Macroeconomics, 2nd edition

Published by Pearson (July 11, 2017) © 2018

  • Daron Acemoglu Massachusetts Institute of Technology
  • David Laibson Harvard University
  • John List University of Chicago

For principles of macroeconomics courses.

An evidence-based approach to economics

Macroeconomics presents real economic questions and data to help students learn about the world around them. The text uses themes of optimization, equilibrium, and empiricism to illustrate the power of simple economic ideas and explain and predict what's happening in today's society.

In the 2nd Edition, each chapter begins with an empirical question that is relevant to the life of a student. This is later answered using data in the Evidence-Based Economics feature. As a result of the text's practical emphasis, students learn to apply economic principles to guide the decisions they make in their own daily lives.

Personalize learning with MyLab Economics

MyLabâ„¢ Economics is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts.

  • Learning Aids. Tied to the textbook,MyLab Economics homework and practice questions regenerate algorithmically to give students unlimited opportunity for practice and mastery. Additionally, Learning Aids such as Help me Solve This offer helpful feedback at the point-of-use when students enter incorrect answers.
  • Digital interactives. Economic principles are not static ideas, and learning them shouldn’t be either! Digital Interactives are dynamic and engaging assessment activities that promote critical thinking and application of key economic principles. Each Digital Interactive has 3 to 5 progressive levels and requires approximately 20 minutes to explore, apply, compare, and analyze each topic. Many Digital Interactives include real-time data from FREDâ„¢ allowing professors and students to display, in graph and table form, up-to-the-minute data on key macro variables. Digital Interactives can be assigned and graded within MyLab Economics, or used as a lecture tool to encourage engagement, classroom conversation, and group work.
  • Interactive Graphs in MyLab Economics enhance the student learning experience. Students can manipulate the coordinates and parameters of these graphs and watch the graphs change in real time, thereby deepening their conceptual understanding of the material.
  • Personalized Learning. Not every student learns the same way or at the same rate. With the growing need for acceleration through many courses, it's more important than ever to meet students where they learn. Personalized learning in MyLab Economics gives you the flexibility to incorporate the approach that best suits of your course and your students.
    • The Study Plan acts as a tutor, providing personalized recommendations for each of your students based on his or her ability to master the learning objectives in your course. This allows students to focus their study time by pinpointing the precise areas they need to review, and allowing them to use customized practice and learning aids—such as videos, eText, tutorials, and more—to get them back on track. Using the report available in the Gradebook, you can then tailor course lectures to prioritize the content where students need the most support—offering you better insight into classroom and individual performance.
    • Dynamic Study Modules help students study effectively on their own by continuously assessing their activity and performance in real time. Here's how it works: students complete a set of questions with a unique answer format that also asks them to indicate their confidence level. Questions repeat until the student can answer them all correctly and confidently. Once completed, Dynamic Study Modules explain the concept using materials from the text. These are available as graded assignments prior to class, and accessible on smartphones, tablets, and computers. NEW! Instructors can now remove questions from Dynamic Study Modules to better fit their course. Available for select titles.
  • The Enhanced eText keeps students engaged in learning on their own time, while helping them achieve greater conceptual understanding of course material.
  • Experiments are a fun and engaging way to promote active learning and mastery of important economic concepts. Pearson’s Experiments program is flexible and easy for instructors and students to use. Single-player experiments allow your students to play against virtual players from anywhere at any time so long as they have an Internet connection. Multiplayer experiments allow you to assign and manage a real-time experiment with your class. Pre- and post-questions for each experiment are available for assignment in MyLab Economics.
  • Economics Exercise Builder allows you to build customized exercises, including multiple-choice, graph drawing, and free-response items—many of which are generated algorithmically so that each time a student works them, a different variation is presented.
  • Reporting Dashboard. View, analyze, and report learning outcomes clearly and easily, and get the information you need to keep your students on track throughout the course, with the new Reporting Dashboard. Available via the MyLab Economics Gradebook and fully mobile-ready, the Reporting Dashboard presents student performance data at the class, section, and program levels in an accessible, visual manner.
  • Learning Catalyticsâ„¢ helps you generate class discussion, customize your lecture, and promote peer-to-peer learning with real-time analytics. As a student response tool, Learning Catalytics uses students’ smartphones, tablets, or laptops to engage them in more interactive tasks and thinking.
    • NEW! Upload a full PowerPoint® deck for easy creation of slide questions.
    • NEW! Team names are no longer case sensitive.
    • Help your students develop critical thinking skills.
    • Monitor responses to find out where your students are struggling.
    • Rely on real-time data to adjust your teaching strategy.
    • Automatically group students for discussion, teamwork, and peer-to-peer learning.
  • LMS Integration. You can now link from Blackboard Learn, Brightspace by D2L, Canvas, or Moodle to MyLab Economics. Access assignments, rosters, and resources, and synchronize grades with your LMS Gradebook. For students, single sign-on provides access to all the personalized learning resources that make studying more efficient and effective.

