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Economics 10th edition [Kõva köide]

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  • Formaat: Hardback, 960 pages, kõrgus x laius x paksus: 252x221x36 mm, kaal: 1787 g, 349 Illustrations
  • Ilmumisaeg: 16-Aug-2016
  • Kirjastus: McGraw-Hill Education
  • ISBN-10: 1259193152
  • ISBN-13: 9781259193156
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Economics 10th editionSuurem pilt
  • Formaat: Hardback, 960 pages, kõrgus x laius x paksus: 252x221x36 mm, kaal: 1787 g, 349 Illustrations
  • Ilmumisaeg: 16-Aug-2016
  • Kirjastus: McGraw-Hill Education
  • ISBN-10: 1259193152
  • ISBN-13: 9781259193156
Teised raamatud teemal:
Püsilink: https://www.kriso.ee/db/9781259193156.html
Märksõnad:
The integrated solutions for Colanders Economics 10e have been specifically designed to help todays students succeed in the principles of economics course. Colanders trademark colloquial approach focuses on modern economics, institutions, history, and modeling, and is organized around learning objectives to make it easier for students to understand the material and for instructors to build assignments within Connect. McGraw-Hills adaptive learning component, LearnSmart, provides assignable modules that help students master core topics. Significant improvements in pedagogy such as reworked end-of-chapter problems, seamless integration within the Connect eBook, and instant feedback on assignments will engage students in the tenth edition like never before and instill the economic sensibility necessary to apply economic concepts to the real world.Connect is the only integrated learning system that empowers students by continuously adapting to deliver precisely what they need, when they need it, and how they need it, so that your class time is more engaging and effective.
PART I INTRODUCTION: THINKING LIKE AN ECONOMIST
1 Economics and Economic Reasoning
4(20)
What Economics Is
4(2)
Scarcity
5(1)
Microeconomics and Macroeconomics
5(1)
A Guide to Economic Reasoning
6(5)
Marginal Costs and Marginal Benefits
7(1)
The Economic Decision Rule
8(1)
Economics and Passion
8(1)
Opportunity Cost
9(2)
Economic Forces, Social Forces, and Political Forces
11(2)
Economic and Market Forces
11(1)
Social and Political Forces
11(2)
Using Economic Insights
13(3)
The Invisible Hand Theorem
14(1)
Economic Theory and Stories
15(1)
Economic Institutions
15(1)
Economic Policy Options
16(3)
Objective Policy Analysis
17(2)
Policy and Social and Political Forces
19(1)
Conclusion
19(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
23(1)
2 The Production Possibility Model, Trade, and Globalization
24(27)
The Production Possibilities Model
24(3)
A Production Possibility Curve for an Individual
24(1)
Increasing Opportunity Costs of the Trade-off
25(2)
Comparative Advantage
27(3)
Efficiency
28(1)
Distribution and Productive Efficiency
28(2)
Examples of Shifts in the PPC
30(1)
Trade and Comparative Advantage
30(4)
Markets, Specialization, and Growth
32(1)
The Benefits of Trade
32(2)
Globalization and the Law of One Price
34(4)
Globalization
34(2)
Exchange Rates and Comparative Advantage
36(1)
The Law of One Price
37(1)
Globalization and the Timing of Benefits of Trade
37(1)
Conclusion
38(13)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
41(1)
Appendix: Graphish: The Language of Graphs
42(9)
3 Economic Institutions
51(26)
Economic Systems
52(3)
How Markets Work
52(1)
What's Good about the Market?
53(1)
Capitalism and Socialism
53(2)
Economic Institutions in a Market Economy
55(6)
Business
56(3)
Households
59(2)
The Roles of Government
61(5)
Government as an Actor
61(1)
Government as a Referee
62(1)
Specific Roles for Government
63(2)
Market Failures and Government Failures
65(1)
Global Institutions
66(1)
Global Corporations
66(1)
Coordinating Global Issues
66(1)
Conclusion
67(10)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
71(1)
Appendix: The History of Economic Systems
71(6)
4 Supply and Demand
77(23)
Demand
77(7)
The Law of Demand
78(1)
The Demand Curve
78(1)
Shifts in Demand versus Movements along a Demand Curve
79(1)
Some Shift Factors of Demand
80(1)
The Demand Table
81(1)
From a Demand Table to a Demand Curve
81(1)
Individual and Market Demand Curves
82(2)
Supply
84(4)
The Law of Supply
84(1)
The Supply Curve
85(1)
Shifts in Supply versus Movements along a Supply Curve
85(1)
Shift Factors of Supply
86(1)
The Supply Table
87(1)
From a Supply Table to a Supply Curve
87(1)
Individual and Market Supply Curves
87(1)
The Interaction of Supply and Demand
88(6)
Equilibrium
89(1)
The Graphical Interaction of Supply and Demand
90(1)
What Equilibrium Isn't
90(1)
Political and Social Forces and Equilibrium
91(1)
Shifts in Supply and Demand
92(2)
A Limitation of Supply/Demand Analysis
94(1)
Conclusion
94(6)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
99(1)
5 Using Supply and Demand
100(22)
Real-World Supply and Demand Applications
100(3)
Government Intervention: Price Ceilings and Price Floors
103(4)
Price Ceilings
103(2)
Price Floors
105(2)
Government Intervention: Excise Taxes and Tariffs
107(1)
Government Intervention: Quantity Restrictions
108(2)
Third-Party-Payer Markets
110(1)
Conclusion
111(11)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
115(1)
Appendix: Algebraic Representation of Supply, Demand, and Equilibrium
116(6)
PART II MICROECONOMICS
SECTION THE POWER OF TRADITIONAL ECONOMIC MODELS
6 Describing Supply and Demand: Elasticities
122(20)
Price Elasticity
122(6)
What Information Price Elasticity Provides
123(1)
Classifying Demand and Supply as Elastic or Inelastic
123(1)
Elasticity Is Independent of Units
123(1)
Calculating Elasticities
124(2)
Other Examples
126(1)
Elasticity Is Not the Same as Slope
126(2)
Five Terms to Describe Elasticity
128(1)
Substitution and Elasticity
128(3)
Substitution and Demand
129(1)
How Substitution Factors Affect Specific Decisions
130(1)
Elasticity, Total Revenue, and Demand
131(2)
Total Revenue along a Demand Curve
132(1)
Income and Cross-Price Elasticity
133(3)
Income Elasticity of Demand
133(1)
Cross-Price Elasticity of Demand
134(1)
Some Examples
135(1)
The Power of Supply/Demand Analysis
136(1)
When Should a Supplier Not Raise Price?
