Given the diversity of macroeconomic models and schools, instructors often ask publisher representatives what is the text’s “approach” to macro. Macroeconomics for Life covers the traditional, agreed-upon core macroeconomic concepts and theory, using the expanded circular flow (Y=C+I+G+X-IM) and AS/AD models. Our distinctive “approach’ is to encourage students to think about the differing Hands-Off and Hands-On positions not as right or wrong, but as contrasting ways of looking at the macro economy. Topic by topic, we then present the best arguments behind economists’ Hands-Off and Hands-On positions.

We hope the specific notes below will help answer your remaining questions about “approach.”

We cover economic growth right after GDP in Chapter 7 (Potential GDP, Business Cycles, and Economic Growth). This allows us to contrast differing emphasis on short-run fluctuations versus long-run growth.

In Chapter 8 (Unemployment and Inflation), we introduce the Phillips Curve (so students are aware early on of unemployment/ inflation trade-offs) and a simplified quantity theory of money, so students understand one of the most common media stories tying inflation to the money supply.

Starting in Chapter 9 (The Aggregate Supply and Aggregate Demand Model), our macro models center around AS/AD. While the treatment of long-run equilibrium is traditional, we use a “time-enhanced” approach to short-run AS/AD. We emphasize that production takes time, which means AS decisions are made before, and in expectation of, subsequent AD decisions. Starting from long-run equilibrium, explanations of AD shocks include scenarios where AD turns out to be greater/less than the expected equilibrium. This treatment incorporates the central role of expectations in a simple fashion.

For those who don’t teach the Keynesian aggregate expenditure model, Chapter 10 (The Aggregate Expenditure Model), can be skipped without disruption to remaining chapters. Instead of deriving AD from AE, Chapter 9 motivates the downward-sloping AD using the international substitution effect, which students find very straightforward. We also cover multipliers in Chapter 13 (Fiscal Policy), Multipliers, Deficits and Debt, providing the intuition using injections and leakages in the circular flow model. There are also numerical multiplier examples and graphical illustrations of multipliers using the AS/AD model. Chapter 13 covers both demand-side and supply-side fiscal policies.

Because of the increasing importance of international trade and open-economy issues, Chapter 11 (Exchange Rates and the Balance of Payments), appears before Chapter 12 (Money and Monetary Policy), which explains both domestic and international transmission effects of monetary policy.

Chapter 12 contains a new, intuitive presentation of how central banks with ample reserves now control market interest rates with central-bank-administered interest rates. There is a brief historical discussion of open market operations, and a feature titled “R.I.P. Money Multiplier,” for those who want to mention the outdated monetary policy tools.

Chapter 13 uses familiar tools like the GDP expenditure equation and the circular flow and AS/AD models to explain how government spending, taxes, deficits, and the national debt affect the economy.

Chapter 14 (Globalization, Trade, and Protectionism), covers international trade, with added emphasis on controversies about the effects of globalization.

While we integrate core disagreements among macroeconomists in each of the relevant chapters, there are more extensive discussions of those differences in Chapter 15 (Controversies in Macroeconomics). Topics include

• Modern macroeconomics camps and their correspondence to Hands-Off and Hands-On positions
• Say’s Law – Does supply create its own demand
• The loanable funds market and business investment and savings
• Business cycle origins and adjustment back to long-run macroeconomic equilibrium
• Monetary Policy hawks and doves
• Fiscal Policy, Deficits, and National Debt issues

The Chapter 15 placement allows us to limit the presentation of contrasting positions within each chapter, leaving most space for core concepts. If you want your students to know more about a particular controversy, you can assign the relevant section of Ch 15 when you cover that topic.

Students using Macroeconomics for Life: Smart Choices for All? will learn the macroeconomics they need, both to continue as economics majors and to be informed and engaged citizens who can think critically about macroeconomic policy issues.