| Preface |
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xix | |
| Acknowledgments |
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xxv | |
| About the Authors |
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xxvii | |
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PART 1 The Economic Way of Thinking |
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1 | (40) |
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Chapter 1 The Economic Approach |
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2 | (15) |
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1-1 What Is Economics About? |
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3 | (3) |
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1-1a Scarcity and Poverty Are Not the Same |
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5 | (1) |
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1-1b Scarcity Necessitates Rationing |
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6 | (1) |
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1-1c The Method of Rationing influences the Nature of Competition |
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6 | (1) |
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1-2 The Economic Way of Thinking |
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6 | (6) |
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1-2a Eight Guideposts to Economic Thinking |
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7 | (5) |
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1-3 Positive and Normative Economics |
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12 | (1) |
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1-4 Pitfalls to Avoid in Economic Thinking |
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13 | (4) |
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1-4a Violation of the Ceteris Paribus Condition Can Lead One to Draw the Wrong Conclusion |
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13 | (1) |
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1-4b Good Intentions Do Not Guarantee Desirable Outcomes |
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13 | (1) |
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1-4c Association Is Not Causation |
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14 | (1) |
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1-4d The Fallacy of Composition: What's True for One Might Not Be True for All |
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15 | (1) |
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15 | (1) |
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Critical Analysis Questions |
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16 | (1) |
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Chapter 2 Some Tools of the Economist |
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17 | (24) |
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2-1 What Shall We Give Up? |
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18 | (1) |
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18 | (1) |
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2-1b Opportunity Cost and the Real World |
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18 | (1) |
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19 | (3) |
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2-2a Transaction Costs--A Barrier to Trade |
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20 | (1) |
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2-2b The Middleman as a Cost Reducer |
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21 | (1) |
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2-3 The Importance of Property Rights |
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22 | (4) |
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2-3a Private Ownership and Markets |
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24 | (2) |
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2-4 Production Possibilities Curve |
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26 | (6) |
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2-4a Shifting the Production Possibilities Curve Outward |
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28 | (3) |
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2-4b Production Possibilities and Economic Growth |
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31 | (1) |
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2-5 Trade, Output, and Living Standards |
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32 | (2) |
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2-5a Gains from Specialization and Division of Labor |
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32 | (1) |
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2-5b Gains from Mass Production Methods |
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33 | (1) |
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2-5c Gains from Innovation |
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34 | (1) |
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2-6 Human Ingenuity, Entrepreneurship, and the Creation of Wealth |
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34 | (1) |
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2-7 Economic Organization |
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35 | (6) |
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35 | (2) |
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2-7b Political Organization |
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37 | (1) |
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37 | (1) |
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Critical Analysis Questions |
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38 | (1) |
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39 | (1) |
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Comparative Advantage, Specialization, and Gains from Trade |
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39 | (2) |
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PART 2 Markets and Government |
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41 | (90) |
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Chapter 3 Demand, Supply, and the Market Process |
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42 | (28) |
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3-1 Consumer Choice and the Law of Demand |
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43 | (1) |
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3-1a The Market Demand Schedule |
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44 | (3) |
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45 | (1) |
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3-1c Responsiveness of Quantity Demanded to Price Changes: Elastic and Inelastic Demand Curves |
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46 | (1) |
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3-2 Changes in Demand versus Changes in Quantity Demanded |
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47 | (3) |
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3-3 Producer Choice and the Law of Supply |
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50 | (5) |
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3-3a The Role of Profits and Losses |
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52 | (1) |
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3-3b Market Supply Schedule |
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52 | (1) |
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53 | (1) |
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3-3d Responsiveness of Quantity Supplied to Price Changes: Elastic and Inelastic Supply Curves |
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54 | (1) |
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3-4 Changes in Supply versus Changes in Quantity Supplied |
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55 | (2) |
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3-5 How Market Prices Are Determined: Demand and Supply Interact |
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57 | (3) |
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57 | (2) |
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3-5b Efficiency and Market Equilibrium |
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59 | (1) |
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3-6 How Markets Respond to Changes in Demand and Supply |
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60 | (3) |
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3-7 Entrepreneurship, Profit, and the Dynamics of Market Competition |
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63 | (2) |
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3-8 Invisible Hand Principle |
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65 | (5) |
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3-8a Prices and Market Order |
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65 | (2) |
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3-8b Competition and Property Rights |
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67 | (1) |
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67 | (1) |
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Critical Analysis Questions |
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68 | (2) |
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Chapter 4 Demand and Supply: Applications and Extensions |
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70 | (23) |
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4-1 The Link between Resource and Product Markets |
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71 | (1) |
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4-2 The Economics of Price Controls |
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72 | (8) |
