key Diagram # 2: The Saving-Investment Application: Oil Price Shocks and Inflation 143 Supply Shocks and the Price Level 142 4.6 Chapter Summary 145 Diagram 106 Key Terms 108 Key Equations 108 Review Questions 108 Numerical Problems 109 Analytical Problems 109 Key Diagram # 3: The IS-LM Diagram 146 Key Terms 148 Key Equations 148 Review Questions Numerical Problems 148 Analytical Problems 149 CONTKNTS CHAPTER 6 SAVING, INVESTMENT, AND THE REAL INTEREST RATE IN9 Part lil Saving, Investment, aud irowth The Real Interest Rate and Saving in the Two- Period Model: Prudence Aguin 190 The Substitution Effect and the Income Effect 192 6.1 The Real Interest Rate and the Saving IDeciaion 190 Aggregate Saving and the Real Interest Rate: Evidence 198 0HAPTER 5 (ONS'MPTON AND SAVING: THE PRESENT VERSS THE FUTURE 159 A1 The Fonward-Looking Consumer 154 How Much Can the Consumer Aford? The Budget Constraint 155 Present Values In Touch with the Macroeconomy: Interest Rates 199 Box 5.1: The Winning Ticket in a Million-Dollar Present Value and the Budget Constraint Lottery 6.2 Tax Incentives for Saving Shifting the Budget Line 162 Application: Tax Policy and the Divergence of Canadian and U.S. Private Saving 201 Choosing How Much to Consume and Save: The Consumer's Preferences 163 6.3 The Real Interest Rate, The User Cost of Capital, and Investment 202 6.2 The Effects of Changes in Income and Wealth on Consumption and Saving 166 The Effects of Changes in Income 167 The Desired Capital Stock 203 The Political Environment: Sociopolitical Should the Tax Code Permit Individual Retirement Accounts? 204 The Policy Debate: Instability and the Rate of Saving 168 Permanent Versus Temporary Income Changes: The Permanent Income Theory 170 Application: The Effective Tax Rates on Equipment Changes in the Desired Capital Stock 209 and Structures 212 From the Desired Capital Stock to Investment 214 The Index of Consumer Sentiment 171 Application: Aggregate Consumption During Recessions 172 n Touch with the Macroeconomy: Application: Does the United States Overinvest in Investment in Inventories and Housing 216 Housing? 217 Box 5.2: Permanent Versus Temporary Income Shocks: The Effects of Unemployment on The Effects of Changes in Wealth Workers' Consumption 174 Application: International Differences in the User The Saving-Investment Diagram 217 Cost of Capital 219 Income Effects 174 Application: The 1987 Stock Market Crash and Consumer Spending 175 6.4 The Budget Deficit, National Saving, and the Real Interest Rate 221 5.3 Consumption and Saving over Many Periods: The Life Cycle Model 176 The Government Budget Constraint 221 A Deficit Due to Increased Government Purchases 222 The Life Cycle Model: An Example 178 Bequests and Saving 178 A Deficit Due to a Tax Cut: The Ricardian Equivalence Proposition 224 Application: Why Do the Japanese Save So Much? 179 Fiscal Policy and the IS Curve 227 6.5 Chapter Summary 229 Key Diagram # 4: The Consumer's Budget Line 230 Terms 232 Key Equations 232 Review Questions 232 Numerical Problems 233 Analytical Problems 234 5.4 Borrowing Constraints and Consumption 180 Application: Home Equity Lines and Household Saving 183 6.5 Chapter Summary 184 Key Terms 186 Key Equations 186 Review Questions 186 Numerical Problems Analytical Problems CONTENTS CHAPTER 8 LONG-RUN BCONOMIC GROWTH 281 8.1 The Sourees of Economic Growth 282 Growth Accounting 283 CHAPTERT SAVTNG AND INVESTMENT IN THE OPEN ECONOMY 236 Application: The Post-1973 Growth Slowdown Box 8.1: The Impact on Productivity of the Decline in Test Scores 290 7.1 Balance of Payments Accounting 237 The Current Account The Capital Account 239 In Touch with the Macroeconomy: The Fundamental Determinants of Long-Run Living Sandards 299 8.2 Growth Dynamies: The Solow Model 291 Setup of the Solow Model 291 The Balance of Payments Aceounts 241 The Relationship Between the Current Account and the Capital Account 241 Application: Do Economies Converge? 305 8.3 Government Policies to Raise Long-Run Living Standards 307 Net Foreign Assets and the Balance of Payments Accounts 243 Box 7.1: Does Mars Have a Current Account Surplus? 244 Policies to Affect the Saving Rate 307 Policies to Raise the Rate of Productivity Application: Is the United States the World's Largest International Debtor? 245 Growth The Institutional Framework: Market Versus Plan 309 The Policy Debate: 7.2 Goods Market Equilibrium in an Open Economy 246 7.3 Saving and Investment in a Small Open Economy Should the United Sates Havea "High-Tech" Industrial Policy? 310 The Effects of Economic Shocks in a Small Open Economy 251 The Political Environment: Application: The LDC Debt Crisis 254 Economic Growth and Democracy 312 Box 8.2: From Plan to Market in Eastern Europe 314 7.4 Saving and Investment in Large Open Economies 257 The Political Environment: 8.4 Chapter Summary 315 Key Terms 316 Key Equations 316 Review Questions 316 Numerical Problems 317 Analytical Problems 317 Application: German Reanification and the World Default and Sovereign Debt 258 Real Interest Rate 260 Application: How Well Does the International Capital Market Operate? 263 The Critical Factor: The Response of National 7.5 Fiscal Policy and the Current Account 266 Saving 266 The Government Budget Deficit and National Saving 269 Application: The Twin Deficits of the 1980s 270 7.6 Chapter Summary 272 Key Diagram #5: National Saving and Investment in a Small Open Economy 274 Key Diagram # 6: National Saving and Investment in Large Open Economies 276 Key Terms 278 Key Equations 278 Review Questions 278 Numerical Problems 279 Analytical Problems 280 CONTENTS CHAPTER 10 THE LABOR MARKET 353 Part II Business Cycles 10.1 The Demand for Labor: How Many Workers Should a Firm Hire? 354 CHAPTER 9 BUSINESS CYCLES 321 The Marginal Product of Labor and Labor Demand: An Example 354 Q1 What Is a Business Cycle? 322 The Marginal Product of Labor and the Labor Demand Curve 359 Factors That Shift the Labor Demand Curve 361 Aggregate Labor Demand 362 Box 9.1: Temporary and Permanent Components of Recessions 324 10.2 The Supply of Labor: The Income-Leisure Trade-Off 363 92 The American Business Cycle: The Historical Record 326 The Pre-World War I Period 326 The Effect of the Real Wage on Labor Supply 365 Application: Weekly Hours of Work and the Wealth of Nations 368 An Example: Prudence the Golf Pro 364 Have American Business Cycles Become Less The Great Depression and World War II Postwar U.S. Business Cycles 328 Severe? 329 93 Business Cycle Facts 331 Factors That Shift the Labor Supply Curve 370 Application: Labor Supply and Tax Reform in the 1980s 375 The Labor Supply Curve 370 The Cyclical Behavior of Economic Variables: Direction and Timing 331 Production 332 Expenditure 334 Aggregate Labor Supply 376 Box 10.1: The Lafer Curve 377 Average Labor Productivity and the Real Employment and Unemployment Wage 10,3 Labor Market Equilibrium 10.4 Unemployment 381 Money Growth and Inflation 340 Financial Variables How Long Are People Unemployed? 