Robert H. Frank,
Cornell University Ben S. Bernanke,
Princeton University
ISBN: 0073193976 Copyright year: 2007
Feature Summary
An Emphasis on Core Principles: A few core principles do most of the work in economics. By focusing on these principles, the text assures that students leave the course with a deep mastery of them. In contrast, traditional encyclopedic texts so overwhelm students with detail that they often leave the course with little useful working knowledge at all.
Economic Naturalism Introduced: The authors' ultimate goal is to produce “economic naturalists” –people who see each human action as the result of an implicit or explicit cost-benefit calculation. The economic naturalist sees mundane details of ordinary existence in a new light and becomes actively engaged in the attempt to understand them.
Why don't auto manufacturers make cars without heaters?
Why are whales, but not chickens, threatened with extinction?
Why do movie theaters give student discounts on the price of admission but not on the price of popcorn?
Active Learning Stressed: The only way to lean to hit an overhead smash in tennis or to speak a foreign language is through repeated practice. The same is true for learning economics. Thus, the authors consistently introduce new ideas in the context of simple examples and then follow them with applications showing how they work in familiar settings. And frequently, the text poses exercises that both test and reinforce the understanding of these ideas. The end-of-chapter questions and problems are carefully crafted to help students internalize and extend core concepts. Students are prepared to apply the important concepts to solve “economic riddles” drawn from the real world.
Well-Known Authors: Robert Frank and Ben Bernanke are renowned experts in their fields (micro and macro, respectively). Frank's research has looked at rivalry and cooperation in economic and social behavior. He is the author of a best-selling intermediate economics text, Microeconomics and Behavior, (McGraw-Hill/Irwin), and has published such award-winning books as The Winner-Take-All-Society and Luxury Fever. Bernanke is the co-author of a best-selling intermediate macroeconomics text and has done significant research on the causes of the Great Depression, the role of financial markets and institutions in the business cycle, and measuring the effects of monetary policy on the economy. He was a member of the Federal Reserve Board of Governors for more than 2 years and is now the Chairman of the President's Council of Economic Advisers.
Modern Macroeconomics: Recent developments have renewed interest in cyclical fluctuations while still paying attention to such long-run issues as growth, productivity, the evolution of real wages, and capital formation. Thus, we offer the following organization
A 5-chapter treatment of long-run issues prior to an analysis of short-run fluctuations followed by a modern treatment of short-term fluctuations and stabilization policy, emphasizing the important distinction between short- and long-run behavior of the economy.
Consistent with both media reporting and recent research on the central bank reaction function, we treat the interest rate rather than the money supply as the instrument of Fed policy.
The analysis of aggregate demand and aggregate supply relates output to inflation, rather than to the price level, sidestepping the necessity of a separate derivation of the link between the output gap and inflation.
This book places a heavy emphasis on globalization, starting with an analysis of its effects on real wage inequality and progressing to such issues as the benefits of trade, the causes and effects of protectionism, the role of capital flows in domestic capital formation, the link between exchange rates and monetary policy, and the sources of speculative attacks on currencies.
Web site: Developed by Scott Simkins of North Carolina A&T State University, an expert in the growing field of Economics education on the World Wide Web, the ambitious web site contains a host of features that will enhance the principles classroom, including dynamic graphs, video lectures, e-mail updates, microeconomic experiments, current news articles, information about the text, an eLearning session, and more.
NEW! Expanded Discussion of Macroeconomic Policy:
The revised monetary policy reaction function the authors introduce in Chapter 14 is a more realistic description of how the Fed actually conducts monetary policy and clarifies the Taylor rule.
In Chapter 15 the authors use this policy reaction function to help students distinguish between a move along the aggregate demand curve and a shift in the aggregate demand curve resulting from a change in monetary policy.
In a new Chapter 16, the authors provide a more complete analysis of the interaction between fiscal and monetary policy, illustrating the crucial role of the central bank in any long-run inflation. The authors also discuss how enhanced credibility can help to anchor inflationary expectations and explain the contributions of central bank independence, inflation targeting, and central bank reputation. In the last section of Chapter 16 they expand their discussion of the real-world difficulties in conducting macroeconomic policy.
NEW! DiscoverEcon with Paul Solman Videos: DiscoverEcon with Paul Solman Videos: We have created interactive tutorial and homework management software called DiscoverEcon. DiscoverEcon provides both the best-selling tutorial software for Principles of Economics, including brand-new videos featuring Paul Solman of the Lehrer NewsHour on PBS, and a powerful course management tool. This product includes 240 minutes of video that focuses on explaining introductory economic concepts in a real-world, student-friendly manner. The website portion of the product includes updated graphing applets, interactive exercises, animated tutorials, and hundreds of multiple-choice questions to test student comprehension in each book chapter. The videos are integrated into the online software. The result is an integrated and comprehensive study tool that brings the material alive. Students will learn more, and instructors spend less time grading homework.
NEW! More Patient Presentation of Models: In Chapter 13 the authors explain the effects of tax cuts on planned aggregate expenditure more carefully. In an optional box we also solve a simple Keynesian model, leaving the full model in the appendix, as in the second edition. In the diagrams in Chapter 15 the authors include the transitional short-run aggregate supply lines to illustrate how the short-run aggregate supply line shifts when actual output deviates from potential output.
NEW! Expanded Discussion of Supply-Side Economics: Most economists agree that changes in marginal tax rates can affect both aggregate demand and aggregate supply, but they disagree on the size of the effects. In Chapter 28 the authors describe this controversy in greater detail and present both the theoretical and empirical evidence of the effects of changes in marginal tax rates on aggregate supply.
NEW! Greater Attention to Asset Prices: In Chapter 8 the authors provide a clearer explanation of the inverse relationship between bond prices and interest rates. They also discuss the effects of changes in asset prices (especially stocks and houses) on aggregate demand.
NEW! Simpler Presentation of Exchange Rates: The authors use supply and demand curves to illustrate the determination of nominal exchange rates before they introduce the real exchange rate and purchasing-power-parity.
NEW! Additional Material on China: At its current rate of growth the Chinese economy may become the largest economy in the world within the next generation. In this edition the authors expand their discussion of China in the world economy. They discuss the determinants of its success and its management of its exchange rate.
NEW! New Material on the Acceleration of Productivity Growth: The productivity slowdown of 1973-1995 has been followed by surprisingly strong productivity growth. The authors present and discuss the reasons for this acceleration.
NEW! Updated Discussion of Saving and Investment: In addition to emphasizing the importance of public and private saving and the relationship between the budget deficit, national saving, and capital flows, the authors discuss the recently divergent trends in business and household saving.
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2007 McGraw-Hill Higher Education