About the book

Teach economics through three unified themes

Three key principles--optimization, equilibrium, and empiricism--lie at the heart of the authors’ approach. Chapters 1–4 introduce these key themes, and lay the groundwork for understanding the economic way of thinking about the world.

  1. Optimization. The first principle--that people try to choose the best available option--is optimization. Economists believe that optimization explains most choices people make, including minor decisions like deciding whether to eat a cheeseburger, and major decisions like deciding whom to date or marry. When people fail to optimize perfectly, economic reasoning can be used to analyze the mistake and to suggest a better course of action.
  2. Equilibrium. Economic systems tend toward equilibrium, wherein each economic actor feels that he or she cannot do any better by picking another course of action. This principle highlights the connections among economic actors and their choices. In a state of equilibrium, consumers and purveyors of goods and services are simultaneously optimizing, and their behaviors are consequently intertwined.
  3. Empiricism. While the first two key principles are conceptual, the third is methodological. Economists use data to test economic theories, learn about the world, and speak to policymakers. The emphasis on matching theories with real-world data to answer specific questions helps to show students the evidence behind the theory, making economics concrete, interesting, and fun.

Real issues engage students with the content

  • NEW! Coverage describing the growth of economic inequality, and emphasizing that inequality is not measured in economic aggregates, such as GDP (Chapter 19).
  • Evidence-Based Economics (EBE) features show how economists use data to answer the question posed in the opening paragraph of each chapter. EBEs use actual data from field experiments, lab experiments, and the government or naturally occurring data, while highlighting major concepts in the chapter. These features let students get a real look at economics as it plays out in the world around them, and gives them the skills to question systematically and evaluate what they read. Examples include:
    • NEW! Uber and the invisible hand?
    • NEW! What can the government do to lower earthquakes in Oklahoma?
  • Letting the Data Speak features reinforce the theme of evidence behind the theory. These short, targeted explorations analyze an economic question by using real data as the foundation of the discussion. Among the many issues explored:
    • NEW!Forecasts on the eve of the election
    • NEW! The great productivity puzzle--discussing how we may be experiencing a slow-down of aggregate productivity despite the rapid introduction of a range of new technologies in the economy (Chapter 21)
    • NEW! Democracy and growth, showing the positive impact of democratic political institutions on economic growth (Chapter 22)
    • NEW! Financing start-ups (Chapter 24)
    • NEW! The response of consumption to tax cuts (Chapter 27)
  • Choice and Consequence features emphasize optimization--one of the key themes in the book--by focusing on making the best decision. These features ask students to make an economic decision, or evaluate the consequences of past real decisions. The authors then explain how an economist might analyze the same decision. Examples of choices investigated include:
    • NEW! The societal consequences of the expulsion of Jewish faculty from universities in Nazi Germany (Chapter 20)
    • NEW! Minimum wage laws and employment (Chapter 23)
    • EXPANDED! Luddite resistance to new technology and what this can teach us about the disruption that new and more productive robots are bringing to the economy today (Chapter 23)
    • NEW! Obtaining reserves outside of the federal funds market (Chapter 25)
    • NEW! The new administration’s fiscal policy proposals (Chapter 27)
    • NEW! The political forces that influence trade policy (Chapter 28)
  • NEW! Graphical Exhibit describing the relationship between interest rates and net capital outflows, unifying material from several chapters for the analysis of open economy macroeconomics (Chapter 29)

Show the importance of macroeconomic concepts in everyday life

Practical coverage of macroeconomics helps students see how they can apply course content in their own decision-making.