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4-2a The Impact of Price Ceilings |
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72 | (3) |
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4-2b Rent Control: A Closer Look at a Price Ceiling |
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75 | (1) |
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4-2c The Impact of Price Floors |
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76 | (1) |
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4-2d Minimum Wage: A Closer Look at a Price Floor |
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77 | (3) |
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4-3 Black Markets and the Importance of the Legal Structure |
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80 | (1) |
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80 | (5) |
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4-4a The Deadweight Loss Caused by Taxes |
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82 | (1) |
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4-4b Actual versus Statutory Incidence |
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82 | (2) |
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4-4c Elasticity and the Incidence of a Tax |
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84 | (1) |
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4-4d Elasticity and the Deadweight Loss |
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85 | (1) |
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4-5 Tax Rates, Tax Revenues, and the Laffer Curve |
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85 | (3) |
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4-6 The Impact of a Subsidy |
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88 | (5) |
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4-6a Elasticity and the Benefit of Government Subsidy Programs |
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88 | (1) |
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4-6b Real-World Subsidy Programs |
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89 | (2) |
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91 | (1) |
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Critical Analysis Questions |
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91 | (2) |
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Chapter 5 Difficult Cases for the Market, and the Role of Government |
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93 | (17) |
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5-1 A Closer Look at Economic Efficiency |
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94 | (1) |
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5-1a If It's Worth Doing, It's Worth Doing Imperfectly |
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95 | (1) |
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5-2 Thinking About the Economic Role of Government |
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96 | (1) |
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5-2a Protective Function of Government |
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96 | (1) |
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5-2b Productive Function of Government |
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96 | (1) |
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5-3 Potential Shortcomings of the Market |
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97 | (11) |
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97 | (1) |
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5-3b Externalities--A Failure to Account for All Costs and Benefits |
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98 | (1) |
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99 | (1) |
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5-3d What Should Be Done About External Costs? |
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100 | (1) |
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101 | (1) |
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5-3f Expanding the Scope of a Project and Capturing External Benefits |
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102 | (2) |
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5-3g Public Goods and Why they Pose a Problem for the Market |
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104 | (1) |
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5-3h Potential Information Problems |
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105 | (1) |
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5-3i Information as a Profit Opportunity |
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106 | (2) |
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5-4 Market and Government Failure |
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108 | (2) |
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109 | (1) |
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Critical Analysis Questions |
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109 | (1) |
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Chapter 6 The Economics of Political Action |
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110 | (21) |
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6-1 The Size and Growth of the U.S. Government |
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111 | (2) |
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6-2 Similarities and Differences between Political and Market Allocation |
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113 | (1) |
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6-3 Political Decision-Making: An Overview |
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114 | (4) |
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6-3a Incentives Confronted by the Voter |
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115 | (1) |
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6-3b Incentives Confronted by the Politician |
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116 | (1) |
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6-3c Incentives Confronted by the Government Bureaucrat |
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117 | (1) |
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6-4 When the Political Process Works Well |
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118 | (2) |
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6-5 When the Political Process Works Poorly |
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120 | (5) |
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6-5a Special-Interest Effect |
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120 | (3) |
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6-5b Shortsightedness Effect |
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123 | (1) |
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124 | (1) |
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6-5d Inefficiency of Government Operations |
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125 | (1) |
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6-6 Political Favoritism, Crony Capitalism, and Government Failure |
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125 | (3) |
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6-7 The Economic Way of Thinking about Markets and Government |
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128 | (3) |
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129 | (1) |
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Critical Analysis Questions |
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129 | (2) |
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PART 3 Core Macroeconomics |
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131 | (224) |
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Chapter 7 Taking the Nation's Economic Pulse |
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132 | (24) |
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7-1 GDP--A Measure of Output |
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133 | (2) |
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7-1a What Counts toward GDP? |
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133 | (2) |
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7-1b Dollars Are the Common Denominator for GDP |
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135 | (1) |
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7-2 GDP as a Measure of Both Output and Income |
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135 | (5) |
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7-2a Deriving GDP by the Expenditure Approach |
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136 | (2) |
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7-2b Deriving GDP by the Resource Cost-Income Approach |
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138 | (1) |
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7-2c The Relative Size of GDP Components |
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139 | (1) |
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7-2d The COVID-19 Pandemic and GDP |
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140 | (1) |
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7-3 Adjusting for Price Changes and Deriving Real GDP |
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140 | (5) |
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7-3a Key Price Indexes: The Consumer Price Index and the GDP Deflator |
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141 | (1) |
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7-3b Using the GDP Deflator to Derive Real GDP |
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142 | (3) |
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7-4 Problems with GDP as a Measuring Rod |
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145 | (4) |