383 Changes in Employment Status Measuring Unemployment 381 The Policy Debate: Box 9.2: The Seasonal Cycle and the Business Cycle 342 International Aspects of the Cycle 343 Should the Minimum Wage Be Increased? Why There Are Always Unemployed People 386 In Touch with the Macroeconomy: 9.4 Classical and Keynesian Approaches to Business Cyele Analysis 344 The Early Classicals and the Keynesian Revolution 345 In Touch with the Macroeconomy: Labor Market Data 387 Box 10.2: Unemployment in the Soviet Union 389 10.5 Chapter Summary 390 Key Diagram # 7: Equilibrium in the Labor Market 392 The Index of Leading Indicators The New Classical Counterrevolution 348 Keynesians and Classicals Today 349 .5 Chapter Summary 350 Key Terms 352 Key Terms 394 Key Equation 394 Review Questions 394 Review Questions 352 Analytical Problems 352 Numerical Problems 395 Analytical Problems 396 CONTENTS XxiN CHAPTER 12 KEYNESIANISM: THE MACROECONOMICS OF WAGE AND PRICR RIGIDITY CHAPTER II CLASSICAL BU'SINESS CYCLE ANALISIS: MARETCLEARING MACROECOOMlCS 397 12.1 Real-Wage Rigidity 448 Some Reasons for Real-Wage Rigidity 440 The Efficiency Wage Model 449 Box 12.1: Henry Ford's Eiiciency Wage 455 12.2 Price Stickiness 11.1 A Review of the ClaSSical IS-LM Model 398 The IS Curve: Goods Market Equilibrium 398 The LM Curve: Asset Market Equilibrium 400 The Full-Employment Line 402 General Equilibrium in the Classical IS-LM Model 402 Sources of Price Stickiness: Monopolistic Competition and Menu Costs 12.3 Monetary and Fiscal Policy in the Keynesian Monetary Policy 463 Fiscal Policy 468 Model 11.2 The Real Business Cyele Theory 403 The Recessionary Impact of an Adverse Productivity Shock 404 Business Cycle Facts Explained by the Real Business Cycle Theory 406 Application: Calibrating the Business Cycle 407 Application: The Policy Mixes of the Early 1980. and the Early 1990s 471 12.4 The Keynesian Model and the Business Cyele Macroeconomic Stabilization Facts Objections to the Real Business Cycle Theory 410 11.3 Fiscal and Monetary Policy in the Classical Fiscal Policy 414 Model 414 The Political Environment: Box l1.1: Where Do Shocks to the Macroeconomy Come From? 417 Monetary Policy 418 The Role of the Council of Economic Advisers in Formulating Economic Policy 478 Supply Shocks in the Keynesian Model 479 12.5 Objections to the Keynesian Model Monetary Nonneutrality and Reverse Causation 419 Box 12.2: How Important Is Labor Hoarding in Practice? 483 Box 11.2: Money and Economic Activity at The Nonneutrality of Money: Additional Christmas 421 Evidence 12.6 Chapter Summary 484 Key Diagram # 9: The Keynesian IS-LM Model 486 11.4 Aggregate Demand, Aggregate Supply, and the Nonneutrality of Money 422 The Aggregate Demand Curve 422 The Aggregate Supply Curve Key Diagram # 10: The Keynesian AD-AS Numerical Problems 491 Review Questions Key Equations 490 Analytical Problems 492 Model 488 Key Terms General Equilibrium in the AD-AS Model 426 Monetary Neutrality in the AD-AS Model 427 The Misperceptions Theory 429 Monetary Policy and the Misperceptions Model 432 Rational Expectations and the Role of Monetary Policy 435 Appendix 12A: Labor Contracts and Nominal- Wage Rigidity 494 Appendix 12B: Tax Cuts and the IS Curve 497 Money Supply: Empirical Evidence 436 Anticipated and Unanticipated Changes in the 11.5 Chapter Summary 439 Key Diagram # 8: The Classical AD-AS Model 440 Key Terms 443 Key Equation 443 Review Questions 443 Numerical Problems 444 Analytical Problems 445 (CONTENTN P'art S Maerocconomic Polieyy A Deeper Look CHAPTER 14 UNEMPLOYMENT AND INFLATION 653 HAPTER I8 BUiSINESS(YCLES AND VCROECONONMIC POLICY IN THE OPEN ECONOMI 498 18,1 Exehango Rates 14.1 Unemployment and Inflatiun: Is There a Trude- Off? 554 Nominal Exchange Rates 499 Price Adjustment and the Level of Qutput G56 The Simple Phillips Curve 559 Okun's Law 554 In Touch with the Macroeconomy: Exchange Rates 501 The Simple Phillips Curve in Practice 560 14.2 The Expectations-Augmented Phillıps Curve 561 The Short-Run Phillips Curve 54 Appreciation and Depreciation Real Versus Nominal Exchange Rate Real Exchange Rates 502 Movements 504 503 The Elusive Trade-Off Between Inflation and Unemployment The Political Environment: Presidentịal ElectiOns and Macroeconomic Policy 568 The Effectof the Real Exchange Rate on Net Exports 18.2 The Determinants of Net Exports 505 Measuring Real Net Exports 505 The Long-Run Phillips Curve 570 Supply Shocks and the Relation Between Inflation and Unermployment Application: The Value of the Dollar and U.S. Net Exports in the 1970s and 1980s 508 Other Determinants of Net Exports 510 Application: Oil Price Fluctuations, Inflation, and Unemployment 572 13.3 The International Flow of Goods: Intertemporal External Balance 511 14.3 The Long-Run Behavior of the Unemployment Hysteresis in Unemployment Rate 573 Box 14.1: The Effect of Unemployment Insurance on Unemployment 578 The Intertemporal External Balance Curve 513 Application: Will Foreign Competition Eliminate U.S. Manufacturing? The External Balance Condition in Action 514 14.4 The Costs of Unemployment and Inflation 579 Costs of Unemployment 579 Costs of Inflation Factors That Shift the IEB Curve 515 13.4 The International Asset Market: Interest Rate Parity 517 In Touch with the Macroeconomy: Price Indexes and Inflation 582 Box 14.2: Indexed Contracts 585 Returns on Domestic and Foreign Assets Interest Rate Parity 519 The Interest Rate Parity Line 520 Factors That Shift the IRP Line 521 13.5 The Determination of the Real Exchange Rate 522 Strategies for Reducing the Rate of Inflation The Classical Prescription for Disinflation: Cold Turkey 586 Factors That Change the Real Exchange 524 Rate 13.6 The IS-LM Model for an Open Economy 527 The International Transmission of Business The Open-Economy IS Curve Cycles 534 The Keynesian Preseription for Disinflation: Gradualism 586 The Importance of Credibility 587 The Policy Debate: Should Price Controls Be Used to Fight Inflation? Application: The Disinflation of the Early 1980s 590 13.7 Macroeconomic Policy in an Open Economy 534 Application: Why the Dollar Rose So High and Fell Fiscal Policy in an Open Economy 535 Monetary Policy in an Open Economy 539 So Far in the 1980s 540 14.6 Chapter Summary 591 13.8 Chapter Summary 542 Key Equations 593 Numerical Problems Review Questions 593 Analytical Problems Key Terms 593 Key Equations 547 Appendix 14.A: More on Okun's Law 596 Key Diagram # 11: Equilibrium in the World Ecnomy 544 Review Questions 547 Key Terms 547 Numerical Problermns 548 Analytical Problems 549 cONTENT8 CHAPTER 16 GOVERNMENT SPENDING AND Pre FINANCING 642 16.1 The Government Budget: Some Facts and Government Outlays Figures Taxes 645 CHAPTER 16 MONETARY POLICY AND THE FEDERAL RESERVE 598 15.1 Principles of Mones Supply Determination The Money Suppy in an All-C'urrency The Composition of Outlays and Taxes: The and Local Federal Government Versus State The Moer Supprly 'nder Fractional Reserve Banking Box 16.1: The Federal Budget Process 652 Fiscal Policy and Aggregate Demand 16.2 Government Spending, Taxes, and the Macroeconomy Governments Bank Runs 4 Deficits The Moner Supply with Both Public Holdings of(urrency and Fractional Reserve Open-Market Operations 606 Bankng 604 Application: Does the Federal Government Smooth Tax Rates? 656 Government Capital Formation 653 Incentive Effects of Fiscal Policy Application: The Money Multiplier During the Great Depression 608 15.2 Monetary (ontrol in the United States 609 The Federal Reserve System The Federal Reserve's Balance Sheet 612 The Political Environment: 16.3 Government DeficitS and Debt The Government Debt Reliability of Fed Governors 614 Can the Government Roll Over Its Debt Forever? 660 Other Means of Controlling the Money Supply 615 Intermediate Targets 618 Box 16.2: The Social Security Surplus and the Federal Deficit 662 16.4 The Burden of the Governmnent Debt on Future Generations 663 Decoding the Policy Directives of the In Tonch with the Macroeconomy: FOMC 620 The Political Environment: .3 The Conduct of Monetary Policy: By Rules or Discretion? 621 Logrolling and the Tax Reform Act of 1986 664 Rules and Central Bank Credibility 624 The Monetarist Case for Rules 622 Deficits and National Saving: Ricardian Equivalence Again Application: Monetary Targeting in West Germany, Japan, and the United States 631 Chapter Summary 637 Departures from Ricardian Equivalence 668 16.5 Deficits and Inflation 669 The Deficit and the Money Supply 669 The Policy Debate: Key Terms 639 Key Equations 639 eview Questions umerical Problems 640 malytical Problems 641 the German Hyperinflation of 1922-1923 677 A Balanced-Budget Amendment? 670 Application: Seignorage and the Budget Deficit in Real Seignorage Collection and Inflation 673 16.6 Chapter Summary 678 Key Terms Review Questions 680 Key Equations 680 Numerical Problems 681 Analytical Problems 682 680 Appendix 16.A The Path of the Debt-GNP Ratio 683 CONTENTS APPENDIX A: SOME USEFUL ANALYTICAL TOOLS 721 CBAPTER 17 FINANCIAL MARKETS AND THE MACROECONOMY A.1 Functions and Graphs 721 A.2 Slopes of Functions A.3 Elasticities 724 171 The Financial System: An Overview 685 Functions of the Financial System 685 A.4 Functions of Several Variables 724 A.5 Shifts of a Curve 724 Box 17.1: Liquidity in the Market for Junk Bonds 687 A.7 Growth Rate Formulas 726 A.6 Exponents 725 688 GLOSSARY 728 NAME INDEX 740 SUBJECT INDEX 742 The Structure of the Financial System 17.2 Financial Markets, Asymmetric Information, and Investment 691 Asymmetric Information and the Banking System 693 Application: The Credit Crunch of 1990 699 Asymmetric Information and Investment by Large Firms Financial Market Instability 701 Instability in Banking 703 Solutions to the Problem of Banking Instability 704 Box 17.2: The World Banking Crisis of 1931 705 Box 17.3: The Savings and Loan Crisis 708 Instability in the Stock Market 709 17.4 Chapter Summary 715 Key Terms 717 Key Equations 717 Review Questions Numerical Problems Analytical Problems 719

