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1454solution Manual For Macroeconomics, 10th Edition, N. Gregory Mankiw Download PDF Full Chapter
1454solution Manual For Macroeconomics, 10th Edition, N. Gregory Mankiw Download PDF Full Chapter
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Solution Manual for Macroeconomics, 10th
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1. Microeconomics is the study of how individual firms and households make decisions and how they
interact with one another. Microeconomic models of firms and households are based on principles of
optimization: firms and households do the best they can, given the constraints they face. For example,
households choose which goods to purchase to maximize their utility, whereas firms choose inputs and
outputs to maximize profits. In contrast, macroeconomics is the study of the economy as a whole; it
focuses on issues such as how total output, total employment, and the overall price level are
determined. These economy-wide variables are based on the interaction of many households and many
2. Economists build models as a means of summarizing the relationships among economic variables.
Models are useful because they abstract from the many details in the economy and allow one to focus
3. A market-clearing model is a model in which prices adjust to equilibrate supply and demand. Market-
clearing models are useful in situations where prices are flexible. Yet, in many situations, flexible
years, and firms such as magazine publishers may change their prices only every few years. Most
macroeconomists believe that price flexibility is a reasonable assumption for studying long-run issues.
Over the long run, prices respond to changes in demand or supply, even though in the short run they
1. First, monetary policy in the United States continues to be a major topic of conversation in 2018. The
Federal Reserve must decide how quickly to raise the federal funds rate. It watches for wage and price
increases as it does so. Second, the United States is implementing more protectionist policies,
restricting international trade and immigration. There is continuing uncertainty regarding how this will
affect consumers, workers, and firms and how other countries will respond. Third, the United States
has enacted tax reforms that will affect the entire economy, altering households’ and firms’ decisions
2. Many philosophers of science believe that the defining characteristic of a science is the use of the
scientific method of inquiry to establish stable relationships. Scientists examine data, often provided by
controlled experiments, to support or disprove a hypothesis. Economists are more limited in their use
of experiments. They cannot conduct controlled experiments on the economy; they must instead rely
on the natural course of developments in the economy to collect data. To the extent that economists use
the scientific method of inquiry—that is, developing hypotheses and testing them—economics has the
characteristics of a science.
3. We can use a simple variant of the supply-and-demand model for pizza to answer this question.
Assume that the quantity of ice cream demanded depends not only on the price of ice cream and
We expect that demand for ice cream will rise when the price of frozen yogurt rises because ice cream
and frozen yogurt are substitutes. That is, when the price of frozen yogurt goes up, households will
consume less of it and instead fulfill more of their frozen dessert desires with ice cream. The next part
of the model is the supply function for ice cream, Qs = S(PIC). Finally, in equilibrium, supply must
equal demand, so that Qs = Qd. The exogenous variables are Y and PFY, and the endogenous variables
are Q and PIC. Figure 1-1 uses this model to show that a fall in the price of frozen yogurt results in an
inward shift of the demand curve for ice cream. The new equilibrium has a lower price and quantity of
ice cream.
4. The price of haircuts changes rather infrequently. From casual observation, hairstylists tend to charge
the same price over a one- or two-year period, regardless of the demand for haircuts or the supply of
cutters. A market-clearing model for analyzing the market for haircuts has the unrealistic assumption
of flexible prices. Such an assumption is unrealistic in the short run, when we observe that prices are
inflexible. Over the long run, however, the price of haircuts does tend to adjust; a market-clearing
MARENGO CAMPAIGN
This superb campaign had lasted but a month, and had been
characterized by the utmost dash and clearness of perception. Again
Napoleon’s one mass projected on one properly chosen line had
accomplished wonders.
Napoleon once said to Jomini, “The secret of war lies in the
secret of communications. Keep your own and attack your enemy’s
in such a way that a lost battle may not harm you, a battle won may
ruin your adversary. Seize your enemy’s communications and then
march to battle.” Napoleon’s success came from study of the
situation. His art was founded on an intimate knowledge of all the
facts, coupled with such reasoning power as enabled him to gauge
correctly what his enemy was apt to do. Without the art the study
would be useless. But the art could not exist apart from study.
After Marengo there were five years of peace. These and the
four years between Wagram and the Russian campaign were the
only two periods of rest from war in Napoleon’s career. Succeeding
this came the memorable Austerlitz campaign. Napoleon had had for
some months three of his best officers in Germany studying up
topography, roads, bridges, towns, in the Black Forest region and
toward the Tyrol and Bohemia. To thus make himself familiar with the
status was his uniform habit.
Ulm-Austerlitz Campaign
Napoleon, now Emperor, was at Boulogne, threatening and
perhaps at times half purposing an invasion of England. He
commanded the best army he ever had. The Austrians, not
supposing him ready, inundated Bavaria with troops, without waiting
for their allies, the Russians, and marched up the Danube to the Iller,
under Field-Marshal Mack. Napoleon put an embargo on the mails,
broke up from Boulogne at twenty-four hours’ notice, and reached
the vicinity of the enemy with an overwhelming force before Mack
was aware of his having left the sea. His line of march was about
Mack’s right flank, because this was the nearest to Boulogne and
gave him a safe base on the confederate German provinces. So well
planned was the manœuvre, so elastic in its design for change of
circumstances, that it fully succeeded, step for step, until Mack was
surrounded at Ulm and surrendered with his thirty thousand men.
