I. Introduction 1. The Policy and Practice of Macroeconomics     2. Measuring Macroeconomic Data     II. Macroeconomic Basics     3. Aggregate Production and Productivity     4. Saving and Investment in Closed and Open Economies     5. Money and Inflation     III. Long-Run Economic Growth     6. The Sources of Growth and the Solow Model     7. Drivers of Growth: Technology, Policy, and Institutions     IV. Business Cycles: The Short Run     8. Business Cycles: An Introduction     9. The IS Curve     10. Monetary Policy and Aggregate Demand     11. Aggregate Supply and the Phillips Curve     12. The Aggregate Demand and Supply Model     13. Macroeconomic Policy and Aggregate Demand and Supply Analysis     V. Finance and the Macroeconomy     14. The Financial System and Economic Growth     15. Financial Crises and the Economy     VI. Macroeconomic Policy     16. Fiscal Policy and the Governmnt Budget     17. Exchange Rates and International Economic Policy     VII. Microeconomic Foundations of Macroeconomics     18. Consumption and Saving     19. Investment     20. The Labor Market, Employment, and Unemployment     VIII. Modern Business Cycle Analysis and Macroeconomic Policy     21. The Role of Expectations in Macroeconomic Policy 22. Modern Business Cycle Theory

This title is a Pearson Global Edition. The Editorial team at Pearson has worked closely with educators around the world to include content which is especially relevant to students outside the United States. Enable students to connect theory to practiceAuthor Frederic Mishkin believes that the best way to teach macroeconomics is by continually exposing students to cases and applications so they really understand the underlying theory. As such, this text emphasizes policy and practice in macroeconomics by discussing the most exciting, current, major policy debates in the macroeconomics field. In particular, in-chapter applications and Policy and Practice cases provide important perspectives on current events, domestic and global issues, and historical episodes.• Over 40 in-chapter applications show students how to apply theory to real-world examples. Topics include the Great Inflation from 1965 to 1982, the 2007—2009 financial crisis, the impact of oil prices on real wages and the stock market, why income inequality has been growing over time, and why some countries are rich and others poor. • Over 30 Policy and Practice cases explore specific examples of actual policies and how they were executed. Topics include how the Federal Reserve uses the Taylor rule, nonconventional monetary policy during the 2007—2009 financial crisis, the political business cycle and Richard Nixon, the survival of the Euro, and China’s one-child policy. The central modeling element in Macroeconomics: Policy and Practice is a powerful, dynamic aggregate demand and supply (AD/AS) model that highlights the interaction of inflation and economic activity. In this model, inflation is on the vertical axis (as opposed to the price level). This model is built step-by-step across Chapters 9—13, enabling students to grasp the basic tenets before proceeding to more advanced applications. Although this model represents a change from the way macroeconomics has been taught in the past, it is actually easier for students to learn because they only have to master one model, rather than three as in more traditional approaches, which have separate developments of the ISLM model, traditional aggregate demand/aggregate supply, and the Phillips curve.  NEW! Substantial additional material on business cycle analysis makes it easier for students to understand the dynamic aggregate demand/aggregate demand model. • A new section on alternative view of the business cycle in Chapter 8 distinguishes the long-run trend from deviations from this trend and introduces the concept of the output gap• Coverage of financial frictions has been integrated into the dynamic aggregate demand and aggregate supply model at the outset, and financial frictions are treated as an additional factor that shifts the IS curve (in Chapter 10) and as a factor that shifts the AD curve (in Chapter 12)• A new section clarifies the difference between movements along the MP curve from shifts in the MP curve. The financial crisis that hit the world economy from 2007 to 2009 made abundantly clear the interaction between finance and macroeconomics. To enlighten students as to these links, two full chapters on the interaction between finance and macroeconomics provide a coherent approach to key topics such as financial system dynamics and asymmetric information and demonstrate their relevance in macroeconomic analysis. • Chapter 14, “The Financial System and Economic Growth,” shows how a well-functioning financial system promotes economic growth.• Chapter 15, “Financial Crises and the Economy,” examines how disruptions to the financial system affect aggregate demand and the economy, with a particular emphasis on the root causes, effects, and policy responses to the financial crisis of 2007—2009. •

Enable students to connect theory to practiceNEW! Substantial additional material on business cycle analysis makes it easier for students to understand the dynamic aggregate demand/aggregate demand model. • A new section on alternative view of the business cycle in Chapter 8 distinguishes the long-run trend from deviations from this trend and introduces the concept of the output gap• Coverage of financial frictions has been integrated into the dynamic aggregate demand and aggregate supply model at the outset, and financial frictions are treated as an additional factor that shifts the IS curve (in Chapter 10) and as a factor that shifts the AD curve (in Chapter 12)• A new section clarifies the difference between movements along the MP curve from shifts in the MP curve. Foster interest via engaging features and updated contentNEW! The Second Edition reflects the recent explosion of research on economic growth as economists attempt to address the question of why some countries stay poor, while others prosper. A new introductory section in Chapter 6 discusses economic growth around the world. Chapter 6 has also been updated to include new figures that show how output per worker changes over time when there is a change in the saving rate, population growth, or technology.NEW! Coverage of non-conventional monetary policy and the zero lower bound helps students understand current issues in macroeconomics. In recent years, monetary policymakers have entered a brave new world in which they have had to resort to nonconventional monetary policy because the policy interest rate—the federal funds rate in the United States—has hit a floor of zero (the so-called “zero lower bound”). The policy rate cannot be driven lower, thus making conventional monetary policy infeasible. Nonconventional monetary policy at the zero lower bound, such as quantitative easing, has become very controversial and is quite interesting to students. The Second Edition contains extensive discussion of this topic, with the following new material:• A new application, “Quantitative Easing and the Money Supply, 2007–2013” (Chapter 5)• A new section on monetary policy at the zero lower bound, which uses the dynamic aggregate demand and aggregate supply model to explain how the zero lower bound affects the conduct of monetary policy (Chapter 13)• A new Policy and Practice case, “Abenomics and the Shift in Japanese Monetary Policy in 2013” (Chapter 13)• A new Policy and Practice case, “Nonconventional Monetary Policy and Quantitative Easing During the Global Financial Crisis” (Chapter 15)• A new section on fiscal multipliers at the zero lower bound, which explains why fiscal multipliers are likely to be larger at the zero lower bound (Chapter 16)• A new section on nominal GDP targeting (Chapter 21)NEW! The Second Edition includes new material on the Euro Crisis, a continuing drama since 2010 and a key contemporary topic.• A new section in Chapter 16 explains the dynamics of these sovereign debt crises.• Three new Policy and Practice cases in Chapters 16 and 17—entitled “The European Sovereign Debt Crisis,” “The Debate Over Fiscal Austerity in Europe,” and “Will the Euro Survive?”—explore the impact of specific policies on the debt crises in the European Union.