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Contents Brief PART IV BUSINESS CYCLES Chapter9 Business Cycles 321 Chapter 10 The Labor Market Chapter 11 Classical Business Cycle Analysis: Market-Clearing Macroeconomics 397 PART I INTRODUCTION Chapter 1 Introduction to Macroeconomics 8 Chapter2 The Measurement and Structure of the National Eeonomy 26 Chapter 12 Keynesianism: The Macroeconomics of Wage and Price Rigidity 447 Chapter 13 Business Cycles and Macroeconomic Policy in the Open Economy 498 PART II A BASIC FRAMEWORK FOR MACROECONOMIC ANALYSIS: THE CLASSICAL IS-LM MODEL Chapter 3 The Real Economy: Output, Employment, and Investment 65 PART V MACROECONOMIC POLICY: A DEEPER LOOK Chapter4 The Asset Market, Money, and Prices Chapter 14 Unemployment and Inflation 553 Chapter 15 Monetary Policy and the Federal Reserve 598 PART III SAVING, INVESTMENT, AND GROWTH Chapter 16 Government Spending and Its Financing 642 Chapter 5 Consumption and Saving: The Present Versus the Future 153 684 Appendix A: Some Useful Analytical Chapter 17 Financial Markets and the Macroeconomy Tools 721 Chapter 6 Saving, Investment, and the Real Interest Rate 189 Glossary 728 Subject Index 742 Name Index 740 Chapter 7 Saving and Investment Chapter 8 Long-Run Economic in the Open Economy 236 Growth 281 Contents CHAPTER 2 THE MEASUREMENT AND STRUCTURE OF THE NATIONAL ECONOMY 26 Preface vii 2.1 National Income Accounting: The Measurement of Production, Income, and Expenditure 26 Why the Three Approaches Are Equivalent 28 In Touch with the Macroeconomy: Part I Introduction The National Income and Product Accounts 29 2.2 Gross National Product 30 CHAPTER 1 INTRODUCTION TO MACROECONOMICS 3 The Product Approach to Measuring GNP 30 The Expenditure Approach to Measuring GNP 33 The Income Approach to Measuring GNP 35 Box 2.1: Natural Resources, the Environment, and the National Income Accounts 37 1.1 What Macroeconomics Is About 3 Long-Run Economic Growth Business Cycles 6 Unemployment 7 Inflation 8 The Circular Flow of Product, Expenditure, and Income 38 The International Economy 9 Macroeconomic Policy 10 Aggregation 2.3 Saving and Wealth 41 Measures of Aggregate Saving 42 Application: The Uses of Saving and the The Uses of Private Saving 44 1.2 What Macroeconomists Do Macroeconomic Forecasting 13 Macroeconomic Analysis 13 Macroeconomic Research Data Development 15 Government Budget Deficit in the 1980s 46 Application: An International Comparison of Relating Saving and Wealth 47 National Saving and Investment Rates 48 Macroeconomic Research: Learning About the Economy 16 Box 1.1: Developing and Testing an Economic Theory 18 2.4 Price Indexes, Inflation, and Interest Rates 50 Real Versus Nominal GNP Why Macroeconomists Disagree 19 Classicals Versus Keynesians Price Indexes and Inflation Interest Rates 55 Macroeconomics:A Unified Approach 22 5 Chapter Summary 23 2.5 Chapter Summary 58 Key Terms 24 60 Key Terms 59 Key Equations Review Questions 60 Numerical Problems 61 Analytical Problems 62 Review Questions 24 Numerical Problems 25 Analytical Problems 25 CONTENTS THE ASSET MARKET, MONEY, AND CHAPTER 4 PRICES Part II A Basie Framework for Macroeconomie Analysis: The Classical /SL W Model 4.1 What Is Money? Box 4.1: Money in a Prisoner-of-War Camp 112 The Monetary Measuring Money: Aggregates 114 The Functions of Money The Money Supply CHAPTER 3 THE REAL ECONOMY: OUTPUT, EMPLOYMENT, AND INVESTMENT 65 In Touch with the Macroeconomy: 3.1 The IS-LM Model: An Overview 66 3.2 How Much Does the Economy Produce? The Production Function 68 The Monetary Aggregates 117 4.2 Portfolio Allocation and the Demand for Expected Return Assets Liquidity 118 Asset Demands Risk 118 Application: The Production Function of the U.S. Economy and U.S. Productivity Growth 69 The Shape of the Production Function 70 Supply Shocks 75 3.3 Determining Output and Employment: The Labor Labor Demand Labor Supply 77 Market 76 4.3 The Demand for Money 119 The Price Level 120 Interest Rates 120 Real Income Labor Market Equilibrium 78 Application: Output, Employment, and the Real Wage During Oil Price Shocks 82 Application: Financial Innovation and the "Case of Other Factors Affecting Money Demand The Money Demand Function the Missing Money" 124 121 3.4 Goods Market Equilibrium: Balancing Saving and Investment 84 Velocity 125 Determinants of Desired National Saving 85 Determinants of Desired Investment The Saving-Investment Diagram 89 4.4 Asset Market Equilibrium and the LM Curve 126 Application: The Effects of Wars on Investment and the Real Interest Rate 93 Asset Market Equilibrium: An Aggregation Assumption 127 3.5 The IS Curve and the Full-Employment Line 94 The IS Curve 94 The LM Curve: Money Supplied Equals Money Shifts of the LM Curve Demanded 4.5 Money and Prices in the Complete IS-LM Model 135 Equilibrium in the Goods and Labor Markets 96 Application: 0il Price Shocks and Investment 102 The Full-Employment (FE) Line 96 3.6 Chapter Summary 103 Application: Inflation in Low-Money-Growth and The Effects of a Monetary Expansion 136 High-Money-Growth Countries 141 Key Diagram # 1: The Production Function 104 Key Diagram # 2: The Saving-Investment Application: Oil Price Shocks and Inflation 143 Supply Shocks and the Price Level 142 4.6 Chapter Summary 145 Diagram 106 Key Terms 108 Key Equations 108 Review Questions 108 Numerical Problems 109 Analytical Problems 109 Key Diagram # 3: The IS-LM Diagram 146 Key Terms 148 Key Equations 148 Review Questions Numerical Problems 148 Analytical Problems 149 CONTKNTS CHAPTER 6 SAVING, INVESTMENT, AND THE REAL INTEREST RATE IN9 Part lil Saving, Investment, aud irowth The Real Interest Rate and Saving in the Two- Period Model: Prudence Aguin 190 The Substitution Effect and the Income Effect 192 6.1 The Real Interest Rate and the Saving IDeciaion 190 Aggregate Saving and the Real Interest Rate: Evidence 198 0HAPTER 5 (ONS'MPTON AND SAVING: THE PRESENT VERSS THE FUTURE 159 A1 The Fonward-Looking Consumer 154 How Much Can the Consumer Aford? The Budget Constraint 155 Present Values In Touch with the Macroeconomy: Interest Rates 199 Box 5.1: The Winning Ticket in a Million-Dollar Present Value and the Budget Constraint Lottery 6.2 Tax Incentives for Saving Shifting the Budget Line 162 Application: Tax Policy and the Divergence of Canadian and U.S. Private Saving 201 Choosing How Much to Consume and Save: The Consumer's Preferences 163 6.3 The Real Interest Rate, The User Cost of Capital, and Investment 202 6.2 The Effects of Changes in Income and Wealth on Consumption and Saving 166 The Effects of Changes in Income 167 The Desired Capital Stock 203 The Political Environment: Sociopolitical Should the Tax Code Permit Individual Retirement Accounts? 