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Cover of Principles of Macroeconomics v4.0
September 2021
Page Count: 
ISBN (Digital): 

Principles of Macroeconomics

Version 4.0
By Libby Rittenberg, Alan Grant, and Timothy Tregarthen

Key Features

  • Over 45 hyperlinked videos, specifically chosen to capture students’ interest, counter the perception of economics as the “dismal science,” and reveal the deeper meanings of economic principles in memorable ways
  • The integrating theme for this volume is the model of aggregate demand and aggregate supply. The model encourages learners to consider both short-run and long-run concepts in order to address a variety of policy issues and debates more efficiently
  • Every chapter begins with a brief Start Up scenario, a timely, real-world attention-getter that often puts students into a decision-making role. One example includes: “What’s the best strategy for becoming a millionaire” (Chapter 11)
  • Seamlessly incorporates the lessons learned so far from the COVID-19 pandemic and the related recession
  • Relies heavily on real-world data to support the models presented, and not just where routinely expected (GDP, unemployment, inflation, etc.). For instance, the aggregate demand and aggregate supply chapter illustrates the remarkable correlation between consumer confidence and spending on durable goods over a 60-year time horizon (Figure 8.3)
  • Supportive learning features include:
    • Start Up features are attention-getting real-world chapter-openers that vividly demonstrate the link between theory and reality, and are revisited throughout the chapter
    • Learning Objectives lead off every main section
    • Heads Up! notes warn of common errors and explain how to avoid making them
    • Key Takeaways in each section summarize content and link back to that section’s  Learning Objectives
    • Key Terms are boldfaced and defined in the margins
    • Pop! Goes the Econ features provide links to contemporary examples that connect with students. Engaging examples include “Dr. Evil Holds the World for Ransom” (Section 6.4), “Bart Simpson Starts a Bank Run” (Section 10.3), and “Fiscal Policy in South Park” (Section 13.3)
    • Try It! problems are organized by main section. These problems encourage active learning and help students confirm they understand the material just covered. Each Try It! problem is linked to a similar end-of-chapter exercise
    • Case in Point scenarios are applications illustrating the influence of economic forces on real issues and real people such as “Good News and Bad in COVID-19 Unemployment Figures” (Section 7.2), “Is Bitcoin Money?” (Section 10.2),  or “Hold on Tight: Money Demand in the Coronavirus Crisis” (Section 11.4). Each Case in Point application is linked to an end-of-chapter problem
    • Summary pulls together the information presented in the chapter to enhance recall and facilitate test preparation
    • End-of-Chapter Concept Problems and Numerical Problems help students check understanding, promote discussion, and prompt learners to analyze and think critically about material just presented


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Principles of Macroeconomics is suitable for introductory macroeconomics courses usually called principles of macroeconomics, macroeconomics principles, introductory macroeconomics, or similar titles taught primarily at the undergraduate level at two- and four-year colleges and universities. The course may also be taught at the MBA level. This volume encompasses only macroeconomic topics and would typically be used in a semester- or quarter-long course. Separate volumes titled Principles of Economics (covering both microeconomic and macroeconomic topics) and Principles of Microeconomics are also available.

This new version of Principles of Macroeconomics welcomes a third co-author, Alan Grant, who brings fresh, classroom-based insights that enliven the text and bring it fully up to date. The two core premises of this book remain constant, however: 

  1. Economics is a unified discipline and not a bewildering array of seemingly unrelated topics. As a result, Version 4.0 of this volume remains structured around the model of aggregate demand and aggregate supply. 
  2. Basic macroeconomic principles are relevant to daily life and should be explained in everyday contexts. In this way, learners more readily perceive and understand the deeper meaning of core economic ideas. Engaging in-text applications and plentiful embedded video links are drawn from sports, politics, campus life, popular culture, and other familiar settings to illustrate the connections between theoretical principles and common experiences. 

Examples of the forward-looking perspective of Version 4.0 include new research on technological change and the wage gap, the impact of graduating college during an economic downturn, policies to reduce carbon emissions, and controversies surrounding the effectiveness of monetary and fiscal policy. This version also provides an up-to-date evaluation of the COVID-19 recession, including data-driven descriptions of the extraordinary policy response by the Federal Reserve and the government’s equally extraordinary fiscal response. There is also new discussion of the Chinese economy’s unprecedented economic growth and projections regarding the future pace of that growth. As in previous editions, there is an appropriate balance between current issues and historical context.

