## Macroeconomic Theory: A Short CourseThoroughly classroom tested, this concise text takes a fresh look at all the key topics in intermediate-level macroeconomic theory with carefully chosen linear versions of the standard models of both the closed and the open economy. The author leaves open the possibility that the standard macroeconomic models are incomplete, and challenges students to form their own opinions. The text's key chapter on inflation replaces the standard assumption of monetary targeting with a central bank reaction function, making the treatment of monetary policy both more realistic and modern. The book also features chapters on the open economy under fixed and floating exchange rates, the classical growth model, and the Solow-Swan growth model. |

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### Contents

Macroeconomic Accounting | 1 |

Prices and Output | 21 |

Keynesian Theory | 29 |

The IS Curve 49 | 49 |

The LM Curve | 59 |

The ISLM Model | 75 |

The Aggregate Demand Curve | 93 |

The Aggregate Supply Curve | 101 |

Fixed Exchange Rates | 193 |

Flexible Exchange Rates | 207 |

The Classical Growth Model | 217 |

CONTENTS | 221 |

The Neoclassical Growth Model | 231 |

A Mathematical Appendix | 243 |

B Answers to Selected Even Problems | 251 |

259 | |

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### Common terms and phrases

adaptive expectations aggregate demand asset markets assume assumption balance of payments bonds BP curve Calculate the level capital-labor ratio central bank constant consumption function currency demand curve demand for money depreciation devaluation dynamic economists exogenous expansion of GDP expected exports Figure fiscal expansion fiscal policy fixed exchange rates flexible exchange rates foreign exchange growth model growth rate increase GDP inflation rate investment spending investment-saving identity IS-LM model IS-LM-BP Keynes effect labor supply level of GDP level of income level of national level of output LM curve long-run equilibrium lower interest rate macroeconomic theory monetary policy money supply multiplier effect national saving natural level natural rate open economy paradox of thrift perfect capital mobility Phillips curve Phillips curve model previous problems price level production function profit rate of unemployment rate reduction reaction function reduced saving rate shifted the investment short run Solow-Swan model spreadsheet trade deficit unemployment rate vertical workers

### Popular passages

Page 267 - More on the Multiplier Effects of a Balanced Budget," American Economic Review, XLV (March 1955), 140.

Page 268 - Salvador!, N. (1995). Theory of Production: A Long-Period Analysis. Cambridge University Press, Cambridge, UK. Marglin, SA (1984). Growth, Distribution, and Prices. Harvard University Press, Cambridge, MA. Minsky, HP (1975). John Maynard Keynes. Columbia University Press, New York. Minsky, HP (1982). Can 'It' Happen Again: Essays on Instability and Finance.

### References to this book

Central Banking in the Modern World: Alternative Perspectives Marc Lavoie,Mario Seccareccia Limited preview - 2004 |