Europe(continued)
monetary neutrality, 318
unemployment benefits, 130
European Central Bank (ECB),
253
European Commission, 83
European Union (EU), 653
Excess capacity, 665
Excess demand. SeeShortage
Excess reserves, 249
Excess supply. SeeSurplus
Exchange market interven-
tion,430–431
Exchange rate,419–427. See
alsoForeign exchange
market
automobile industry, 427
balance of payments, 419,
421–423
Big Mac index, 425–426
equilibrium, 420–423
nominal, 423–426, 429
real, 423–425
Exchange Rate Mechanism,
436, 439
Exchange rate,policy
devaluation, revaluation,
435–437
exchange market interven-
tion, 430–431
fixed, 429–432, 435–437
floating, 429, 431–432,
437–438
foreign exchange controls,
431
foreign exchange reserves,
430–431
international business cycle,
438
macroeconomic, 435–439
Exchange rate regime,
429–432, 435–439
Excise tax,499–500
cost of, 506–508
price elasticities and, 502–504
quantities and prices and,
500–502
revenue from, 505–506
Excludable, 743
Expanded circular-flow dia-
gram, 103 –106
Expansionary fiscal policy,
204–205, 209, 355–356
Expansionary monetary
policy,310, 355–356
Expansions,10 –11
Expectation changes
aggregate demand curve, 175
demand curve, 54–55
supply curve, 63
Expected deflation, 339
Expected inflation, 333–336
Explicit cost,530–531
Exports,105 –106, 108 –109
External benefits,726–727,
727External cost,726–727
Externalities, 727
pollution, economics of,
724–729
pollution, policies and,
731–736
private solutions to, 728–729
production, consumption
and, 736–740F
Factor demand
economy’s factors of
production, 680–682
marginal productivity and,
682–688
shifts, in curve, 686–688
Factor distribution of
income,681–682
Factor income, 409–410, 681
Factor markets,103, 679–680
Factor prices, 680–681
Factors of production, 3, 680
Fannie Mae, 257
Farm veterinary services, com-
petition and, 65
Farming industry
decline, in U.S., 477
implicit cost of, 533
perfect competition, 596
price floors, 82–84
FDIC (Federal Deposit
Insurance Corporation),
229, 246
The Fed. SeeFederal Reserve
Federal budget, 204
balance, 296–300
deficit, 296–305
future demands, 304
Federal debt, 300–304
problems with, 300–301
World War II, 303
Federal Deposit Insurance
Corporation (FDIC),
229, 246
Federal funds market, 263
Federal funds rate,263,
307–313
Federal Open Market
Committee, 255
economic contraction,
expansion and, 313
money and interest rates,
273, 307, 309
Federal Reserve, 234–235, 295
assets, liabilities, 264–265
banks, 243 –244, 246 –247,
249–250
central bank targets, 358
financial crisis of 2008,
258–260
housing boom, 169, 258–259
monetary policy, interest
rate, 307–313
money supply, 273–274
press release, 273stock bubble, 359
target federal funds rate, 273,
307–309
unconventional policy, 359
U.S. Treasury, 324
Federal Reserve Bank of New
York, 255–256, 258
Federal Reserve Banks, 255–256
Federal Reserve Board, 134
Federal Reserve districts,
255–256
Federal Reserve System,
253–260, 262–266
counterfeit money, 265
creation, 253–255
discount rate, 263–264
effectiveness of, 256–257
functions of, 262–266
monetary policy, 262–266
open market operations,
264–266
reserve requirement, 263
structure of, 255–256
Treasury bills, 264–265, 324
Federal Trade Commission Act
of 1914, 756
Fiat money, 234
Fidelity Investments, 228
Final buyers, 108
Final goods and services,
106 –107
Finance, international. See
Open economy
Financial account,411– 414
Financial asset,224, 226–227
Financial capital, 413
Financial crisis of 2008,
258–260
Financial intermediary,
227–229, 243
Financial markets,105, 224,
277
Financial risk, 225
Financial sector
banking, 243–251
Federal Reserve System,
253–260, 262–266
financial system, 224–229
interest rate models,
273–274, 277–286
loanable funds, 277–286
money, 231–235
money creation, 247–251
money market, 268–275
money, time value, 237–241
savings, investment, 222–224
Financial system, 224–229
financial assets, 224,
226–227
financial intermediaries,
227–229
liquidity, 225–226
risk, 225
transaction costs, 225
Firm, 103
Firm costsaverage cost, 552–555
cost curves, 548–550
marginal cost, 550–552
marginal cost curve, slope,
556–557
minimum average total cost,
555–556
short-run versuslong-run,
559 –563
sunk costs, 563–565
First Street Bank, 244–248
Fiscal policy,176 –177,
202–207
aggregate demand curve, 209
budget balance, 296–300
contractionary, 204–206,
209
deficits, 296–305
demand/supply shocks,
200–201
discretionary, 212, 356–357
expansionary, 204–205, 209,
355–356
fixed money supply, 349
government spending,
202–205
lags, 206–207
long-run implications,
300–305
macroeconomic theories,
356–357
versusmonetary policy,
355–357
multiplier, 209–213
public debt, 300–302
taxes, 202–205
unemployment reduction,
356
Fiscal year, 300
Fisher effect,283, 339
Fisher, Irving, 283, 338–339
Fixed cost, 548
concept and measures of,
564
in perfect competition, 595
short-run versuslong-run
and, 559–562
Fixed exchange rate,
429–432, 435–437
Fixed input, 542
Flat-bottomed paper bag, pro-
ductivity and, 371
Floating exchange rate,429,
431–432, 437–438
Florida, housing boom, 157
Flu vaccine, consumer demand,
457
Ford, Henry, 379, 670
Ford Motors U.K., 412
Foreign exchange. SeeExchange
rate
Foreign exchange controls,
431
Foreign exchange market,
419–423, 444. See also
Exchange rateI-4 INDEX