  • UPDATED! Examination of the labor market in terms of the downward nominal wage rigidity (Chapters 23, 26, and 27).
  • UPDATED! Simplified presentation of the two-part labor supply curve for easier student comprehension (Chapters 26 and 27).

About the book

Real issues engage students with the content

  • Coverage describing the growth of economic inequality, and emphasizing that inequality is not measured in economic aggregates, such as GDP (Chapter 19).
  • Evidence-Based Economics (EBE) features show how economists use data to answer the question posed in the opening paragraph of each chapter. EBEs use actual data from field experiments, lab experiments, and the government or naturally occurring data, while highlighting major concepts in the chapter. These features let students get a real look at economics as it plays out in the world around them, and gives them the skills to question systematically and evaluate what they read. Examples include:
    • Uber and the invisible hand?
    • What can the government do to lower earthquakes in Oklahoma?
  • Letting the Data Speak features reinforce the theme of evidence behind the theory. These short, targeted explorations analyze an economic question by using real data as the foundation of the discussion. Among the many issues explored:
    • Forecasts on the eve of the election
    • The great productivity puzzle--discussing how we may be experiencing a slow-down of aggregate productivity despite the rapid introduction of a range of new technologies in the economy (Chapter 21)
    • Democracy and growth, showing the positive impact of democratic political institutions on economic growth (Chapter 22)
    • Financing start-ups (Chapter 24)
    • The response of consumption to tax cuts (Chapter 27)
  • Choice and Consequence features emphasize optimization--one of the key themes in the book--by focusing on making the best decision. These features ask students to make an economic decision, or evaluate the consequences of past real decisions. The authors then explain how an economist might analyze the same decision. Examples of choices investigated include:
    • The societal consequences of the expulsion of Jewish faculty from universities in Nazi Germany (Chapter 20)
    • Minimum wage laws and employment (Chapter 23)
    • Luddite resistance to new technology and what this can teach us about the disruption that new and more productive robots are bringing to the economy today (Chapter 23)
    • Obtaining reserves outside of the federal funds market (Chapter 25)
    • The new administration’s fiscal policy proposals (Chapter 27)
    • The political forces that influence trade policy (Chapter 28)
  • Graphical Exhibit describing the relationship between interest rates and net capital outflows, unifying material from several chapters for the analysis of open economy macroeconomics (Chapter 29)

Show the importance of macroeconomic concepts in everyday life

Practical coverage of macroeconomics helps students see how they can apply course content in their own decision-making.

  • Examination of the labor market in terms of the downward nominal wage rigidity (Chapters 23, 26, and 27).
  • Simplified presentation of the two-part labor supply curve for easier student comprehension (Chapters 26 and 27).

PART I: INTRODUCTION TO ECONOMICS 

1. The Principles and Practice of Economics

2. Economic Methods and Economic Questions

3. Optimization: Doing the Best You Can

4. Demand, Supply, and Equilibrium

 

PART II: INTRODUCTION TO MACROECONOMICS 

5. The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

6. Aggregate Incomes

 

PART III: LONG-RUN GROWTH AND DEVELOPMENT 

7. Economic Growth

8. Why Isn’t the Whole World Developed?

 

PART IV: EQUILIBRIUM IN THE MACROECONOMY 

9. Employment and Unemployment

10. Credit Markets

11. The Monetary System

 

PART V: SHORT-RUN FLUCTUATIONS AND MACROECONOMICS POLICY

12. Short-Run Fluctuations

13. Countercyclical Macroeconomic Policy

 

PART VI: MACROECONOMICS IN A GLOBAL ECONOMY 

14. Macroeconomics and International Trade

15. Open Economy Macroeconomics

 

CHAPTERS ON THE WEB 

1. Financial Decision Making

2. Economics of Life, Health, and the Environment

3. Political Economy

Daron Acemoglu is Elizabeth and James Killian Professor of Economics in the Department of Economics at the Massachusetts Institute of Technology. He received a BA in economics from the University of York, an MSc in mathematical economics and econometrics from the London School of Economics, and a PhD in economics from the London School of Economics.