136(1)
Elasticity and Shifting Supply and Demand
137(1)
Conclusion
137(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
141(1)
7 Taxation and Government Intervention
142(20)
Producer and Consumer Surplus
142(2)
Burden of Taxation
144(6)
Who Bears the Burden of a Tax?
146(2)
Tax Incidence and Current Policy Debates
148(2)
Government Intervention as Implicit Taxation
150(1)
Price Ceilings and Floors
150(1)
The Difference between Taxes and Price Controls
151(1)
Rent Seeking, Politics, and Elasticities
151(6)
Inelastic Demand and Incentives to Restrict Supply
153(1)
Inelastic Supplies and Incentives to Restrict Prices
154(1)
The Long-Run/Short-Run Problem of Price Controls
154(3)
Conclusion
157(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
161(1)
8 Market Failure versus Government Failure
162
Externalities
162(3)
A Negative Externality Example
164(1)
A Positive Externality Example
165(1)
Alternative Methods of Dealing with Externalities
165(4)
Direct Regulation
165(1)
Incentive Policies
166(2)
Voluntary Reductions
168(1)
The Optimal Policy
168(1)
Public Goods
169(3)
The Market Value of a Public Good
169(2)
Excludability and the Costs of Pricing
171(1)
Informational and Moral Hazard Problems
172(4)
Signaling and Screening
173(1)
Policies to Deal with Informational Problems
173(3)
Government Failure and Market Failures
176(2)
Conclusion
178
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
182
8W Politics and Economics: The Case of Agricultural Markets
1(183)
The Good/Bad Paradox in Agriculture
2(3)
The Long-Run Decline of Farming
2(1)
The Short-Run Cyclical Problem Facing Farmers
3(1)
The Difficulty of Coordinating Farm Production
4(1)
Ways around the Good/Bad Paradox
4(1)
The General Rule of Political Economy
4(1)
Four Price Support Options
5(5)
Supporting the Price by Regulatory Measures
6(2)
Providing Economic Incentives to Reduce Supply
8(1)
Subsidizing the Sale of the Good
8(1)
Buying Up and Storing, Giving Away, or Destroying the Good
9(1)
Which Group Prefers Which Option?
9(1)
Economics, Politics, and Real-World Policies
10(2)
Interest Groups
10(1)
International Issues
11(1)
Conclusion
12(172)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
15(169)
SECTION II INTERNATIONAL ECONOMIC POLICY ISSUES
9 Comparative Advantage, Exchange Rates, and Globalization
184(19)
The Principle of Comparative Advantage
184(4)
The Gains from Trade
184(2)
Dividing Up the Gains from Trade
186(2)
Why Economists and Laypeople Differ in Their Views of Trade
188(2)
Gains Are Often Stealth
188(1)
Opportunity Cost Is Relative
188(1)
Trade Is Broader Than Manufactured Goods
188(1)
Trade Has Distributional Effects
189(1)
Sources of U.S. Comparative Advantage
190(4)
Some Concerns about the Future
192(1)
Inherent and Transferable Sources of Comparative Advantages
192(1)
The Law of One Price
192(1)
How the United States Gained and Is Now Losing Sources of Comparative Advantage
193(1)
Methods of Equalizing Trade Balances
193(1)
Determination of Exchange Rates and Trade
194(4)
Exchange Rates and Trade
196(1)
Some Complications in Exchange Rates
197(1)
Conclusion
198(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
202(1)
10 International Trade Policy
203(21)
The Nature and Patterns of Trade
203(5)
Increasing but Fluctuating World Trade
203(1)
Differences in the Importance of Trade
203(1)
What and with Whom the United States Trades
204(2)
Debtor and Creditor Nations
206(2)
Varieties of Trade Restrictions
208(3)
Tariffs and Quotas
208(2)
Voluntary Restraint Agreements
210(1)
Embargoes
210(1)
Regulatory Trade Restrictions
211(1)
Nationalistic Appeals and "Buy Domestic" Requirements
211(1)
Reasons for Trade Restrictions
211(7)
Unequal Internal Distribution of the Gains from Trade
212(1)
Haggling by Companies over the Gains from Trade
213(1)
Haggling by Countries over Trade Restrictions
214(1)
Specialized Production
214(2)
Macroeconomic Costs of Trade
216(1)
National Security
216(1)
International Politics
216(1)
Increased Revenue Brought in by Tariffs
217(1)
Why Economists Generally Oppose Trade Restrictions
217(1)
Institutions Supporting Free Trade
218(2)
Conclusion
220(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
223(1)
SECTION III PRODUCTION AND COST ANALYSIS
11 Production and Cost Analysis I
224(19)
The Role of the Firm
225(2)
Firms Maximize Profit
225(1)
The Difference between Economists' Profits and Accountants' Profits