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7-4a Nonmarket Production |
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145 | (1) |
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146 | (1) |
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7-4c Leisure and Human Costs |
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146 | (1) |
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7-4d Quality Variation and the Introduction of New Goods |
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146 | (1) |
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7-4e Harmful Side Effects and Economic "Bads" |
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147 | (1) |
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7-4f GDP Understates Well-Being in the Information Age |
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147 | (2) |
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7-5 Differences in GDP over Time |
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149 | (1) |
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7-6 The Great Contribution of GDP |
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150 | (6) |
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153 | (1) |
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Critical Analysis Questions |
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153 | (2) |
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155 | (1) |
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The Construction of a Price Index |
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155 | (1) |
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Chapter 8 Economic Fluctuations, Unemployment, and Inflation |
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156 | (19) |
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8-1 Swings in the Economic Pendulum |
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157 | (2) |
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8-1a A Hypothetical Business Cycle |
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157 | (2) |
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8-2 Economic Fluctuations and the Labor Market |
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159 | (5) |
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8-2a The Labor Force Participation and Unemployment Rates |
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160 | (1) |
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8-2b Employment Fluctuations and Trends: The Historical Record |
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161 | (2) |
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8-2c Dynamic Change and Reasons for Unemployment |
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163 | (1) |
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8-3 Three Types of Unemployment |
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164 | (4) |
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8-3a Frictional Unemployment |
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165 | (1) |
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8-3b Structural Unemployment |
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166 | (1) |
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8-3c Cyclical Unemployment |
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167 | (1) |
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8-4 Full Employment and the Natural Rate of Unemployment |
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168 | (1) |
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8-5 Actual and Potential GDP |
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169 | (1) |
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8-6 The Effects of Inflation |
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170 | (5) |
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8-6a Unanticipated and Anticipated Inflation |
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171 | (1) |
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8-6b Why Does Inflation Adversely Affect the Economy? |
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171 | (1) |
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8-6c What Causes Inflation? |
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172 | (1) |
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172 | (1) |
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Critical Analysis Questions |
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173 | (2) |
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Chapter 9 An Introduction to Basic Macroeconomic Markets |
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175 | (22) |
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9-1 Understanding Macroeconomics: Our Game Plan |
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176 | (1) |
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9-2 Four Key Markets: Resources, Goods and Services, Loanable Funds, and Foreign Exchange |
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176 | (2) |
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9-3 Aggregate Demand for Goods and Services |
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178 | (3) |
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9-3a Why Does the Aggregate Demand Curve Slope Downward? |
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179 | (1) |
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9-3b The Downward-Sloping Aggregate Demand Curve: A Summary |
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180 | (1) |
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9-4 Aggregate Supply of Goods and Services |
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181 | (3) |
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9-4a Aggregate Supply in the Short Run |
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181 | (1) |
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9-4b Aggregate Supply in the Long Run |
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182 | (2) |
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9-5 Equilibrium in the Goods and Services Market |
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184 | (3) |
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9-5a Equilibrium in the Short Run |
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184 | (1) |
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9-5b Equilibrium in the Long Run |
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184 | (1) |
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9-5c Long-Run Equilibrium, Potential Output, and Full Employment |
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185 | (1) |
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9-5d What Happens When the Economy's Output Differs from Its Long-Run Potential? |
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186 | (1) |
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187 | (1) |
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9-7 Loanable Funds Market |
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188 | (4) |
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9-7a Does Inflation Help Borrowers? |
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190 | (1) |
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9-7b Loanable Funds Market, Interest Rates, and Bond Prices |
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191 | (1) |
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9-7c Global Loanable Funds Market |
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191 | (1) |
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9-8 Foreign Exchange Market |
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192 | (3) |
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195 | (2) |
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195 | (1) |
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Critical Analysis Questions |
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196 | (1) |
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Chapter 10 Dynamic Change, Economic Fluctuations, and the AD-AS Model |
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197 | (20) |
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10-1 Anticipated and Unanticipated Changes |
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198 | (1) |
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10-2 Factors that Shift Aggregate Demand |
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198 | (3) |
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10-3 Shifts in Aggregate Supply |
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201 | (3) |
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10-3a Changes in Long-Run Aggregate Supply |
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202 | (1) |
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10-3b Changes in Short-Run Aggregate Supply |
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203 | (1) |
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10-4 Steady Economic Growth and Anticipated Changes in Long-Run Aggregate Supply |
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204 | (1) |
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10-5 Unanticipated Changes and Market Adjustments |
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205 | (5) |
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10-5a Unanticipated Increases in Aggregate Demand |
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205 | (2) |
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10-5b Unanticipated Reductions in Aggregate Demand |
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207 | (1) |
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10-5c Unanticipated Increases in Short-Run Aggregate Supply |
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208 | (1) |