He is an elected fellow of the National Academy of Sciences, the American Academy of Arts and Sciences, the Econometric Society, the European Economic Association, and the Society of Labor Economists. Acemoglu has received numerous awards and fellowships, including the inaugural T. W. Schultz Prize from the University of Chicago in 2004, the inaugural Sherwin Rosen Award for outstanding contribution to labor economics in 2004, the Distinguished Science Award from the Turkish Sciences Association in 2006, and the John von Neumann Award, Rajk College, Budapest, in 2007.

He was also the recipient of the John Bates Clark Medal in 2005, awarded every two years to the best economist in the US under the age of 40 by the American Economic Association, and the Erwin Plein Nemmers Prize awarded every two years for work of lasting significance in economics. He holds honorary doctorates from the University of Utrecht and Bosporus University.

His research interests include political economy, economic development and growth, human capital theory, growth theory, innovation, search theory, network economics, and learning.

His books include Economic Origins of Dictatorship and Democracy (jointly with James A. Robinson), which was awarded the Woodrow Wilson and the William Riker prizes, Introduction to Modern Economic Growth, and Why Nations Fail: The Origins of Power, Prosperity, and Poverty (jointly with James A. Robinson), which has become a New York Times bestseller.

David Laibson is the Chair of the Harvard Economics Department and the Robert I. Goldman Professor of Economics at Harvard University. He is also a member of the National Bureau of Economic Research, where he is Research Associate in the Asset Pricing, Economic Fluctuations, and Aging Working Groups.

His research focuses on the topics of behavioral economics, intertemopral choice, macroeconomics, and household finance, and he leads Harvard University’s Foundations of Human Behavior Initiative. He serves on several editorial boards, as well as the Pension Research Council (Wharton) and Harvard’s Pension Investment Committee, and the Board of the Russell Sage Foundation. He has previously served on the boards of the Health and Retirement Study (National Institutes of Health) and the Academic Research Council of the Consumer Financial Protection Bureau.

He is a recipient of a Marshall Scholarship and a Fellow of the Econometric Society and the American Academy of Arts and Sciences. He is also a recipient of the T. W. Schultz Prize from the University of Chicago and the TIAA-CREF Paul A. Samuelson Award for Outstanding Scholarly Writing on Lifelong Financial Security.

Laibson holds degrees from Harvard University (AB in economics), the London School of Economics (MSc in econometrics and mathematical economics), and the Massachusetts Institute of Technology (PhD in economics). He received his PhD in 1994 and has taught at Harvard since then. In recognition of his teaching excellence, he has been awarded Harvard’s Phi Beta Kappa Prize and a Harvard College Professorship.

John A. List is the Kenneth C. Griffin Distinguished Service Professor in Economics at the University of Chicago, and Chairman of the Department of Economics. He received his BS in economics from the University of Wisconsin—Stevens Point and his PhD in economics from the University of Wyoming. Before joining the University of Chicago in 2005, he was a professor at the University of Central Florida, University of Arizona, and University of Maryland. He also served in the White House on the Council of Economic Advisers from 2002—2003, and is a Research Associate at the NBER.

List was elected a Member of the American Academy of Arts and Sciences in 2011, and a Fellow of the Econometric Society in 2015. He also received the Arrow Prize for Senior Economists in 2008, the Kenneth Galbraith Award in 2010, the Yrjo Jahnsson Lecture Prize in 2012, and the Klein Lecture Prize in 2016. He received an honorary doctorate from Tilburg University in 2014, and was named a Top 50 Innovator in the Non-Profit Times for 2015 and 2016 for his work on charitable giving.

His research focuses on questions in microeconomics, with a particular emphasis on using field experiments to address both positive and normative issues. For decades his field experimental research has focused on issues related to the inner workings of markets, the effects of various incentive schemes on market equilibria and allocations, and how behavioral economics can augment the standard economic model. This includes research into why inner city schools fail, why people discriminate, why people give to charity, why firms fail, why women make less money than men in labor markets, and why people generally do what they do.


His research includes over 200 peer-reviewed journal articles and several published books, including the 2013 international best-seller, The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life (with Uri Gneezy).

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