225(2)
The Production Process
227(3)
The Long Run and the Short Run
228(1)
Production Tables and Production Functions
228(1)
The Law of Diminishing Marginal Productivity
229(1)
The Costs of Production
230(3)
Fixed Costs, Variable Costs, and Total Costs
230(1)
Average Costs
231(1)
Marginal Cost
232(1)
Graphing Cost Curves
233(4)
Total Cost Curves
233(1)
Average and Marginal Cost Curves
234(3)
Intermission
237(6)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
242(1)
12 Production and Cost Analysis II
243(22)
Technical Efficiency and Economic Efficiency
243(1)
The Shape of the Long-Run Cost Curve
244(6)
Economies of Scale
244(2)
Diseconomies of Scale
246(2)
Constant Returns to Scale
248(1)
The Importance of Economies and Diseconomies of Scale
248(1)
Envelope Relationship
248(2)
Entrepreneurial Activity and the Supply Decision
250(6)
Using Cost Analysis in the Real World
251(1)
Economies of Scope
251(1)
Learning by Doing and Technological Change
252(3)
Many Dimensions
255(1)
Unmeasured Costs
255(1)
The Standard Model as a Framework
256(1)
Conclusion
256(9)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
260(1)
Appendix: Isocost/Isoquant Analysis
260(5)
SECTION IV MARKET STRUCTURE
13 Perfect Competition
265(20)
Perfect Competition as a Reference Point
265(1)
Conditions for Perfect Competition
265(1)
Demand Curves for the Firm and the Industry
266(1)
The Profit-Maximizing Level of Output
266(5)
Marginal Revenue
267(1)
Marginal Cost
267(1)
Profit Maximization: MC = MR
268(1)
The Marginal Cost Curve Is the Supply Curve
269(1)
Firms Maximize Total Profit
270(1)
Total Profit at the Profit-Maximizing Level of Output
271(6)
Determining Profit from a Table of Costs and Revenue
271(1)
Determining Profit from a Graph
272(2)
The Shutdown Point
274(1)
Short-Run Market Supply and Demand
275(1)
Long-Run Competitive Equilibrium: Zero Profit
275(2)
Adjustment from the Short Run to the Long Run
277(3)
An Increase in Demand
277(1)
Long-Run Market Supply
278(1)
An Example in the Real World
279(1)
Conclusion
280(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
242(43)
14 Monopoly and Monopolistic Competition
285(27)
The Key Difference between a Monopolist and a Perfect Competitor
285(1)
A Model of Monopoly
286(6)
Determining the Monopolist's Price and Output Numerically
286(1)
Determining Price and Output Graphically
287(2)
Comparing Monopoly and Perfect Competition
289(1)
An Example of Finding Output and Price
289(1)
Profits and Monopoly
290(2)
Welfare Loss from Monopoly
292(2)
The Normal Monopolist
292(1)
The Price-Discriminating Monopolist
293(1)
Barriers to Entry and Monopoly
294(5)
Natural Ability
296(1)
Natural Monopolies
296(2)
Government-Created Monopolies
298(1)
Government Policy and Monopoly: AIDS Drugs
298(1)
Monopolistic Competition
299(5)
Characteristics of Monopolistic Competition
299(2)
Advertising and Monopolistic Competition
301(1)
Output, Price, and Profit of a Monopolistic Competitor
302(1)
Comparing Monopoly, Monopolistic Competition and Perfect Competition
303(1)
Conclusion
304(8)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
310(1)
Appendix: The Algebra of Competitive and Monopolistic Firms
310(2)
15 Oligopoly and Antitrust Policy
312(19)
The Distinguishing Characteristics of Oligopoly
312(1)
Models of Oligopoly Behavior
313(4)
The Cartel Model
313(2)
The Contestable Market Model
315(1)
Comparison of the Contestable Market Model and the Cartel Model
316(1)
Classifying Industries and Markets in Practice
317(4)
The North American Industry Classification System
317(2)
Empirical Measures of Industry Structure
319(1)
Conglomerate Firms and Bigness
320(1)
Oligopoly Models and Empirical Estimates of Market Structure
320(1)
Antitrust Policy
321(5)
Judgment by Performance or Structure?
321(1)
Standard Oil: Judging Market Competitiveness by Performance
322(1)
The ALCOA Case: Judging Market Competitiveness by Structure
322(1)
Judging Markets by Structure and Performance: The Reality
322(2)
The Role of Antitrust in Today's Economy
324(2)
Assessment of U.S. Antitrust Policy
326(1)
Conclusion
326(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
330(1)
16 Real-World Competition and Technology
331(20)
The Goals of Real-World Firms and the Monitoring Problem
332(5)
Short-Run versus Long-Run Profit
332(1)
The Problem with Profit Maximization
332(2)
What Do Real-World Firms Maximize?
