Macroeconomics

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I N D E X

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India

investment rate in, 202f

legal tradition in, 234

population growth and income per

person in, 215f

standard of living in, 192t

Indifference curves, 503f, 503–504

Indonesia

Big Mac price and exchange rate in,

148t

financial crisis of 1997-1998 and,

360–361

financial crisis of 1997-1998 in, 538

inflation and money growth in, 92f

standard of living in, 192t

Industrial policy, 233

Inflation, 79–80, 86–113. See also

Deflation; Hyperinflation

in AD-AS model, 412–413

benefit of, 105–106

core, 33

cost-push, 391

costs of, 572–573

definition of, 79

demand-pull, 391

differing views of, 101

expected, AD-AS model and, 413

expected, costs of, 102–103

high. See Hyperinflation

indexation and, 104

inertia of, Phillips curve and,

390–391

interest rates and, 94–100

measurement of government debt

and, 472–473

menu cost of, 102

money growth and, 90–92, 91f, 92f

of 1970s, causes of, 437–438

nominal exchange rate and, 144–145,

145f

rate of money growth and, 569

real wage and, 105–106

reducing, costs of, 572–573

shoeleather cost of, 102

social costs of, 100–105

stagflation and, 280, 427

time inconsistency and, 463–465

tradeoff between output variability

and inflation variability, 432–435,

433f

tradeoff with unemployment. See

Phillips curve

unexpected, costs of, 103–104

in United States, 4, 79, 92f, 391–393,

392f, 437–438

Inflation rate, 5

in United States, 6, 6f

Inflation targeting, 457–458

Inflation tax, 80, 93

Infrastructure, 232

Inside lag, 447

Insiders, wages and, 173, 400

Instant gratification, 519–521

Institutions, bases for, 234–235

Instrumental variables, 229

Insurance

Medicare and Medicaid, 471

social, 27, 471, 474

unemployment, 167–169

Intellectual property rights, 236

Interest rate(s), 62

differences among, 64

federal funds rate. See Federal funds

rate

Fed’s control of, 320–321, 333

housing demand and, 541, 542f

inflation and, 94–100

investment and, 62–63, 63f

IS curve and, 298–299, 299f

monetary policy and, 303–304

nominal. See Nominal interest rates

present value and, 502

real. See Real interest rates

in United Kingdom, wars and,

70–72, 71f

world, capital mobility and, 125–126

Interest rate differentials, 356–361

Asian financial crisis and, 360–361

country risk and exchange-rate

expectations and, 356–357

Mexican financial crisis and, 358–360

in Mundell-Fleming model,

357–358, 358f

Intergenerational redistribution, budget

deficits and, 486

Intermediate goods in GDP, 22

International flows of capital and

goods, 120–125

example of, 124–125

net exports and, 120–122

trade balance and, 122–124, 123t

International Monetary Fund (IMF),

359

Intertemporal budget constraint,

500–503, 502f

Intertemporal choice, 500–509

borrowing constraints and, 507–509,

508f, 509f

budget constraint and, 500–503, 502f

consumer preferences and, 503f,

503–504

income and, 505f, 505–506

interest rates and, 506–507, 507f

optimization and, 504f, 504–505

Inventories

as factor of production, 543

GDP and, 21–22

Inventory investment, 525, 526f,

543–544

real interest rate and credit conditions

and, 543–544

reasons for holding inventories and,

543

Investment, 27, 62–63, 63f, 535–545

allocation of, Solow growth model

and, 232–233