204 The Policy Debate: Instability and the Rate of Saving 168 Permanent Versus Temporary Income Changes: The Permanent Income Theory 170 Application: The Effective Tax Rates on Equipment Changes in the Desired Capital Stock 209 and Structures 212 From the Desired Capital Stock to Investment 214 The Index of Consumer Sentiment 171 Application: Aggregate Consumption During Recessions 172 n Touch with the Macroeconomy: Application: Does the United States Overinvest in Investment in Inventories and Housing 216 Housing? 217 Box 5.2: Permanent Versus Temporary Income Shocks: The Effects of Unemployment on The Effects of Changes in Wealth Workers' Consumption 174 Application: International Differences in the User The Saving-Investment Diagram 217 Cost of Capital 219 Income Effects 174 Application: The 1987 Stock Market Crash and Consumer Spending 175 6.4 The Budget Deficit, National Saving, and the Real Interest Rate 221 5.3 Consumption and Saving over Many Periods: The Life Cycle Model 176 The Government Budget Constraint 221 A Deficit Due to Increased Government Purchases 222 The Life Cycle Model: An Example 178 Bequests and Saving 178 A Deficit Due to a Tax Cut: The Ricardian Equivalence Proposition 224 Application: Why Do the Japanese Save So Much? 179 Fiscal Policy and the IS Curve 227 6.5 Chapter Summary 229 Key Diagram # 4: The Consumer's Budget Line 230 Terms 232 Key Equations 232 Review Questions 232 Numerical Problems 233 Analytical Problems 234 5.4 Borrowing Constraints and Consumption 180 Application: Home Equity Lines and Household Saving 183 6.5 Chapter Summary 184 Key Terms 186 Key Equations 186 Review Questions 186 Numerical Problems Analytical Problems CONTENTS CHAPTER 8 LONG-RUN BCONOMIC GROWTH 281 8.1 The Sourees of Economic Growth 282 Growth Accounting 283 CHAPTERT SAVTNG AND INVESTMENT IN THE OPEN ECONOMY 236 Application: The Post-1973 Growth Slowdown Box 8.1: The Impact on Productivity of the Decline in Test Scores 290 7.1 Balance of Payments Accounting 237 The Current Account The Capital Account 239 In Touch with the Macroeconomy: The Fundamental Determinants of Long-Run Living Sandards 299 8.2 Growth Dynamies: The Solow Model 291 Setup of the Solow Model 291 The Balance of Payments Aceounts 241 The Relationship Between the Current Account and the Capital Account 241 Application: Do Economies Converge? 305 8.3 Government Policies to Raise Long-Run Living Standards 307 Net Foreign Assets and the Balance of Payments Accounts 243 Box 7.1: Does Mars Have a Current Account Surplus? 244 Policies to Affect the Saving Rate 307 Policies to Raise the Rate of Productivity Application: Is the United States the World's Largest International Debtor? 245 Growth The Institutional Framework: Market Versus Plan 309 The Policy Debate: 7.2 Goods Market Equilibrium in an Open Economy 246 7.3 Saving and Investment in a Small Open Economy Should the United Sates Havea "High-Tech" Industrial Policy? 310 The Effects of Economic Shocks in a Small Open Economy 251 The Political Environment: Application: The LDC Debt Crisis 254 Economic Growth and Democracy 312 Box 8.2: From Plan to Market in Eastern Europe 314 7.4 Saving and Investment in Large Open Economies 257 The Political Environment: 8.4 Chapter Summary 315 Key Terms 316 Key Equations 316 Review Questions 316 Numerical Problems 317 Analytical Problems 317 Application: German Reanification and the World Default and Sovereign Debt 258 Real Interest Rate 260 Application: How Well Does the International Capital Market Operate? 263 The Critical Factor: The Response of National 7.5 Fiscal Policy and the Current Account 266 Saving 266 The Government Budget Deficit and National Saving 269 Application: The Twin Deficits of the 1980s 270 7.6 Chapter Summary 272 Key Diagram #5: National Saving and Investment in a Small Open Economy 274 Key Diagram # 6: National Saving and Investment in Large Open Economies 276 Key Terms 278 Key Equations 278 Review Questions 278 Numerical Problems 279 Analytical Problems 280 CONTENTS CHAPTER 10 THE LABOR MARKET 353 Part II Business Cycles 10.1 The Demand for Labor: How Many Workers Should a Firm Hire? 354 CHAPTER 9 BUSINESS CYCLES 321 The Marginal Product of Labor and Labor Demand: An Example 354 Q1 What Is a Business Cycle? 322 The Marginal Product of Labor and the Labor Demand Curve 359 Factors That Shift the Labor Demand Curve 361 Aggregate Labor Demand 362 Box 9.1: Temporary and Permanent Components of Recessions 324 10.2 The Supply of Labor: The Income-Leisure Trade-Off 363 92 The American Business Cycle: The Historical Record 326 The Pre-World War I Period 326 The Effect of the Real Wage on Labor Supply 365 Application: Weekly Hours of Work and the Wealth of Nations 368 An Example: Prudence the Golf Pro 364 Have American Business Cycles Become Less The Great Depression and World War II Postwar U.S. Business Cycles 328 Severe? 329 93 Business Cycle Facts 331 Factors That Shift the Labor Supply Curve 370 Application: Labor Supply and Tax Reform in the 1980s 375 The Labor Supply Curve 370 The Cyclical Behavior of Economic Variables: Direction and Timing 331 Production 332 Expenditure 334 Aggregate Labor Supply 376 Box 10.1: The Lafer Curve 377 Average Labor Productivity and the Real Employment and Unemployment Wage 10,3 Labor Market Equilibrium 10.4 Unemployment 381 Money Growth and Inflation 340 Financial Variables How Long Are People Unemployed? 383 Changes in Employment Status Measuring Unemployment 381 The Policy Debate: Box 9.2: The Seasonal Cycle and the Business Cycle 342 International Aspects of the Cycle 343 Should the Minimum Wage Be Increased? Why There Are Always Unemployed People 386 In Touch with the Macroeconomy: 9.4 Classical and Keynesian Approaches to Business Cyele Analysis 344 The Early Classicals and the Keynesian Revolution 345 In Touch with the Macroeconomy: Labor Market Data 387 Box 10.2: Unemployment in the Soviet Union 389 10.5 Chapter Summary 390 Key Diagram # 7: Equilibrium in the Labor Market 392 The Index of Leading Indicators The New Classical Counterrevolution 348 Keynesians and Classicals Today 349 .5 Chapter Summary 350 Key Terms 352 Key Terms 394 Key Equation 394 Review Questions 394 Review Questions 352 Analytical Problems 352 Numerical Problems 395 Analytical Problems 396 CONTENTS XxiN CHAPTER 12 KEYNESIANISM: THE MACROECONOMICS OF WAGE AND PRICR RIGIDITY CHAPTER II CLASSICAL BU'SINESS CYCLE ANALISIS: MARETCLEARING MACROECOOMlCS 397 12.1 Real-Wage Rigidity 448 Some Reasons for Real-Wage Rigidity 440 The Efficiency Wage Model 449 Box 12.1: Henry Ford's Eiiciency Wage 455 12.2 Price Stickiness 11.1 A Review of the ClaSSical IS-LM Model 398 The IS Curve: Goods Market Equilibrium 398 The LM Curve: Asset Market Equilibrium 400 The Full-Employment Line 402 General Equilibrium in the Classical IS-LM Model 402 Sources of Price Stickiness: Monopolistic Competition and Menu Costs 12.3 Monetary and Fiscal Policy in the Keynesian Monetary Policy 463 Fiscal Policy 468 Model 11.2 The Real Business Cyele Theory 403 The Recessionary Impact of an Adverse Productivity Shock 404 Business Cycle Facts Explained by the Real Business Cycle Theory 406 Application: Calibrating the Business Cycle 407 Application: The Policy Mixes of the Early 1980. and the Early 1990s 471 12.4 The Keynesian Model and the Business Cyele Macroeconomic Stabilization Facts Objections to the Real Business Cycle Theory 410 11.3 Fiscal and Monetary Policy in the Classical Fiscal Policy 414 Model 414 The Political Environment: Box l1.1: Where Do Shocks to the Macroeconomy Come From? 417 Monetary Policy 418 The Role of the Council of Economic Advisers in Formulating Economic Policy 478 Supply Shocks in the Keynesian Model 479 12.5 Objections to the Keynesian Model Monetary Nonneutrality and Reverse Causation 419 Box 12.2: How Important Is Labor Hoarding in Practice? 