334(1)
The Lazy Monopolist and X-Inefficiency
335(2)
The Fight between Competitive and Monopolistic Forces
337(4)
How Monopolistic Forces Affect Perfect Competition
337(1)
Economic Insights and Real-World Competition
338(1)
How Competitive Forces Affect Monopoly
338(1)
Competition and Natural Monopoly
339(2)
How Firms Protect Their Monopolies
341(2)
Cost/Benefit Analysis of Creating and Maintaining Monopolies
341(1)
Establishing Market Position
342(1)
Technology, Efficiency, and Market Structure
343(3)
Perfect Competition and Technology
343(1)
Monopolistic Competition and Technology
344(1)
Monopoly and Technology
344(1)
Oligopoly and Technology
344(1)
Network Externalities, Standards, and Technological Lock-In
345(1)
Conclusion
346(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
350(1)
SECTION V FACTOR MARKETS
17 Work and the Labor Market
351
The Supply of Labor
352(4)
Real Wages and the Opportunity Cost of Work
353(1)
The Supply of Labor and Nonmarket Activities
353(1)
Income Taxation, Work, and Leisure
354(1)
The Elasticity of the Supply of Labor
355(1)
Immigration and the International Supply of Labor
356(1)
The Derived Demand for Labor
356(4)
Factors Influencing the Elasticity of Demand for Labor
357(1)
Labor as a Factor of Production
357(1)
Shift Factors of Demand
357(3)
Determination of Wages
360(4)
Imperfect Competition and the Labor Market
361(1)
Political and Social Forces and the Labor Market
362(1)
Fairness and the Labor Market
363(1)
Discrimination and the Labor Market
364(3)
Three Types of Direct Demand-Side Discrimination
365(1)
Institutional Discrimination
366(1)
The Evolution of Labor Markets
367(3)
Evolving Labor Laws
367(1)
Unions and Collective Bargaining
368(1)
The Labor Market and You
369(1)
Conclusion
370
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
374(1)
Appendix: Derived Demand
375
17W Nonwage and Asset Income: Rents, Profits, and Interest
1(381)
Rent
2(4)
The Effect of a Tax on Land
3(1)
Quasi Rents
4(1)
Rent Seeking and Institutional Constraints
5(1)
Profit
6(1)
Profit, Entrepreneurship, and Disequilibrium Adjustment
6(1)
Market Niches, Profit, and Rent
6(1)
Interest
7(4)
The Present Value Formula
8(1)
Some Rules of Thumb for Determining Present Value
8(2)
The Importance of Present Value
10(1)
The Marginal Productivity Theory of Income Distribution
11(1)
Conclusion
12(370)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
14(368)
18 Who Gets What? The Distribution of Income
382(25)
Measuring the Distribution of Income, Wealth, and Poverty
383(9)
The Lorenz Curve
383(1)
U.S. Income Distribution over Time
384(2)
Defining Poverty
386(3)
International Dimensions of Income Inequality
389(2)
The Distribution of Wealth
391(1)
Socioeconomic Dimensions of Income and Wealth Inequality
392(3)
Income Distribution According to Socioeconomic Characteristics
392(1)
Income Distribution According to Class
393(2)
Income Distribution and Fairness
395(2)
Philosophical Debates about Equality and Fairness
395(1)
Fairness and Equality
396(1)
Fairness as Equality of Opportunity
396(1)
The Problems of Redistributing Income
397(6)
Three Important Side Effects of Redistributive Programs
397(1)
Politics, Income Redistribution, and Fairness
398(1)
Income Redistribution Policies
398(4)
How Successful Have Income Redistribution Programs Been?
