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limits by single bank, 252“254
Marshall, Alfred, 199
on coordination failure, 184
oversimplified formula, 258
Marshall, Steve, 69
on equilibrium GDP, 176
by a series of banks, 254“256
Marx, Karl, 35, 52
The General Theory of Employment,
full-bodied paper money, 246
Mazda, 32
Interest, and Money, 95, 168, 182
growth of, and inflation, 282
McCain, John, 222, 228, 232, 300
on Great Depression, 182
vs. income, 262
McCullough, Robert, 60
Keynesian model
inflationary expectations, 326“328
McDonnell-Douglas, 349
aggregate demand curve, 273“274
M1/M2, 246“247
Medicaid/Medicare, 34
monetary policy, 272“274, 281
measurements of, 246“248
Medium of exchange, 244. see also Money
money and price level in, 272“274
as medium of exchange, 244
Mercantilism, 348
recessions, 330“331
nature of, 242“246
Metropolitan Transportation
Keynesian theory, 11
objects used as, 244“246
Authority, 46
King, Martin Luther, Jr., 113
and price level in Keynesian model,
Mexico
Krueger, Alan, 115
272“274
central bank of, 265
Kydland, Finn, 294
primitive forms of, 244
currency, 363, 373, 374
L quantity theory of, 278“281
educational attainment in, 148
redesigning bills, 245
growth, 138
Labor
Money cost, 41“42, 274
investor protection, 140
costs of, 341


Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Licensed to:
Index
418



Net worth, 252
Money market deposit accounts, 247 inflationary expectations, 326“328
Netherlands, 24, 35
Money market mutual funds, 247 origins of, 319“320
“New Economy,” 97“98, 318
Money multiplier, 256 short-run, 324, 325, 327
Money profit, 43 New York City, rent controls in, 72“73 supply-side inflation, 214“215,
Money supply, 246“248. see also Money New York Times, 76 318“319, 321“322
bank discretion over, 248“249 NIH (National Institutes of Health), 143 vertical long-run, 323, 327“328
contractions of, 256“258 Nippon Steel Co., 69 Physical assets, 155
and Federal Reserve System, 284“287 Nissan, 32 Physical resources, 40
origins of, 251“252 Nixon, Richard, 96, 371 Political business cycles, 293“294
Money-fixed asset, 162, 180 NNP (Net national product), 170 Political stability, 140
Moral hazard, 250 No Child Left Behind, 141 Politics, 293“294, 314
Mozambique, 140 Nobel Prize winners Polo, Marco, 245
Finn Kydland, 294 Population, and shifts in demand curve, 59
MPC (Marginal propensity to consume),
160“161 Robert E. Lucas, Jr., 133 Positive slope, 14
Mugabe, Robert, 124 Edward Prescott, 294 Post office, 23
Robert M. Solow, 3
Multinational corporations, 31“32, Potential GDP, 108“112, 149, 153, 182,
Nominal GDP, 88, 92
147“148 205, 310
Nominal rate of interest, 120“122 Poverty, 226
Multiplier
Nominal wage, 118, 201“202, 207“208
aggregate demand curve, 190“191 PPF (Production possibilities frontier),
Nonconsumption uses, as portion of 43“44, 45, 138, 347
algebraic statement, 187“189
GDP, 31 Practical policy, vs. theory, 10
and automatic stabilizers, 225
North American Free Trade Agreement Predictable inflation, 123
definition, 185“186
(NAFTA), 340, 348 Prescott, Edward, 294
and demand-side equilibrium,
Northern Rock (bank), 242, 249 Presidential campaign (2008), 222, 226,
185“189, 190“191, 193“197
Northern Telecom, 32 228, 231
effect on equilibrium GDP, 223
NSF (National Science Foundation), 143 Presidential campaigns, and supply-side
as general concept, 189“190
NTT, 32 economics, 232
and government transfer payments, 35,
Price
157, 225“226, 332
O advantage for domestic firms, 350
illustration of, 186“187
and aggregate demand curve, 228
and income determination, 193“194 Obama, Barack, 222, 228, 232, 300, 340
of energy, 60, 144“145
inflation, 204“205 Official deficit, 306
equilibrium, 358“359
interest rates, 282“283 Offshoring, 340“341
and income distribution, 231“232
and international trade, 195“196 Oil, 56, 68“69, 211“212, 216, 321“322
of inputs, 63
monetary policy, 272 On-the-job training, 141“142
international trade, 358“360
overstatement of, 224 OPEC (Organization of Petroleum Export-
price ratios and exchange rates, 346
spending chain, 187 ing Countries), 96, 144, 211, 216
and recessionary gap, 207“208
taxes, 223“226, 237 Open economy, 23“24, 379, 382, 384“386
of related outputs, 64
variability of, 229 Open-market operations, 265“268
relative, 119“120, 165“166, 381
with variable imports, 194“197 bank reserves market, 216, 265“266
supports during Great Depression, 73
bond prices, 268
N Price ceilings, 70“71
contractionary, 285
Price controls, 56“57, 96
NAFTA (North American Free Trade expansionary, 285“286
Price floors, 73
Agreement), 340, 348 interest rates, 268
Price index, 128“129
NASA (National Aeronautics and Space mechanics of, 266“268
Price level, 162, 212“213
Administration), 143 Opportunity cost
Price system, 56, 348
National Aeronautics and Space and comparative advantage, 49
Principle of increasing costs, 44
Administration (NASA), 143 definition, 4“5
Priorities, 40
money cost, 41“42, 274
National debt
Prism, Miss, 361
as a burden, 307“308 nature of, 45
Private-enterprise economy, 23
contributors, 312 and production possibilities frontier, 44
Production, 108“109, 155“157, 170“171
definition, 303 scarcity and choice, 40“42
Production function, 108“109
facts, 303“305 Optimal decision, 42
Production indifference maps, 18
foreign holders of, 308 Optimal purchase rule, 125
Production possibilities frontier (PPF),
interest on, 34 Organization of Petroleum Exporting
43“44, 45, 138, 347
relative to GDP, 304 Countries (OPEC), 96, 144, 211, 216
Productivity
and slow growth, 311“312 Origin, 13
aggregate supply curve, 202
National defense, 34, 351“352 Outputs, 30“32, 42, 50“52, 105, 108“109, 157
and capital, 135
National income, 153“155, 157, 165, 170
P growth, 106“107, 134“136, 145
National income accounting, 168“172
of labor, 107, 109“110, 146
National Institutes of Health (NIH), 143 Panama, 374
labor quality, 136
National Science Foundation (NSF), 143 Paper money. see Money
levels of, 136“138
Natural rate of unemployment, 323, Pensions, 34
rate of, 143“147
331“332 Perfect competition, 33“34
slow down (1973“1995), 143“144
Natural resources, 56“57, 96 Perot, Ross, 348
specialization, 48, 50, 341, 344,
Near moneys, 247 Personal income tax, 230
347“348
Negative income tax (NIT), 226 Personal services, cost disease of, 146“147
speed-up (1995-?), 144“145
Negative slope, 14 Peru, 138
technology, 135
Net exports, 155, 165“166, 195, 380. see also Phillips, A.W., 10“11, 319
Productivity growth, 6“7
Exports “Phillips curve,” 10“11
Profits, 31
Net national product (NNP), 170 Phillips curve, 317
Progressive taxation, 35
Net of transfers, 157 definition, 322“324
Property rights, 140
Net taxes, 157 and inflation targeting, 293, 325“326


Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Licensed to:
Index 419



Related outputs, prices of, 64
Proportional tax, 35 Spending policy, 227“228
Relative prices, 119“120, 165“166, 381
Protectionism Stabilization policy
Rent controls, 72“73
infant-industry argument, 352“353 and aggregate supply curve, 287“289
Report on Manufacturers (Hamilton), 352
national defense, 34, 351“352 automatic stabilizers, 225
Republican Party, fiscal policy, 228
noneconomic considerations, 351“352 criticism of, 278, 290
Research and development (R&D), 142“143
for particular industries, 350“351 definition, 133
Research and Experimentation Tax
popularity of, 352 disagreements about, 330“331
Credit, 143
price advantage for domestic firms, 350 effectiveness, 100“101
Reserve requirements, 251
Safire on, 354 and full employment, 182
Resource allocation, 47“49, 75“76
satire, 355 lags in, 283“284, 292
Resources, 40. see also Resource allocation
strategic trade policy, 353 in macroeconomics, 99“101
Retail sector, 28
trade deficit, 382, 387“390 role of, 216
Revaluation (currency), 363, 370
Prudhoe Bay, 68“69 Stagflation, 96, 199, 200, 210“212, 216
Public debt. see National debt Ricardo, David, 49, 343“344, 348, 354 State and local government expenditures, 34
State and local tax system. see Taxation
Roosevelt, Franklin, 371
Public infrastructure, 34
Rules-versus-discretion debate, 291“295
Purchasing power, 92, 117“118 Steel industry, 69
Run on a bank, 242, 249
Purchasing power parity theory, 366“368 Stewart, Jimmy, 249
Russia, 24, 133, 138, 140, 361, 374
Pure inflation, 119 Store of value, 244
Russianoff, Gene, 46 Straphangers Campaign, 46
Q Strategic argument for protection, 353
S Strategic trade policy, 353
Quantity demanded, 57“61
Structural budget deficit, 305“306
Quantity supplied, 61“64 Safire, William, 354
Structural budget surplus, 305“307
Quantity theory of money, 278“281 Sales tax, 235
Structural unemployment, 114
Quota, 348“353, 359“360 Savings, 158, 163, 183“184, 389
Subprime mortgage crisis (2007), 249,
Savings account, 247
R 251, 379
Scarcity, 39“52
Subsidies, 349
and choice
Rational expectations, 328“330
Sudan, 148
efficiency, 47
Ray through the origin, 16
Sugar industry, 73“74
for entire society, 45“46
Rays, 16“17
Supply and demand, 55“76. see also
money cost, 41“42, 274
Reagan, Ronald
Demand; Demand curve
opportunity cost, 40“42
budget deficits, 40
demand schedule, 58
optimal decision, 42

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