483 Box 11.2: Money and Economic Activity at The Nonneutrality of Money: Additional Christmas 421 Evidence 12.6 Chapter Summary 484 Key Diagram # 9: The Keynesian IS-LM Model 486 11.4 Aggregate Demand, Aggregate Supply, and the Nonneutrality of Money 422 The Aggregate Demand Curve 422 The Aggregate Supply Curve Key Diagram # 10: The Keynesian AD-AS Numerical Problems 491 Review Questions Key Equations 490 Analytical Problems 492 Model 488 Key Terms General Equilibrium in the AD-AS Model 426 Monetary Neutrality in the AD-AS Model 427 The Misperceptions Theory 429 Monetary Policy and the Misperceptions Model 432 Rational Expectations and the Role of Monetary Policy 435 Appendix 12A: Labor Contracts and Nominal- Wage Rigidity 494 Appendix 12B: Tax Cuts and the IS Curve 497 Money Supply: Empirical Evidence 436 Anticipated and Unanticipated Changes in the 11.5 Chapter Summary 439 Key Diagram # 8: The Classical AD-AS Model 440 Key Terms 443 Key Equation 443 Review Questions 443 Numerical Problems 444 Analytical Problems 445 (CONTENTN P'art S Maerocconomic Polieyy A Deeper Look CHAPTER 14 UNEMPLOYMENT AND INFLATION 653 HAPTER I8 BUiSINESS(YCLES AND VCROECONONMIC POLICY IN THE OPEN ECONOMI 498 18,1 Exehango Rates 14.1 Unemployment and Inflatiun: Is There a Trude- Off? 554 Nominal Exchange Rates 499 Price Adjustment and the Level of Qutput G56 The Simple Phillips Curve 559 Okun's Law 554 In Touch with the Macroeconomy: Exchange Rates 501 The Simple Phillips Curve in Practice 560 14.2 The Expectations-Augmented Phillıps Curve 561 The Short-Run Phillips Curve 54 Appreciation and Depreciation Real Versus Nominal Exchange Rate Real Exchange Rates 502 Movements 504 503 The Elusive Trade-Off Between Inflation and Unemployment The Political Environment: Presidentịal ElectiOns and Macroeconomic Policy 568 The Effectof the Real Exchange Rate on Net Exports 18.2 The Determinants of Net Exports 505 Measuring Real Net Exports 505 The Long-Run Phillips Curve 570 Supply Shocks and the Relation Between Inflation and Unermployment Application: The Value of the Dollar and U.S. Net Exports in the 1970s and 1980s 508 Other Determinants of Net Exports 510 Application: Oil Price Fluctuations, Inflation, and Unemployment 572 13.3 The International Flow of Goods: Intertemporal External Balance 511 14.3 The Long-Run Behavior of the Unemployment Hysteresis in Unemployment Rate 573 Box 14.1: The Effect of Unemployment Insurance on Unemployment 578 The Intertemporal External Balance Curve 513 Application: Will Foreign Competition Eliminate U.S. Manufacturing? The External Balance Condition in Action 514 14.4 The Costs of Unemployment and Inflation 579 Costs of Unemployment 579 Costs of Inflation Factors That Shift the IEB Curve 515 13.4 The International Asset Market: Interest Rate Parity 517 In Touch with the Macroeconomy: Price Indexes and Inflation 582 Box 14.2: Indexed Contracts 585 Returns on Domestic and Foreign Assets Interest Rate Parity 519 The Interest Rate Parity Line 520 Factors That Shift the IRP Line 521 13.5 The Determination of the Real Exchange Rate 522 Strategies for Reducing the Rate of Inflation The Classical Prescription for Disinflation: Cold Turkey 586 Factors That Change the Real Exchange 524 Rate 13.6 The IS-LM Model for an Open Economy 527 The International Transmission of Business The Open-Economy IS Curve Cycles 534 The Keynesian Preseription for Disinflation: Gradualism 586 The Importance of Credibility 587 The Policy Debate: Should Price Controls Be Used to Fight Inflation? Application: The Disinflation of the Early 1980s 590 13.7 Macroeconomic Policy in an Open Economy 534 Application: Why the Dollar Rose So High and Fell Fiscal Policy in an Open Economy 535 Monetary Policy in an Open Economy 539 So Far in the 1980s 540 14.6 Chapter Summary 591 13.8 Chapter Summary 542 Key Equations 593 Numerical Problems Review Questions 593 Analytical Problems Key Terms 593 Key Equations 547 Appendix 14.A: More on Okun's Law 596 Key Diagram # 11: Equilibrium in the World Ecnomy 544 Review Questions 547 Key Terms 547 Numerical Problermns 548 Analytical Problems 549 cONTENT8 CHAPTER 16 GOVERNMENT SPENDING AND Pre FINANCING 642 16.1 The Government Budget: Some Facts and Government Outlays Figures Taxes 645 CHAPTER 16 MONETARY POLICY AND THE FEDERAL RESERVE 598 15.1 Principles of Mones Supply Determination The Money Suppy in an All-C'urrency The Composition of Outlays and Taxes: The and Local Federal Government Versus State The Moer Supprly 'nder Fractional Reserve Banking Box 16.1: The Federal Budget Process 652 Fiscal Policy and Aggregate Demand 16.2 Government Spending, Taxes, and the Macroeconomy Governments Bank Runs 4 Deficits The Moner Supply with Both Public Holdings of(urrency and Fractional Reserve Open-Market Operations 606 Bankng 604 Application: Does the Federal Government Smooth Tax Rates? 656 Government Capital Formation 653 Incentive Effects of Fiscal Policy Application: The Money Multiplier During the Great Depression 608 15.2 Monetary (ontrol in the United States 609 The Federal Reserve System The Federal Reserve's Balance Sheet 612 The Political Environment: 16.3 Government DeficitS and Debt The Government Debt Reliability of Fed Governors 614 Can the Government Roll Over Its Debt Forever? 660 Other Means of Controlling the Money Supply 615 Intermediate Targets 618 Box 16.2: The Social Security Surplus and the Federal Deficit 662 16.4 The Burden of the Governmnent Debt on Future Generations 663 Decoding the Policy Directives of the In Tonch with the Macroeconomy: FOMC 620 The Political Environment: .3 The Conduct of Monetary Policy: By Rules or Discretion? 621 Logrolling and the Tax Reform Act of 1986 664 Rules and Central Bank Credibility 624 The Monetarist Case for Rules 622 Deficits and National Saving: Ricardian Equivalence Again Application: Monetary Targeting in West Germany, Japan, and the United States 631 Chapter Summary 637 Departures from Ricardian Equivalence 668 16.5 Deficits and Inflation 669 The Deficit and the Money Supply 669 The Policy Debate: Key Terms 639 Key Equations 639 eview Questions umerical Problems 640 malytical Problems 641 the German Hyperinflation of 1922-1923 677 A Balanced-Budget Amendment? 670 Application: Seignorage and the Budget Deficit in Real Seignorage Collection and Inflation 673 16.6 Chapter Summary 678 Key Terms Review Questions 680 Key Equations 680 Numerical Problems 681 Analytical Problems 682 680 Appendix 16.A The Path of the Debt-GNP Ratio 683 CONTENTS APPENDIX A: SOME USEFUL ANALYTICAL TOOLS 721 CBAPTER 17 FINANCIAL MARKETS AND THE MACROECONOMY A.1 Functions and Graphs 721 A.2 Slopes of Functions A.3 Elasticities 724 171 The Financial System: An Overview 685 Functions of the Financial System 685 A.4 Functions of Several Variables 724 A.5 Shifts of a Curve 724 Box 17.1: Liquidity in the Market for Junk Bonds 687 A.7 Growth Rate Formulas 726 A.6 Exponents 725 688 GLOSSARY 728 NAME INDEX 740 SUBJECT INDEX 742 The Structure of the Financial System 17.2 Financial Markets, Asymmetric Information, and Investment 691 Asymmetric Information and the Banking System 693 Application: The Credit Crunch of 1990 699 Asymmetric Information and Investment by Large Firms Financial Market Instability 701 Instability in Banking 703 Solutions to the Problem of Banking Instability 704 Box 17.2: The World Banking Crisis of 1931 705 Box 17.3: The Savings and Loan Crisis 708 Instability in the Stock Market 709 17.4 Chapter Summary 715 Key Terms 717 Key Equations 717 Review Questions Numerical Problems Analytical Problems 719