402(1)
Conclusion
403(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
406(1)
SECTION VI CHOICE AND DECISION MAKING
19 The Logic of Individual Choice: The Foundation of Supply and Demand
407(25)
Rational Choice Theory
407(5)
Total Utility and Marginal Utility
408(2)
Diminishing Marginal Utility
410(1)
Rational Choice and Marginal Utility
410(2)
Maximizing Utility and Equilibrium
412(3)
An Example of Maximizing Utility
413(1)
Extending the Principle of Rational Choice
414(1)
Rational Choice and the Laws of Demand and Supply
415(3)
The Law of Demand
415(1)
Income and Substitution Effects
416(1)
The Law of Supply
417(1)
Opportunity Cost
418(1)
Applying Economists' Theory of Choice to the Real World
418(4)
The Cost of Decision Making
418(1)
Given Tastes
419(2)
Utility Maximization
421(1)
Conclusion
422(10)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
426(1)
Appendix: Indifference Curve Analysis
427(5)
20 Game Theory, Strategic Decision Making, and Behavioral Economics
432(25)
Game Theory and the Economic Way of Thinking
432(5)
Game Theory and Economic Modeling
433(1)
The Game Theory Framework
433(1)
The Prisoner's Dilemma
434(2)
Dominant Strategies and Nash Equilibrium
436(1)
An Overview of Game Theory as a Tool in Studying Strategic Interaction
437(4)
Some Specific Games
438(1)
Strategies of Players
438(3)
Informal Game Theory and Modern Behavioral Economics
441(4)
Informal Game Theory
442(1)
Real-World Applications of Informal Game Theory
443(2)
An Application of Game Theory: Auction Markets
445(1)
Game Theory and the Challenge to Standard Economic Assumptions
445(3)
Fairness
446(1)
Endowment Effects
446(1)
Framing Effects
446(1)
Behavioral Economics and the Traditional Model
447(1)
The Importance of the Traditional Model: Money Is Not Left on the Table
447(1)
Conclusion
448(9)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
452(1)
Appendix: Game Theory and Oligopoly
452(5)
SECTION VII MODERN ECONOMIC THINKING
21 Thinking Like a Modern Economist
457(26)
The Nature of Economists' Models
458(6)
Scientific and Engineering Models
459(1)
Behavioral and Traditional Building Blocks
459(1)
Behavioral Economic Models
459(3)
The Advantages and Disadvantages of Modern Traditional and Behavioral Models
462(2)
Behavioral and Traditional Informal (Heuristic) Models
464(5)
The Armchair Economist: Heuristic Models Using Traditional Building Blocks
464(3)
The Economic Naturalist: Heuristic Models Using Behavioral Building Blocks
467(1)
The Limits of Heuristic Models
468(1)
Empirical and Formal Models
469(9)
The Importance of Empirical Work in Modern Economics
469(3)
The Role of Formal Models
472(6)
What Difference Does All This Make to Policy?
478(1)
Conclusion
479(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
482(1)
22 Behavioral Economics and Modern Economic Policy
483(18)
Behavioral Economic Policy in Perspective
483(5)
Behavioral Economics and Economic Engineering
483(1)
Economists as Mechanism Design Engineers
484(2)
Behavioral Economics and Mechanism Design
486(1)
Policy Implications of Traditional Economics
487(1)
Choice Architecture and Behavioral Economic Policy
488(4)
Nudge Policy and Libertarian Paternalism
489(1)
When Are Nudges Needed?
490(1)
Two Types of Nudges
491(1)
The Problems of Implementing Nudges
492(3)
Distinguishing a Nudge from a Push
493(1)
Behavioral and Traditional Economic Policy Frames
494(1)
Concerns about Behavioral Economic Policies
495(2)
Few Policies Meet Libertarian Paternalism Criterion
495(1)
Designing Helpful Policies Is Complicated
495(1)
It Isn't Clear Government Knows Better
496(1)
Government Policy May Make the Situation Worse
496(1)
A Changing View of Economists: From Pro-market Advocates to Economic Engineers
497(1)
Conclusion
497(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
500(1)
23 Microeconomic Policy, Economic Reasoning, and Beyond
501(21)
Economists' Differing Views about Social Policy
502(2)
How Economists' Value Judgments Creep into Policy Proposals
502(1)
The Need for a Worldview
503(1)
Agreement among Economists about Social Policy
504(1)
Economists' Cost/Benefit Approach to Government Regulation
504(5)
The Value of Life
505(2)
Comparing Costs and Benefits of Different Dimensions
507(1)
Putting Cost/Benefit Analysis in Perspective
507(1)
The Problem of Other Things Changing
508(1)
The Cost/Benefit Approach in Context
508(1)
Failure of Market Outcomes
509(5)
Distribution
509(2)
Consumer Sovereignty and Rationality Problems
511(1)
Inalienable Rights
512(2)
Government Failure
514(1)
Conclusion
515(7)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
519(3)
PART III MACROECONOMICS
SECTION I MACROECONOMIC BASICS
24 Economic Growth, Business Cycles, and Unemployment
522(21)
The Historical Development of Macroeconomics
523(5)
From Classical to Keynesian Economics
523(1)
Classical Economics
523(1)
Keynesian Economics
524(1)
The Merging of Classical and Keynesian Economics
525(1)
The Unraveling of the Keynesian/Classical Synthesis
525(2)
Two Frameworks: The Long Run and the Short Run
527(1)
Growth
528(2)
Global Experiences with Growth
529(1)
The Prospect for Future U.S. Growth
530(1)
Business Cycles and Structural Stagnation
530(4)
Describing the Business Cycle
531(2)
Structural Stagnation
533(1)
Unemployment and Jobs
534(5)
How Is Unemployment Measured?