Here again we find the Napoleonic rule fairly overwhelming Mack
with superior numbers. Except in 1796 and 1814, Napoleon always
had more men than the enemy on the field at the proper time. “They
ascribe more talent to me than to others,” he observed, “and yet to
give battle to an enemy I am in the habit of beating, I never think I
have enough men; I call to my aid all that I can unite.”
The chart herewith given of the grand manœuvre of Ulm is so
simple as to suggest no difficulties of execution. But there is
probably nothing in human experience which taxes strength,
intellect, judgment, and character to so great a degree as the
strategy and logistics of such a movement, unless it be the tactics of
the ensuing battle. The difficulties are, in reality, gigantic.
Napoleon headed direct for Vienna, and on the way absolutely
lived on the country. “In the movements and wars of invasion
conducted by the Emperor, there are no magazines; it is a matter for
the commanding generals of the corps to collect the means of
victualling in the countries through which they march,” writes Berthier
to Marmont. Napoleon took Vienna and marched out towards Brünn,
where the Austrians and Russians had concentrated. Here he was
far from secure, if equal talent had been opposed to him; but he took
up a position near Austerlitz, from which he could retreat through
Bohemia, if necessary, and, calmly watching the enemy and allowing
several chances of winning an ordinary victory to pass, he waited,
with an audacity which almost ran into braggadocio, for the enemy to
commit some error from which he could wrest a decisive one. And
this the allies did, as Napoleon divined they would do. They tried to
turn his right flank and cut him off from Vienna. Napoleon massed his
forces on their centre and right, broke these in pieces, and won the
victory of which he was always most proud. Napoleon’s conduct here
showed distinctly a glint of what he himself so aptly calls the divine
part of the art.
There is always a corresponding danger in every plan which is of
the kind to compass decisive results. In this case Napoleon risked
his right wing. But to judge how much it is wise to risk and to guess
just how much the enemy is capable of undertaking is a
manifestation of genius.
The era of the great battles of modern war dates from Austerlitz.
Marengo was rather two combats than one great battle. Frederick’s
battles were wonders of tactics and courage, but they differ from the
Napoleonic system. In Frederick’s battles the whole army was set in
motion for one manœuvre at one time to be executed under the
management of the chief. If the manœuvre was interrupted by
unforeseen events, the battle might be lost. In Napoleon’s system,
the centre might be broken and the wings still achieve victory; one
wing might be crushed while the other destroyed the enemy. A bait
was offered the enemy by the exhibition of a weak spot to attract his
eye, while Napoleon fell on the key-point with overwhelming odds.
But in this system the control passed from the hand of the leader. All
he could do was to project a corps in a given direction at a given
time. Once set in motion, these could not readily be arrested. Such a
system required reserves much more than the old method. “Battles
are only won by strengthening the line at a critical moment,” says
Napoleon. Once in, Napoleon’s corps worked out their own
salvation. He could but aid them with his reserves.
There is a magnificence of uncertainty and risk, and
corresponding genius in the management of the battles of Napoleon;
but for purely artistic tactics they do not appeal to us as do
Frederick’s. The motif of Alexander’s battles is more akin to
Napoleon’s; that of Hannibal’s, to Frederick’s.
It has been said that Napoleon never considered what he should
do in case of failure. The reverse is more exact. Before delivering a
battle, Napoleon busied himself little with what he would do in case
of success. That was easy to decide. He busied himself markedly
with what could be done in case of reverse.
Like all great captains, Napoleon preferred lieutenants who
obeyed instead of initiating. He chafed at independent action. This
was the chief’s prerogative. But as his armies grew in size he gave
his marshals charge of detail under general instructions from himself.
Dependence on Napoleon gradually sapped the self-reliance of more
than one of his lieutenants, and though there are instances of noble
ability at a distance from control, most of his marshals were able
tacticians, rather than great generals. Napoleon grew impatient of
contradiction or explanation; and he sometimes did not learn or was
not told of things he ought to know. He was no longer so active.
Campaigning was a hardship. His belief in his destiny became so
strong that he began to take greater risks. Such a thing as failure did
not exist for him. His armies were increasing in size, and railroads
and telegraphs at that day did not hasten transportation and news.
The difficulties he had to contend with were growing fast.
These things had the effect of making Napoleon’s military plans
more magnificent, more far-reaching. But all the less could he pay
heed to detail, and from now on one can, with some brilliant
exceptions, perceive more errors of execution. In the general
conception he was greater than ever, and this balanced the scale.
His ability to put all his skill into the work immediately in hand was
marvellous. But with a vast whole in view, the parts were, perhaps of
necessity, lost sight of.
The campaigns of 1806 and 1807 were in sequence. To move on
the Prussians, who, under the superannuated Duke of Brunswick,
were concentrated in Thuringia, Napoleon massed on his own right,
disgarnishing his left, turned their left,—in this case their strategic
flank, because the manœuvre cut them off from Berlin and their
allies, the Russians,—and with overwhelming vigor fell on the
dawdling enemy at Jena and Auerstädt. The Prussians had
remained stationary in the art of war where they had been left by
Frederick, and had lost his burning genius.