New in This Version

New in This Version:

  • Significantly reorganized, new, or streamlined coverage:
    • Three key components all covered early in the book: Chapter 5 “Introduction to the Macroeconomy: Measuring the Economy’s Output”; Chapter 6 “The Price Level and Inflation”; and Chapter 7 “Unemployment”
    • The previous version’s coverage of interest rates and capital has been folded into Chapter 15 “Investment and Economic Activity”
    • The previous version’s extensive coverage of the Phillips curve has been streamlined and is now included in Chapter 12 “Monetary Policy and the Fed”
    • Appendix B “The Solow Model of Economic Growth”
  • New or expanded sections on:
    • Fed’s new fourth tool of policy (Chapter 10)
    • In March 2022, a new write up on central banking was added via the "Regime Shift at the Fed" box (Section 10.4)
    • Functions of financial instruments (Chapter 11)
    • Solow Model of Economic Growth (Appendix B)
  • Over 20 new or substantially revised Case in Point features that include:
    • Hidden Figures: GDP Surprises in the COVID Recession (Chapter 5)
    • Ay Caracas! Inflation, Venezuelan Style (Chapter 6)
    • Is Unemployment Insurance a Blessing or a Curse? (Chapter 7)
    • Tortoise and Hare: Will China Catch the United States? (Chapter 9)
    • Is Bitcoin Money? (Chapter 10)
    • Not-So-Great Financial Instruments Touch Off Great Recession (Chapter 11)
    • The Fed’s Job May Be Easing, but It Isn’t Easy (Chapter 12)
    • An Oprah Stimulus (Chapter 13)
    • Investment in a COVID Recovery (Chapter 15)
  • Substantially expanded, updated, and upgraded illustration program featuring more use of color, such as:
    • “A Recessionary Gap” (Figure 8.14)
    • “An Inflationary Gap” (Figure 8.15)
    • “Expansionary Monetary Policy to Close a Recessionary Gap” (Figure 12.1)
  • Macroeconomics coverage draws more heavily on real-world data from the Federal Reserve Bank of St. Louis’s FRED database
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Instructor’s Manual

Instructor’s Manual

The Instructor’s Manual guides you through the main concepts of each chapter and important elements such as learning objectives, key terms, and key takeaways. Can include answers to chapter exercises, group activity suggestions, and discussion questions.

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PowerPoint Lecture Notes

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Test Bank Files for Import to Learning Management Systems

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Solutions Manual

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Libby Rittenberg Colorado College

Libby Rittenberg (PhD Rutgers University) is Professor Emerita of Economics at Colorado College. She also served as the Dean of Summer Programs as well as the college’s ombudsperson. As a professor, she frequently taught Principles of Economics, Intermediate Macroeconomic Theory, Comparative Economic Systems, and a senior seminar on the International Political Economy. Throughout her academic career, Libby was deeply involved in study abroad education and directed programs in central Europe and Turkey. She was honored to have been a Fulbright Lecturer. Her research has focused on the internationally oriented areas of economics, with numerous articles on comparative and development economics, and a particular emphasis on the Turkish economy. 

Alan Grant Baker University

Alan Grant (PhD Kansas State University) is the Barbara and Charles A. Duboc University Professor at Baker University. Nationally recognized for teaching excellence, his research has been published in numerous professional journals and has been highlighted in The Wall Street Journal, Businessweek, The Economist, and The New York Times. Alan is the author or co-author of two FlatWorld titles: Economic Analysis of Social Issues and, with Libby Rittenberg and Timothy Tregarthen, Principles of Economics, including its two-volume version Principles of Macroeconomics and Principles of Microeconomics. Alan is also the co-author of the mass-market economics book, Seinfeld and Economics: Lessons on Everything from the Show about Nothing. He is currently writing a second mass-market economics book, Game Theory of Thrones.

Timothy Tregarthen University of Colorado Colorado Springs

Timothy Tregarthen (PhD University of California, Davis) is Professor Emeritus of Economics at the University of Colorado-Colorado Springs. There is one word that captures the essence of Tim Tregarthen—inspiring. Tim was first diagnosed with multiple sclerosis in 1975, yet, he continued a remarkable academic career of teaching and research which includes an autobiography recounting his experiences with multiple sclerosis titled Suffering, Faith, and Wildflowers. Tim was formerly on faculty at University of Colorado-Colorado Springs. 

Additions & Errata

4/6/23: Chapter 3.2 video updated to


Section 5.2:
In “Case in Point: Hidden Figures—GDP Surprises in the COVID-19 Recession,” in the third paragraph, “nondurables” was corrected to “durables” in the following sentence: “Particularly telling was the behavior of consumer durables, which, after an initial decline, exploded to far beyond pre-pandemic levels.”

Section 5.4:
Learning objective #2 had the words “GNP or” removed so that it now reads: “Explain the use of per capita real GDP to compare economic performance across countries and discuss its limitations.”

Section 13.2:
Figure 13.7 and Figure 13.9 have been updated to show more context and some related stats were changed in the text.

Section 15.5:
The following was added for Numerical Problem #6: “Assume a 5% interest rate.”

Section 17.4:
Figure 17.10 title had the year corrected to “2020” so that it now reads: “M2 and Nominal GDP, 1980–2020.”

Section 18.3: 
The subheading for “Tax and Transfer Policy” was fixed.


Section 7.3:
Fixed broken "Pop! Goes the Econ: Video Killed the Radio Star” link to:

Section 10.4:
Updated second bullet under Key Takeaways and added “Regime Shift at the Fed” box and attachment at the end of the chapter.

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