535(2)
Unemployment as a Social Problem
537(1)
Unemployment as Government's Problem
538(1)
Underemployment as a Government Problem
539(1)
Conclusion
539(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
542(1)
25 Measuring and Describing the Aggregate Economy
543(24)
Aggregate Accounting
544(8)
Calculating GDP
544(1)
The Components of GDP
545(1)
Two Things to Remember about GDP
546(3)
Calculating GDP: Some Examples
549(1)
Some Complications
550(2)
Calculating Aggregate Income
552(2)
Equality of Aggregate Income, Output, and Production
553(1)
Adjusting for Global Dimensions of Production
554(1)
Inflation: Distinguishing Real from Nominal
554(5)
Real versus Nominal GDP
555(1)
Other Real-World Price indexes
556(2)
Other Real and Nominal Distinctions
558(1)
Some Limitations of Aggregate Accounting
559(3)
Comparing GDP among Countries
560(1)
GDP Measures Market Activity, Not Welfare
560(1)
Measurement Errors
560(1)
Misinterpretation of Subcategories
561(1)
Genuine Progress Indicator
561(1)
Conclusion
562(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
566(1)
SECTION II POLICY MODELS
26 The Keynesian Short-Run Policy Model: Demand-Side Policies
567
The Key Insight of the Keynesian AS/AD Model
567(4)
Fixed Price Level
568(1)
The Paradox of Thrift
569(1)
Three Things to Remember about the Keynesian Model
569(1)
The Components of the AS/AD Model
570(1)
The Aggregate Demand Curve
571(6)
The Slope of the AD Curve
571(3)
Dynamic Price Level Adjustment Feedback Effects
574(1)
Shifts in the AD Curve
574(3)
The Aggregate Supply Curves
577(4)
The Short-Run Aggregate Supply Curve
577(2)
The Long-Run Aggregate Supply Curve
579(2)
Equilibrium in the Aggregate Economy
581(6)
Integrating the Short-Run and Long-Run Frameworks
582(1)
The Recessionary Gap
582(1)
The Inflationary Gap
583(1)
The Economy beyond Potential
584(1)
Aggregate Demand Policy
584(1)
Some Additional Policy Examples
585(2)
Limitations of the AS/AD Model
587(2)
How Feedback Effects Complicate the AS/AD Model
587(1)
Additional Complications That the AS/AD Model Misses
588(1)
Reality and Models
589(1)
Conclusion
589
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
592
26W The Multiplier Model
1(593)
The Multiplier Model
2(6)
Aggregate Production
2(1)
Aggregate Expenditures
3(5)
Determining the Equilibrium Level of Aggregate Income
8(7)
The Multiplier Equation
9(1)
The Multiplier Process
10(1)
The Circular Flow Model and the Intuition behind the Multiplier Process
11(1)
The Multiplier Model in Action
12(3)
Fiscal Policy in the Multiplier Model
15(3)
Fighting Recession: Expansionary Fiscal Policy
15(2)
Fighting Inflation: Contractionary Fiscal Policy
17(1)
Using Taxes Rather Than Expenditures as the Tool of Fiscal Policy
18(1)
Limitations of the Multiplier Model
18(3)
The Multiplier Model Is Not a Complete Model of the Economy
19(1)
Shifts Are Sometimes Not as Great as the Model Suggests
19(1)
Fluctuations Can Sometimes Be Greater than the Model Suggests
19(1)
The Price Level Will Often Change in Response to Shifts in Demand
20(1)
People's Forward-Looking Expectations Make the Adjustment Process Much More Complicated
20(1)
Shifts in Expenditures Might Reflect Desired Shifts in Supply and Demand
20(1)
Expenditures Depend on Much More Than Current Income
21(1)
Conclusion
21(573)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
25(1)
Appendix A An Algebraic Presentation of the Expanded Multiplier Model
25(4)
Appendix B The Multiplier Model and the AS/AD Model
29(565)
27 The Classical Long-Run Policy Model: Growth, and Supply-Side Policies
594(21)
General Observations about Growth
595(3)
Growth and the Economy's Potential Output
595(1)
The Benefits and Costs of Growth
596(1)
The Importance of Growth for Living Standards
597(1)
Markets, Specialization, and Growth
598(3)
Economic Growth, Distribution, and Markets
599(1)
Per Capita Growth
600(1)
The Sources of Growth
601(5)
Growth-Compatible Institutions
602(1)
Investment and Accumulated Capital
602(2)
Available Resources
604(1)
Technological Development
605(1)
Entrepreneurship
606(1)
Turning the Sources of Growth into Growth
606(5)
Capital and Investment
607(1)
Technology
608(2)
Growth Policies
610(1)
Conclusion
611(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
614(1)
SECTION III FINANCE, MONEY, AND THE ECONOMY
28 The Financial Sector and the Economy
615(27)
The Definition and Functions of Money
616(6)
The U.S. Central Bank: The Fed
616(1)
Functions of Money
617(2)
Alternative Measures of Money
619(1)
Distinguishing between Money and Credit
620(2)
Banks and the Creation of Money
622(6)
How Banks Create Money
622(2)
The Process of Money Creation
624(2)
The Relationship between Reserves and Total Money
626(2)
Faith as the Backing of Our Money Supply
628(1)
Why Is the Financial Sector Important to Macro?