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Contents Brief PART IV BUSINESS CYCLES Chapter9 Business Cycles 321 Chapter 10 The Labor Market Chapter 11 Classical Business Cycle Analysis: Market-Clearing Macroeconomics 397 PART I INTRODUCTION Chapter 1 Introduction to Macroeconomics 8 Chapter2 The Measurement and Structure of the National Eeonomy 26 Chapter 12 Keynesianism: The Macroeconomics of Wage and Price Rigidity 447 Chapter 13 Business Cycles and Macroeconomic Policy in the Open Economy 498 PART II A BASIC FRAMEWORK FOR MACROECONOMIC ANALYSIS: THE CLASSICAL IS-LM MODEL Chapter 3 The Real Economy: Output, Employment, and Investment 65 PART V MACROECONOMIC POLICY: A DEEPER LOOK Chapter4 The Asset Market, Money, and Prices Chapter 14 Unemployment and Inflation 553 Chapter 15 Monetary Policy and the Federal Reserve 598 PART III SAVING, INVESTMENT, AND GROWTH Chapter 16 Government Spending and Its Financing 642 Chapter 5 Consumption and Saving: The Present Versus the Future 153 684 Appendix A: Some Useful Analytical Chapter 17 Financial Markets and the Macroeconomy Tools 721 Chapter 6 Saving, Investment, and the Real Interest Rate 189 Glossary 728 Subject Index 742 Name Index 740 Chapter 7 Saving and Investment Chapter 8 Long-Run Economic in the Open Economy 236 Growth 281 Contents CHAPTER 2 THE MEASUREMENT AND STRUCTURE OF THE NATIONAL ECONOMY 26 Preface vii 2.1 National Income Accounting: The Measurement of Production, Income, and Expenditure 26 Why the Three Approaches Are Equivalent 28 In Touch with the Macroeconomy: Part I Introduction The National Income and Product Accounts 29 2.2 Gross National Product 30 CHAPTER 1 INTRODUCTION TO MACROECONOMICS 3 The Product Approach to Measuring GNP 30 The Expenditure Approach to Measuring GNP 33 The Income Approach to Measuring GNP 35 Box 2.1: Natural Resources, the Environment, and the National Income Accounts 37 1.1 What Macroeconomics Is About 3 Long-Run Economic Growth Business Cycles 6 Unemployment 7 Inflation 8 The Circular Flow of Product, Expenditure, and Income 38 The International Economy 9 Macroeconomic Policy 10 Aggregation 2.3 Saving and Wealth 41 Measures of Aggregate Saving 42 Application: The Uses of Saving and the The Uses of Private Saving 44 1.2 What Macroeconomists Do Macroeconomic Forecasting 13 Macroeconomic Analysis 13 Macroeconomic Research Data Development 15 Government Budget Deficit in the 1980s 46 Application: An International Comparison of Relating Saving and Wealth 47 National Saving and Investment Rates 48 Macroeconomic Research: Learning About the Economy 16 Box 1.1: Developing and Testing an Economic Theory 18 2.4 Price Indexes, Inflation, and Interest Rates 50 Real Versus Nominal GNP Why Macroeconomists Disagree 19 Classicals Versus Keynesians Price Indexes and Inflation Interest Rates 55 Macroeconomics:A Unified Approach 22 5 Chapter Summary 23 2.5 Chapter Summary 58 Key Terms 24 60 Key Terms 59 Key Equations Review Questions 60 Numerical Problems 61 Analytical Problems 62 Review Questions 24 Numerical Problems 25 Analytical Problems 25 CONTENTS THE ASSET MARKET, MONEY, AND CHAPTER 4 PRICES Part II A Basie Framework for Macroeconomie Analysis: The Classical /SL W Model 4.1 What Is Money? Box 4.1: Money in a Prisoner-of-War Camp 112 The Monetary Measuring Money: Aggregates 114 The Functions of Money The Money Supply CHAPTER 3 THE REAL ECONOMY: OUTPUT, EMPLOYMENT, AND INVESTMENT 65 In Touch with the Macroeconomy: 3.1 The IS-LM Model: An Overview 66 3.2 How Much Does the Economy Produce? The Production Function 68 The Monetary Aggregates 117 4.2 Portfolio Allocation and the Demand for Expected Return Assets Liquidity 118 Asset Demands Risk 118 Application: The Production Function of the U.S. Economy and U.S. Productivity Growth 69 The Shape of the Production Function 70 Supply Shocks 75 3.3 Determining Output and Employment: The Labor Labor Demand Labor Supply 77 Market 76 4.3 The Demand for Money 119 The Price Level 120 Interest Rates 120 Real Income Labor Market Equilibrium 78 Application: Output, Employment, and the Real Wage During Oil Price Shocks 82 Application: Financial Innovation and the "Case of Other Factors Affecting Money Demand The Money Demand Function the Missing Money" 124 121 3.4 Goods Market Equilibrium: Balancing Saving and Investment 84 Velocity 125 Determinants of Desired National Saving 85 Determinants of Desired Investment The Saving-Investment Diagram 89 4.4 Asset Market Equilibrium and the LM Curve 126 Application: The Effects of Wars on Investment and the Real Interest Rate 93 Asset Market Equilibrium: An Aggregation Assumption 127 3.5 The IS Curve and the Full-Employment Line 94 The IS Curve 94 The LM Curve: Money Supplied Equals Money Shifts of the LM Curve Demanded 4.5 Money and Prices in the Complete IS-LM Model 135 Equilibrium in the Goods and Labor Markets 96 Application: 0il Price Shocks and Investment 102 The Full-Employment (FE) Line 96 3.6 Chapter Summary 103 Application: Inflation in Low-Money-Growth and The Effects of a Monetary Expansion 136 High-Money-Growth Countries 141 Key Diagram # 1: The Production Function 104 Key Diagram # 2: The Saving-Investment Application: Oil Price Shocks and Inflation 143 Supply Shocks and the Price Level 142 4.6 Chapter Summary 145 Diagram 106 Key Terms 108 Key Equations 108 Review Questions 108 Numerical Problems 109 Analytical Problems 109 Key Diagram # 3: The IS-LM Diagram 146 Key Terms 148 Key Equations 148 Review Questions Numerical Problems 148 Analytical Problems 149 CONTKNTS CHAPTER 6 SAVING, INVESTMENT, AND THE REAL INTEREST RATE IN9 Part lil Saving, Investment, aud irowth The Real Interest Rate and Saving in the Two- Period Model: Prudence Aguin 190 The Substitution Effect and the Income Effect 192 6.1 The Real Interest Rate and the Saving IDeciaion 190 Aggregate Saving and the Real Interest Rate: Evidence 198 0HAPTER 5 (ONS'MPTON AND SAVING: THE PRESENT VERSS THE FUTURE 159 A1 The Fonward-Looking Consumer 154 How Much Can the Consumer Aford? The Budget Constraint 155 Present Values In Touch with the Macroeconomy: Interest Rates 199 Box 5.1: The Winning Ticket in a Million-Dollar Present Value and the Budget Constraint Lottery 6.2 Tax Incentives for Saving Shifting the Budget Line 162 Application: Tax Policy and the Divergence of Canadian and U.S. Private Saving 201 Choosing How Much to Consume and Save: The Consumer's Preferences 163 6.3 The Real Interest Rate, The User Cost of Capital, and Investment 202 6.2 The Effects of Changes in Income and Wealth on Consumption and Saving 166 The Effects of Changes in Income 167 The Desired Capital Stock 203 The Political Environment: Sociopolitical Should the Tax Code Permit Individual Retirement Accounts? 204 The Policy Debate: Instability and the Rate of Saving 168 Permanent Versus Temporary Income Changes: The Permanent Income Theory 170 Application: The Effective Tax Rates on Equipment Changes in the Desired Capital Stock 209 and Structures 212 From the Desired Capital Stock to Investment 214 The Index of Consumer Sentiment 171 Application: Aggregate Consumption During Recessions 172 n Touch with the Macroeconomy: Application: Does the United States Overinvest in Investment in Inventories and Housing 216 Housing? 217 Box 5.2: Permanent Versus Temporary Income Shocks: The Effects of Unemployment on The Effects of Changes in Wealth Workers' Consumption 174 Application: International Differences in the User The Saving-Investment Diagram 217 Cost of Capital 219 Income Effects 174 Application: The 1987 Stock Market Crash and Consumer Spending 175 6.4 The Budget Deficit, National Saving, and the Real Interest Rate 221 5.3 Consumption and Saving over Many Periods: The Life Cycle Model 176 The Government Budget Constraint 221 A Deficit Due to Increased Government Purchases 222 The Life Cycle Model: An Example 178 Bequests and Saving 178 A Deficit Due to a Tax Cut: The Ricardian Equivalence Proposition 224 Application: Why Do the Japanese Save So Much? 179 Fiscal Policy and the IS Curve 227 6.5 Chapter Summary 229 Key Diagram # 4: The Consumer's Budget Line 230 Terms 232 Key Equations 232 Review Questions 232 Numerical Problems 233 Analytical Problems 234 5.4 Borrowing Constraints and Consumption 180 Application: Home Equity Lines and Household Saving 183 6.5 Chapter Summary 184 Key Terms 186 Key Equations 186 Review Questions 186 Numerical Problems Analytical Problems CONTENTS CHAPTER 8 LONG-RUN BCONOMIC GROWTH 281 8.1 The Sourees of Economic Growth 282 Growth Accounting 283 CHAPTERT SAVTNG AND INVESTMENT IN THE OPEN ECONOMY 236 Application: The Post-1973 Growth Slowdown Box 8.1: The Impact on Productivity of the Decline in Test Scores 290 7.1 Balance of Payments Accounting 237 The Current Account The Capital Account 239 In Touch with the Macroeconomy: The Fundamental Determinants of Long-Run Living Sandards 299 8.2 Growth Dynamies: The Solow Model 291 Setup of the Solow Model 291 The Balance of Payments Aceounts 241 The Relationship Between the Current Account and the Capital Account 241 Application: Do Economies Converge? 