Flexibility for you and quality, engaging content for your students…
The sixth edition of this benchmark Australian text continues to offer students a comprehensive and relevant introduction to economics whilst now offering you, as the instructor, the ability to customise and deliver the content the way you wish to teach it!
Through extensive revision, the book gives students an even more streamlined approach to study and recognises the difficulties some may face in comprehending key concepts. The new edition leaves the more technical content and applications until later, allowing students to enjoy the more exciting policy material from the beginning and to engage with the content early.
Through compelling examples, clear explanations and the latest instructive on-line resources, the text draws students into the content and reinforces learning through practice and solving problems which are relevant to them. The authors train students to think about issues in the way real economists do, and learn how to explore difficult policy problems and make more informed decisions by offering a clear introduction to theory and applying the concepts to today’s events, news, and research.
Part 1: INTRODUCTION
1. What is Economics?
2. The Economic Problem
3. Demand and Supply
Part 4: MONITORING THE MACROECONOMY
18. Measuring GDP and Economic Growth
19. Monitoring Jobs and Inflation
Part 5: UNDERSTANDING THE MACROECONOMY
20. Economic Growth
21. Finance, Saving, and Investment
22. Money, the Price Level, and Inflation
23. The Exchange Rate and the Balance of Payments
24. Aggregate Demand and Aggregate Supply
25. Expenditure Multipliers: The Keynesian Model
26. Australian Macroeconomic Fluctuations
Part 6: MACROECONOMIC POLICY
27. Fiscal Policy
28. Monetary Policy
29: International Trade Policy (Available on MyEconlab only)
Key content changes to the sixth edition
The thoroughly updated coverage of macroeconomics is now organised in three parts:
- Monitoring the macroeconomy,
- Understanding the macroeconomy,
- Macroeconomic policy.
This reorganisation provides flexible coverage of the material and supports either a course that focuses on the trends and long-run fundamentals or one that focuses on fluctuations and short-run departures from trend.
In addition to these organisational changes, the macroeconomics chapters feature the following eight major revisions.
1. Measuring GDP and Economic Growth (Chapter 18)
This chapter now includes a description and discussion of the recent history of real GDP growth and fluctuations found in the previous edition's introductory macro chapter. The explanation of the real GDP has been simplified and the calculation of real GDP using the chain volume measure is presented in a new Mathematical Note at the end of the chapter.
2. Monitoring Jobs and Inflation (Chapter 19)
This substantially revised chapter has a simplified coverage of the anatomy and types of unemployment but a more comprehensive explanation of the sources of unemployment. As today's unemployment is compared with that of the Great Depression, the empirical relationship between cyclical unemployment and the output gap is more clearly illustrated. The measurement of the price level and inflation is motivated with a discussion of inflation and why it is a problem. The chapter also includes new material on alternative price indexes including the GDP deflator and the chain price index of household final expenditure (HFCE), as well as the concept of core inflation and its measurement with the trimmed mean CPI. The chapter now concludes with a brief section on the general use of real variables in macroeconomics.
3. Economic Growth (Chapter 20)
The process of economic growth now begins with an explanation of what determines potential GDP (adapted from the previous edition's classical model chapter) and is followed by an explanation of what makes potential GDP grow. The sources of labour productivity growth are thoroughly explored.
4. Finance, Saving, and Investment (Chapter 21)
An entirely new chapter provides a thorough and extensive explanation of financial markets and institutions. These markets are the link between the money economy and the real economy, and they play a crucial role in providing the funds for investment— an engine of economic growth. The circular flow model of Chapter 18 is extended to include the flows in the market for loanable funds that finance investment. The chapter explains the role of government in the market for loanable funds and explains crowding out and the role of debt and the government budget deficit. The chapter also includes a discussion of borrowing and lending in the global loanable funds market. The credit crisis of 2008 is a central example used to illustrate the working of this vital macroeconomic market.
5. Money, the Price Level, and Inflation (Chapter 22)
This chapter is heavily revised to simplify the explanation of the money creation process. A Mathematical Note at the end of the chapter provides a more comprehensive analysis of this process. The chapter includes an explanation of the role and functions of the Reserve Bank. It also includes coverage of the Reserve Bank's and the U.S. Federal Reserve's roles in the 2008 credit crisis.
6. The Exchange Rate and the Balance of Payments (Chapter 23)
This chapter is heavily revised to incorporate an explanation of the determination of the balance of payments, found in the international trade chapter of the previous edition. The chapter also looks at the dramatic rise in the Australian dollar from 2002 to 2008 and the equally dramatic fall that started in July 2008.
7. Aggregate Demand and Aggregate Supply (Chapter 24)
This chapter is a streamlined version of the previous edition's content, but with a new and more detailed explanation and illustration of the Australian business cycle. The added clarity and focus of this chapter reflects the tone and goals of the sixth edition.
8. Fiscal Policy (Chapter 27) and Monetary Policy (Chapter 28)
These chapters are revised to incorporate the policy responses to the ongoing slowdown and recession triggered by the global financial crisis. They describe and analyse the Commonwealth government’s fiscal stimulus packages and the Reserve Bank’s interest rate actions in 2008 and the first quarter of 2009. Chapter 28 contains a new feature on the influences on Reserve Bank decisions and compare its cash rate decisions with the Taylor Rule. The chapter also explains the extraordinary policies that have been adopted to cope with the unusual economic and financial crisis.
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