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3.3 End-of-Chapter Material
In Conclusion
Our book is built around economic topics, such as the income tax code, the social security system, the determination of monetary policy in Europe, and the contrasting economic health of different countries.
Throughout this book, we will emphasize the measurement and interpretation of economic data. Understanding how to read charts and tables of economic data is a critical skill for anyone who wants to be a sophisticated consumer of economic and political news. We also explain both policy tools and their links to economic outcomes. Understanding these links requires a model of the economy. We introduce models as needed, in the context of their applications. Mastering macroeconomics involves both understanding the tools that macroeconomists use and knowing how and when those tools should be applied. In this book, you will learn about these tools by example: you will see them in use as we study different questions in economics. At the same time, you will learn about many topics that should interest you as engaged and aware citizens of the world. We hope that, after reading this book, you will both better understand what it is that economists do and be better informed about the world in which we all live.
As you proceed through the chapters, you will often see reference to our toolkit. This is a collection of some of the most important tools that we use over and over in different chapters. Each tool is fully introduced somewhere in the book, but you can also use the toolkit as a reference when working through different chapters. In addition, it can serve as a study aid when you are preparing for quizzes and examinations.
We try to avoid getting too hung up on the mathematical expression of our theories (although the math will usually be lurking in the background where you can’t quite see it). In particular, our applications chapters contain very little mathematics. This means that you can read and understand the applications without needing to work through a lot of mathematics. Compared to our applications chapters, our toolkit contains slightly more formal versions of the frameworks that we develop. You will refer to the tools over and over again as we progress through the book, for the same tool is often used to shed light on all sorts of different questions.
Key Links
- Bureau of Economic Analysis: http://www.bea.gov
- Bureau of Labor Statistics: http://www.bls.gov
- Board of Governors of the Federal Reserve System: http://www.federalreserve.gov
- European Central Bank: http://www.ecb.int/home/html/index.en.html
Exercises
- Provide updated information for at least one of the four screens in Figure 3.1.
- Use the Internet to find an article (for example, magazine, newspaper, publication of an economics research group) that contains a graph of real GDP for a country other than the United States. What purpose does the picture serve in the article? Why do you think it was included?
- Find a statement about monetary policy from the monetary authority in the United States, Canada, or Australia. What are some of the indicators of the state of the economy that are used in the policy statement?
- The article on Bernanke’s model contained the following quote: “We conclude that, although private-sector forecasts may contain information useful to the central bank, ultimately the monetary authorities must rely on an explicit structural model of the economy to guide their policy decisions.” What do you think is meant by this statement?