305 8.3 Government Policies to Raise Long-Run Living Standards 307 Net Foreign Assets and the Balance of Payments Accounts 243 Box 7.1: Does Mars Have a Current Account Surplus? 244 Policies to Affect the Saving Rate 307 Policies to Raise the Rate of Productivity Application: Is the United States the World's Largest International Debtor? 245 Growth The Institutional Framework: Market Versus Plan 309 The Policy Debate: 7.2 Goods Market Equilibrium in an Open Economy 246 7.3 Saving and Investment in a Small Open Economy Should the United Sates Havea "High-Tech" Industrial Policy? 310 The Effects of Economic Shocks in a Small Open Economy 251 The Political Environment: Application: The LDC Debt Crisis 254 Economic Growth and Democracy 312 Box 8.2: From Plan to Market in Eastern Europe 314 7.4 Saving and Investment in Large Open Economies 257 The Political Environment: 8.4 Chapter Summary 315 Key Terms 316 Key Equations 316 Review Questions 316 Numerical Problems 317 Analytical Problems 317 Application: German Reanification and the World Default and Sovereign Debt 258 Real Interest Rate 260 Application: How Well Does the International Capital Market Operate? 263 The Critical Factor: The Response of National 7.5 Fiscal Policy and the Current Account 266 Saving 266 The Government Budget Deficit and National Saving 269 Application: The Twin Deficits of the 1980s 270 7.6 Chapter Summary 272 Key Diagram #5: National Saving and Investment in a Small Open Economy 274 Key Diagram # 6: National Saving and Investment in Large Open Economies 276 Key Terms 278 Key Equations 278 Review Questions 278 Numerical Problems 279 Analytical Problems 280 CONTENTS CHAPTER 10 THE LABOR MARKET 353 Part II Business Cycles 10.1 The Demand for Labor: How Many Workers Should a Firm Hire? 354 CHAPTER 9 BUSINESS CYCLES 321 The Marginal Product of Labor and Labor Demand: An Example 354 Q1 What Is a Business Cycle? 322 The Marginal Product of Labor and the Labor Demand Curve 359 Factors That Shift the Labor Demand Curve 361 Aggregate Labor Demand 362 Box 9.1: Temporary and Permanent Components of Recessions 324 10.2 The Supply of Labor: The Income-Leisure Trade-Off 363 92 The American Business Cycle: The Historical Record 326 The Pre-World War I Period 326 The Effect of the Real Wage on Labor Supply 365 Application: Weekly Hours of Work and the Wealth of Nations 368 An Example: Prudence the Golf Pro 364 Have American Business Cycles Become Less The Great Depression and World War II Postwar U.S. Business Cycles 328 Severe? 329 93 Business Cycle Facts 331 Factors That Shift the Labor Supply Curve 370 Application: Labor Supply and Tax Reform in the 1980s 375 The Labor Supply Curve 370 The Cyclical Behavior of Economic Variables: Direction and Timing 331 Production 332 Expenditure 334 Aggregate Labor Supply 376 Box 10.1: The Lafer Curve 377 Average Labor Productivity and the Real Employment and Unemployment Wage 10,3 Labor Market Equilibrium 10.4 Unemployment 381 Money Growth and Inflation 340 Financial Variables How Long Are People Unemployed? 383 Changes in Employment Status Measuring Unemployment 381 The Policy Debate: Box 9.2: The Seasonal Cycle and the Business Cycle 342 International Aspects of the Cycle 343 Should the Minimum Wage Be Increased? Why There Are Always Unemployed People 386 In Touch with the Macroeconomy: 9.4 Classical and Keynesian Approaches to Business Cyele Analysis 344 The Early Classicals and the Keynesian Revolution 345 In Touch with the Macroeconomy: Labor Market Data 387 Box 10.2: Unemployment in the Soviet Union 389 10.5 Chapter Summary 390 Key Diagram # 7: Equilibrium in the Labor Market 392 The Index of Leading Indicators The New Classical Counterrevolution 348 Keynesians and Classicals Today 349 .5 Chapter Summary 350 Key Terms 352 Key Terms 394 Key Equation 394 Review Questions 394 Review Questions 352 Analytical Problems 352 Numerical Problems 395 Analytical Problems 396 CONTENTS XxiN CHAPTER 12 KEYNESIANISM: THE MACROECONOMICS OF WAGE AND PRICR RIGIDITY CHAPTER II CLASSICAL BU'SINESS CYCLE ANALISIS: MARETCLEARING MACROECOOMlCS 397 12.1 Real-Wage Rigidity 448 Some Reasons for Real-Wage Rigidity 440 The Efficiency Wage Model 449 Box 12.1: Henry Ford's Eiiciency Wage 455 12.2 Price Stickiness 11.1 A Review of the ClaSSical IS-LM Model 398 The IS Curve: Goods Market Equilibrium 398 The LM Curve: Asset Market Equilibrium 400 The Full-Employment Line 402 General Equilibrium in the Classical IS-LM Model 402 Sources of Price Stickiness: Monopolistic Competition and Menu Costs 12.3 Monetary and Fiscal Policy in the Keynesian Monetary Policy 463 Fiscal Policy 468 Model 11.2 The Real Business Cyele Theory 403 The Recessionary Impact of an Adverse Productivity Shock 404 Business Cycle Facts Explained by the Real Business Cycle Theory 406 Application: Calibrating the Business Cycle 407 Application: The Policy Mixes of the Early 1980. and the Early 1990s 471 12.4 The Keynesian Model and the Business Cyele Macroeconomic Stabilization Facts Objections to the Real Business Cycle Theory 410 11.3 Fiscal and Monetary Policy in the Classical Fiscal Policy 414 Model 414 The Political Environment: Box l1.1: Where Do Shocks to the Macroeconomy Come From? 417 Monetary Policy 418 The Role of the Council of Economic Advisers in Formulating Economic Policy 478 Supply Shocks in the Keynesian Model 479 12.5 Objections to the Keynesian Model Monetary Nonneutrality and Reverse Causation 419 Box 12.2: How Important Is Labor Hoarding in Practice? 483 Box 11.2: Money and Economic Activity at The Nonneutrality of Money: Additional Christmas 421 Evidence 12.6 Chapter Summary 484 Key Diagram # 9: The Keynesian IS-LM Model 486 11.4 Aggregate Demand, Aggregate Supply, and the Nonneutrality of Money 422 The Aggregate Demand Curve 422 The Aggregate Supply Curve Key Diagram # 10: The Keynesian AD-AS Numerical Problems 491 Review Questions Key Equations 490 Analytical Problems 492 Model 488 Key Terms General Equilibrium in the AD-AS Model 426 Monetary Neutrality in the AD-AS Model 427 The Misperceptions Theory 429 Monetary Policy and the Misperceptions Model 432 Rational Expectations and the Role of Monetary Policy 435 Appendix 12A: Labor Contracts and Nominal- Wage Rigidity 494 Appendix 12B: Tax Cuts and the IS Curve 497 Money Supply: Empirical Evidence 436 Anticipated and Unanticipated Changes in the 11.5 Chapter Summary 439 Key Diagram # 8: The Classical AD-AS Model 440 Key Terms 443 Key Equation 443 Review Questions 443 Numerical Problems 444 Analytical Problems 445 (CONTENTN P'art S Maerocconomic Polieyy A Deeper Look CHAPTER 14 UNEMPLOYMENT AND INFLATION 653 HAPTER I8 BUiSINESS(YCLES AND VCROECONONMIC POLICY IN THE OPEN ECONOMI 498 18,1 Exehango Rates 14.1 Unemployment and Inflatiun: Is There a Trude- Off? 554 Nominal Exchange Rates 499 Price Adjustment and the Level of Qutput G56 The Simple Phillips Curve 559 Okun's Law 554 In Touch with the Macroeconomy: Exchange Rates 501 The Simple Phillips Curve in Practice 560 14.2 The Expectations-Augmented Phillıps Curve 561 The Short-Run Phillips Curve 54 Appreciation and Depreciation Real Versus Nominal Exchange Rate Real Exchange Rates 502 Movements 504 503 The Elusive Trade-Off Between Inflation and Unemployment The Political Environment: Presidentịal ElectiOns and Macroeconomic Policy 568 The Effectof the Real Exchange Rate on Net Exports 18.2 