628(1)
The Role of Interest Rates in the Financial Sector
629(4)
Long- and Short-Term Interest Rates
630(1)
The Demand for Money and the Role of the Interest Rate
631(1)
Why People Hold Money
631(1)
The Many Interest Rates in the Economy
632(1)
Conclusion
633(9)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
636(1)
Appendix: A Closer Look at Financial Assets and Liabilities
636(6)
29 Monetary Policy
642(22)
How Monetary Policy Works in the Models
642(2)
How Monetary Policy Works in Practice
644(4)
Monetary Policy and the Fed
644(1)
Structure of the Fed
644(3)
Duties of the Fed
647(1)
The Tools of Conventional Monetary Policy
648(5)
Open Market Operations
648(2)
The Reserve Requirement and the Money Supply
650(2)
Borrowing from the Fed and the Discount Rate
652(1)
The Fed Funds Market
652(1)
The Complex Nature of Monetary Policy
653(7)
The Taylor Rule
655(3)
Maintaining Policy Credibility
658(2)
Conclusion
660(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
663(1)
30 Financial Crises, Panics and Unconventional Monetary Policy
664(20)
The Central Bank's Role in a Crisis
664(4)
Anatomy of a Financial Crisis
665(2)
The Financial Crisis: The Bubble Bursts
667(1)
The Fed as Lender of Last Resort
668(1)
The Role of Leverage and Herding in a Crisis
668(2)
Leverage
668(1)
Herding
669(1)
The Problem of Regulating the Financial Sector
670(5)
Regulation, Bubbles, and the Financial Sector
671(2)
The Law of Diminishing Control
673(1)
General Principles of Regulation
674(1)
Monetary Policy in the Post-Financial Crisis Era
675(5)
Unconventional Monetary Policy
676(3)
Criticisms of Unconventional Monetary Policy
679(1)
Conclusion
680(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
683(1)
SECTION IV TAXES, BUDGETS, AND FISCAL POLICY
31 Deficits and Debt: The Austerity Debate
684(16)
Defining Deficits and Surpluses
685(3)
Financing the Deficit
686(1)
Arbitrariness of Defining Deficits and Surpluses
686(1)
Many Right Definitions
686(1)
Deficits and Surpluses as Summary Measures
687(1)
Structural and Cyclical Deficits and Surpluses
687(1)
Nominal and Real Deficits and Surpluses
688(2)
Defining Debt and Assets
690(3)
Debt Management
690(2)
Difference between Individual and Government Debt
692(1)
U.S. Government Deficits and Debt: The Historical Record
693(3)
The Debt Burden
694(1)
U.S. Debt Relative to Other Countries
694(1)
Interest Rates and Debt Burden
695(1)
Conclusion
696(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
699(1)
32 The Fiscal Policy Dilemma
700(19)
Classical Economics and Sound Finance
700(2)
Ricardian Equivalence Theorem: Deficits Don't Matter
701(1)
The Sound-Finance Precept
701(1)
Keynesian Economics and Functional Finance
702(2)
Assumptions of the AS/AD Model
704(7)
Financing the Deficit Has No Offsetting Effects
704(2)
The Government Knows the Situation
706(1)
The Government Knows the Economy's Potential Income Level
706(1)
The Government Has Flexibility in Changing Spending and Taxes
707(1)
The Size of Government Debt Doesn't Matter
708(2)
Fiscal Policy Doesn't Negatively Affect Other Government Goals
710(1)
Summary of the Problems
710(1)
Building Fiscal Policies into Institutions
711(3)
How Automatic Stabilizers Work
711(1)
State Government Finance and Procyclical Fiscal Policy
711(2)
The Negative Side of Automatic Stabilizers
713(1)
Modern Macro Policy Precepts
714(1)
Conclusion
714(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
718(1)
SECTION V MACROECONOMIC PROBLEMS
33 Jobs and Unemployment
719(18)
The Debate about the Nature and Measurement of Unemployment
721(2)
Entrepreneurship and Unemployment
721(1)
Microeconomic Categories of Unemployment
721(2)
Unemployment and Potential Output
723(4)
Okun's Rule of Thumb
723(1)
Is Unemployment Structural or Cyclical?
724(1)
Why Has the Target Rate of Unemployment Changed over Time?
725(1)
Globalization, Immigration, and Jobs
726(1)
Framing the Debate about Voluntary and Involuntary Unemployment
727(2)
Individual Responsibility and Unemployment
727(1)
Social Responsibility and Unemployment
728(1)
The Tough Policy Choices
728(1)
Summary of the Debate
729(1)
A Guaranteed-Job Proposal: Government as Employer of Last Resort
729(4)
The Design and Characteristics of the Program
730(1)
Why Don't the Guaranteed Jobs Do Something Useful?
731(1)
Paying for the Program
732(1)
Would Such a Plan Ever Be Implemented?
733(1)
Conclusion
733(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
736(1)
34 Inflation, Deflation, and Macro Policy
737(22)
Defining Inflation
738(3)
Asset Price Inflation and Deflation
738(3)
The Costs and Benefits of Inflation
741(5)
The Costs of Inflation
741(2)
The Benefits of (Low) Inflation
743(2)
The Danger of Accelerating Inflation
745(1)
The Inflation Process and the Quantity Theory of Money
746(5)
Productivity, Inflation, and Wages
746(1)
The Quantity Theory of Money and Inflation
747(2)
The Declining Influence of the Quantity Theory
749(2)
Inflation and the Phillips Curve Trade-Off
751(4)
The Long-Run and Short-Run Phillips Curves
751(3)
Global Competition and the Phillips Curve
754(1)
Conclusion
755(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
758(1)
SECTION VI INTERNATIONAL MACROECONOMIC POLICY ISSUES
35 International Financial Policy
759(27)
The Balance of Payments
759(4)
The Current Account
761(1)
The Financial and Capital Account
761(1)
What Is Meant by a Balance of Payment Deficit or Surplus?
762(1)
Exchange Rates
763(8)
Fundamental Forces Determining Exchange Rates
763(1)
Exchange Rate Dynamics
764(3)
Influencing Exchange Rates with Monetary and Fiscal Policy
767(4)
The Problems of Determining the Appropriate Exchange Rate
771(2)
Purchasing Power Parity and Real Exchange Rates
771(1)
Criticisms of the Purchasing Power Parity Method
772(1)
Real Exchange Rates
773(1)
Advantages and Disadvantages of Alternative Exchange Rate Systems
773(6)
Fixed Exchange Rates
774(1)
Flexible Exchange Rates
775(1)
Partially Flexible Exchange Rates
776(1)
Which View Is Right?
