The severe economic downturn that began in 2007 with the bursting of the housing bubble was still affecting the economy in 2011. Unemployment had risen to levels not seen in decades and remained above 9 percent for more than two and a half years. The crisis in the financial system was the worst since the Great Depression of the 1930s. Policy debates intensified as Congress passed and President Barack Obama enacted the American Recovery and Reinvestment Act of 2009, the largest package of spending increases and tax cuts in history.
The Federal Reserve sailed into uncharted waters as it developed new policy tools to deal with the unprecedented financial turmoil. Other long running policy debates continued as well, as comprehensive health care legislation, looming cost increases for Social Security and Medicare, huge long run budget deficits, environmental problems, income inequality, and changes to the tax system all received attention from economists, policymakers, and the public.
In this new edition, we help students understand recent economic events and the policy responses to them. As in the earlier editions, we place applications at the forefront of the discussion. We believe that students find the study of economics more interesting and easier to master when they see economic analysis applied to real world issues that concern them.
Part 1 Introduction
Part 2 Firms in the Domestic and International Economies
Part 3 Macroeconomic Foundations and Long-Run Growth
Part 4 Short-Run Fluctuations
Part 5 Monetary and Fiscal Policy
Part 6 The International Economy