The Determinants of Net Exports 505 Measuring Real Net Exports 505 The Long-Run Phillips Curve 570 Supply Shocks and the Relation Between Inflation and Unermployment Application: The Value of the Dollar and U.S. Net Exports in the 1970s and 1980s 508 Other Determinants of Net Exports 510 Application: Oil Price Fluctuations, Inflation, and Unemployment 572 13.3 The International Flow of Goods: Intertemporal External Balance 511 14.3 The Long-Run Behavior of the Unemployment Hysteresis in Unemployment Rate 573 Box 14.1: The Effect of Unemployment Insurance on Unemployment 578 The Intertemporal External Balance Curve 513 Application: Will Foreign Competition Eliminate U.S. Manufacturing? The External Balance Condition in Action 514 14.4 The Costs of Unemployment and Inflation 579 Costs of Unemployment 579 Costs of Inflation Factors That Shift the IEB Curve 515 13.4 The International Asset Market: Interest Rate Parity 517 In Touch with the Macroeconomy: Price Indexes and Inflation 582 Box 14.2: Indexed Contracts 585 Returns on Domestic and Foreign Assets Interest Rate Parity 519 The Interest Rate Parity Line 520 Factors That Shift the IRP Line 521 13.5 The Determination of the Real Exchange Rate 522 Strategies for Reducing the Rate of Inflation The Classical Prescription for Disinflation: Cold Turkey 586 Factors That Change the Real Exchange 524 Rate 13.6 The IS-LM Model for an Open Economy 527 The International Transmission of Business The Open-Economy IS Curve Cycles 534 The Keynesian Preseription for Disinflation: Gradualism 586 The Importance of Credibility 587 The Policy Debate: Should Price Controls Be Used to Fight Inflation? Application: The Disinflation of the Early 1980s 590 13.7 Macroeconomic Policy in an Open Economy 534 Application: Why the Dollar Rose So High and Fell Fiscal Policy in an Open Economy 535 Monetary Policy in an Open Economy 539 So Far in the 1980s 540 14.6 Chapter Summary 591 13.8 Chapter Summary 542 Key Equations 593 Numerical Problems Review Questions 593 Analytical Problems Key Terms 593 Key Equations 547 Appendix 14.A: More on Okun's Law 596 Key Diagram # 11: Equilibrium in the World Ecnomy 544 Review Questions 547 Key Terms 547 Numerical Problermns 548 Analytical Problems 549 cONTENT8 CHAPTER 16 GOVERNMENT SPENDING AND Pre FINANCING 642 16.1 The Government Budget: Some Facts and Government Outlays Figures Taxes 645 CHAPTER 16 MONETARY POLICY AND THE FEDERAL RESERVE 598 15.1 Principles of Mones Supply Determination The Money Suppy in an All-C'urrency The Composition of Outlays and Taxes: The and Local Federal Government Versus State The Moer Supprly 'nder Fractional Reserve Banking Box 16.1: The Federal Budget Process 652 Fiscal Policy and Aggregate Demand 16.2 Government Spending, Taxes, and the Macroeconomy Governments Bank Runs 4 Deficits The Moner Supply with Both Public Holdings of(urrency and Fractional Reserve Open-Market Operations 606 Bankng 604 Application: Does the Federal Government Smooth Tax Rates? 656 Government Capital Formation 653 Incentive Effects of Fiscal Policy Application: The Money Multiplier During the Great Depression 608 15.2 Monetary (ontrol in the United States 609 The Federal Reserve System The Federal Reserve's Balance Sheet 612 The Political Environment: 16.3 Government DeficitS and Debt The Government Debt Reliability of Fed Governors 614 Can the Government Roll Over Its Debt Forever? 660 Other Means of Controlling the Money Supply 615 Intermediate Targets 618 Box 16.2: The Social Security Surplus and the Federal Deficit 662 16.4 The Burden of the Governmnent Debt on Future Generations 663 Decoding the Policy Directives of the In Tonch with the Macroeconomy: FOMC 620 The Political Environment: .3 The Conduct of Monetary Policy: By Rules or Discretion? 621 Logrolling and the Tax Reform Act of 1986 664 Rules and Central Bank Credibility 624 The Monetarist Case for Rules 622 Deficits and National Saving: Ricardian Equivalence Again Application: Monetary Targeting in West Germany, Japan, and the United States 631 Chapter Summary 637 Departures from Ricardian Equivalence 668 16.5 Deficits and Inflation 669 The Deficit and the Money Supply 669 The Policy Debate: Key Terms 639 Key Equations 639 eview Questions umerical Problems 640 malytical Problems 641 the German Hyperinflation of 1922-1923 677 A Balanced-Budget Amendment? 670 Application: Seignorage and the Budget Deficit in Real Seignorage Collection and Inflation 673 16.6 Chapter Summary 678 Key Terms Review Questions 680 Key Equations 680 Numerical Problems 681 Analytical Problems 682 680 Appendix 16.A The Path of the Debt-GNP Ratio 683 CONTENTS APPENDIX A: SOME USEFUL ANALYTICAL TOOLS 721 CBAPTER 17 FINANCIAL MARKETS AND THE MACROECONOMY A.1 Functions and Graphs 721 A.2 Slopes of Functions A.3 Elasticities 724 171 The Financial System: An Overview 685 Functions of the Financial System 685 A.4 Functions of Several Variables 724 A.5 Shifts of a Curve 724 Box 17.1: Liquidity in the Market for Junk Bonds 687 A.7 Growth Rate Formulas 726 A.6 Exponents 725 688 GLOSSARY 728 NAME INDEX 740 SUBJECT INDEX 742 The Structure of the Financial System 17.2 Financial Markets, Asymmetric Information, and Investment 691 Asymmetric Information and the Banking System 693 Application: The Credit Crunch of 1990 699 Asymmetric Information and Investment by Large Firms Financial Market Instability 701 Instability in Banking 703 Solutions to the Problem of Banking Instability 704 Box 17.2: The World Banking Crisis of 1931 705 Box 17.3: The Savings and Loan Crisis 708 Instability in the Stock Market 709 17.4 Chapter Summary 715 Key Terms 717 Key Equations 717 Review Questions Numerical Problems Analytical Problems 719

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ONERVIEW OF CORPORATE FINANCE Introduction to corporate finance Financial statements Taxes, and Cash FINANCLAL STATEMENTS AND LONG-TERM FINANCIAL PLANNING Working Financial Statements Long-Term Financal Planning and Corporate Growth VALUATION OF FUTURE CASH FLOWS First Princinples of Valuation: The Time Value of Money CAPITAL BUDGETING Valuing Stocks and Bonds Net Present Value and Other Investment Criteria Making Capital Investment Decisions Project Analysis and Evaluation RISK AND RETURN Some Lessons from Capital Market History Return, Risk, and the Security Market Line LONG-TERM FINANCING Long-Term Financing: An Introduction Issuing Securities to the Public COST OF CAPITAL AND LONG-TERM FINANCIAL POLICY Cost of Capital Financial Leverage and Capital Structure Policy Dividends and Dividend Policy PLANNING AND MANAGEMENT Planning Cash and Liquidity Managenent Credit Management TOPICS IN CORPORATE FINANCE Options and CorpOrate Securities Mergers and Acquisitions Internaticnal Corporate Finance MATHEMATICAL TABLES END-OFCHAPTER PROBLEMS SOLUTIONS TO SELECTED SHORTTERM FINANClAL

📖 Contenu

ONERVIEW OF CORPORATE FINANCE Introduction to corporate finance Financial statements Taxes, and Cash FINANCLAL STATEMENTS AND LONG-TERM FINANCIAL PLANNING Working Financial Statements Long-Term Financal Planning and Corporate Growth VALUATION OF FUTURE CASH FLOWS First Princinples of Valuation: The Time Value of Money CAPITAL BUDGETING Valuing Stocks and Bonds Net Present Value and Other Investment Criteria Making Capital Investment Decisions Project Analysis and Evaluation RISK AND RETURN Some Lessons from Capital Market History Return, Risk, and the Security Market Line LONG-TERM FINANCING Long-Term Financing: An Introduction Issuing Securities to the Public COST OF CAPITAL AND LONG-TERM FINANCIAL POLICY Cost of Capital Financial Leverage and Capital Structure Policy Dividends and Dividend Policy PLANNING AND MANAGEMENT Planning Cash and Liquidity Managenent Credit Management TOPICS IN CORPORATE FINANCE Options and CorpOrate Securities Mergers and Acquisitions Internaticnal Corporate Finance MATHEMATICAL TABLES END-OFCHAPTER PROBLEMS SOLUTIONS TO SELECTED SHORTTERM FINANClAL