776(1)
Advantages and Disadvantages of a Common Currency: The Future of the Euro
776(3)
Conclusion
779(7)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
783(1)
Appendix: History of Exchange Rate Systems
783(3)
36 Macro Policy in a Global Setting
786(15)
The Ambiguous International Goals of Macroeconomic Policy
786(4)
The Exchange Rate Goal
786(1)
The Trade Balance Goal
787(1)
International versus Domestic Goals
788(1)
Balancing the Exchange Rate Goal with Domestic Goals
789(1)
Monetary and Fiscal Policy and the Trade Deficit
790(1)
Monetary Policy's Effect on the Trade Balance
790(1)
Fiscal Policy's Effect on the Trade Balance
791(1)
International Phenomena and Domestic Goals
791(3)
International Goals and Policy Alternatives
792(1)
International Monetary and Fiscal Coordination
792(1)
Coordination Is a Two-Way Street
793(1)
Crowding Out and International Considerations
794(1)
Globalization, Macro Policy, and the U.S. Economy
794(3)
International Issues and Macro Policy
794(2)
Restoring International Trade Balance to the U.S. Economy
796(1)
Conclusion
797(4)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
800(1)
37 Structural Stagnation and Globalization
801(24)
The Structural Stagnation Hypothesis
802(5)
Differentiating a Structural Stagnation from a Standard Recession
802(1)
Why the Assumed Underlying Growth Trend Is Important for Policy
803(2)
Structural Stagnation as a Cause for the Slow Recovery
805(1)
Structural Stagnation's Implications for Macro Policy
805(1)
Structural, not Secular, Stagnation
806(1)
The AS/AD Model with Globalization
807(5)
Globalization Can Limit Potential Output
809(1)
International Adjustment Forces
810(1)
Why the Adjustments Did Not Occur
811(1)
Aggregate Demand Increases No Longer Cause Accelerating Inflation
811(1)
Summary: Globalization and Structural Imbalances
812(1)
Structural Problems of Globalization
812(5)
Structural Change in the Nontradable Sector
813(1)
Globalization and Income Distribution
814(1)
Remembering the Benefits of Globalization
815(1)
The Future of Globalization
816(1)
Policies to Deal with Structural Stagnation
817(3)
Shifting the World Supply Curve Up
817(1)
Shifting the Domestic SAS Curve Down
818(2)
The Problems with the Standard Political Solution
820(1)
Conclusion
820(5)
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
823(1)
Appendix: Creating a Targeted Safety Net to Help the Least Well Off
823(2)
38 Macro Policy in Developing Countries
825
Developing Countries in Perspective
825(3)
Don't Judge Society by Its Income Alone
826(1)
Some Comparative Statistics on Rich and Poor Nations
827(1)
Growth versus Development
828(4)
Differing Goals
829(1)
Differing Institutions
829(3)
Monetary Policy in Developing Countries
832(4)
Central Banks Are Less Independent
832(2)
Focus on the International Sector and the Exchange Rate Constraint
834(2)
The Need for Creativity
836(1)
Obstacles to Economic Development
836(10)
Political Instability
837(1)
Corruption
838(1)
Lack of Appropriate Institutions
839(1)
Lack of Investment
839(3)
Inappropriate Education
842(2)
Overpopulation
844(1)
Health and Disease
845(1)
Conclusion
846
Summary
Key Terms
Questions and Exercises
Questions from Alternative Perspectives
Issues to Ponder
Answers to Margin Questions
849
Glossary 1(1)
Colloquial Glossary 1(1)
Index 1
David Colander is Distinguished College Professor at Middlebury College. He has authored, coauthored, or edited over 40 books and over 150 articles on a wide range of economic topics.He earned his B.A. at Columbia College and his M.Phil. and Ph.D. at Columbia University. He also studied at the University of Birmingham in England and at Wilhelmsburg Gymnasium in Germany. Professor Colander has taught at Columbia University, Vassar College, the University of Miami, and Princeton University as the Kelley Professor of Distinguished Teaching. He has also been a consultant to Time-Life Films, a consultant to Congress, a Brookings Policy Fellow, and Visiting Scholar at Nuffield College, Oxford.He has been president of both the History of Economic Thought Society and the Eastern Economics Association. He has also served on the editorial boards of the Journal of Economic Perspectives, The Journal of Economic Education, The Journal of Economic Methodology, The Journal of the History of Economic Thought, The Journal of Socio-Economics, and The Eastern Economic Journal. He has been chair of the AEA Committee on Electronic Publishing, a member of the AEA Committee on Economic Education, and is currently the associate editor for content of the Journal of Economic Education. He is married to a pediatrician, Patrice. In their spare time, the Colanders designed and built an oak post-and-beam house on a ridge overlooking the Green Mountains to the east and the Adirondacks to the west. The house is located on the site of a former drive-in movie theater. (They replaced the speaker poles with fruit trees and used the I-beams from the screen as support for the second story of the carriage house and the garage.) They now live in both Florida and Vermont.