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10-5d Unanticipated Reductions in Short-Run Aggregate Supply |
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209 | (1) |
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10-6 The Price Level, Inflation, and the AD-AS Model |
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210 | (1) |
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10-7 Unanticipated Changes, Recessions, and Booms |
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210 | (7) |
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10-7a Expansions and Recessions: The Historical Record |
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212 | (1) |
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10-7b Using the AD-AS Model to Think About the Business Cycle and the Great Recession of 2008-2009 |
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212 | (2) |
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214 | (1) |
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Critical Analysis Questions |
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215 | (2) |
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Chapter 11 Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics |
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217 | (14) |
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11-1 The Great Depression, Economic Instability, and the Development of Keynesian Economics |
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218 | (4) |
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11-1a The Great Depression and Keynesian Economics |
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218 | (1) |
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11-1b Output, Employment, and Keynesian Equilibrium |
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218 | (1) |
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11-1c The Multiplier and Economic Instability |
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219 | (2) |
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11-1d Adding Realism to the Multiplier |
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221 | (1) |
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11-1e Keynes and Economic Instability: A Summary |
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221 | (1) |
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11-2 The Federal Budget and Fiscal Policy |
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222 | (1) |
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11-3 Fiscal Policy and the Good News of Keynesian Economics |
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222 | (5) |
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11-3a Using the Budget to Promote Stability |
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223 | (2) |
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11-3b Fiscal Policy Changes and Problems of Timing |
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225 | (1) |
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11-3c Automatic Stabilizers |
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226 | (1) |
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11-4 Saving, Spending, Debt, and the Impact of Fiscal Policy |
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227 | (4) |
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229 | (1) |
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Critical Analysis Questions |
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230 | (1) |
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Chapter 12 Fiscal Policy, Incentives, and Secondary Effects |
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231 | (17) |
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12-1 Fiscal Policy, Borrowing, and the Crowding-Out Effect |
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232 | (2) |
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12-1a Do Global Financial Markets Minimize the Crowding-Out Effect? |
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233 | (1) |
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12-2 Fiscal Policy, Future Taxes, and the New Classical Model |
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234 | (3) |
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12-2a Is Job Creation a Good Reason to Support a Government Spending Program? |
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236 | (1) |
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12-3 Political Incentives and the Effective Use of Discretionary Fiscal Policy |
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237 | (1) |
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12-4 Is Discretionary Fiscal Policy an Effective Stabilization Tool? |
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237 | (1) |
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12-5 The Supply-Side Effects of Fiscal Policy |
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238 | (4) |
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12-5a Why Do High Tax Rates Decrease Output? |
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239 | (1) |
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12-5b How Important Are the Supply-Side Effects? |
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239 | (3) |
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12-6 Fiscal Policy and Recovery from Recessions |
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242 | (1) |
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12-6a Will Fiscal Stimulus Speed Recovery? |
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242 | (1) |
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12-6b Tax Cuts versus Spending Increases |
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242 | (1) |
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12-7 U.S. Fiscal Policy: 1990-2019 |
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243 | (5) |
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246 | (1) |
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Critical Analysis Questions |
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246 | (2) |
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Chapter 13 Money and the Banking System |
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248 | (22) |
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249 | (1) |
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13-1a Money as a Medium of Exchange |
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249 | (1) |
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13-1b Money as a Store of Value |
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249 | (1) |
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13-1c Money as a Unit of Account |
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249 | (1) |
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13-2 How the Supply of Money Affects Its Value |
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250 | (1) |
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13-3 How Is the Money Supply Measured? |
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250 | (2) |
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13-3a The M1 Money Supply |
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250 | (1) |
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13-3b The Broader M2 Money Supply |
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251 | (1) |
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13-3c Credit Cards versus Money |
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252 | (1) |
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13-4 The Business of Banking |
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252 | (2) |
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13-4a Fractional Reserve Banking |
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253 | (1) |
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13-4b Bank Runs, Bank Failures, and Deposit Insurance |
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254 | (1) |
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13-5 How Banks Create Money by Extending Loans |
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254 | (2) |
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13-5a The Actual Deposit Expansion Multiplier |
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256 | (1) |
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13-6 The Federal Reserve System |
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256 | (10) |
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13-6a Structure of the Fed |
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256 | (3) |
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13-6b How the Fed Controls the Money Supply |
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259 | (2) |
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13-6c Recent Fed Policy, the Monetary Base, and the Money Supply |
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261 | (4) |
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13-6d The Fed and the Treasury |
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265 | (1) |
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13-7 Ambiguities in the Meaning and Measurement of the Money Supply |
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266 | (4) |
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267 | (1) |
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Critical Analysis Questions |
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268 | (2) |
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Chapter 14 Modern Macroeconomics and Monetary Policy |
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270 | (21) |
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14-1 Impact of Monetary Policy: A Brief Historical Background |
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271 | (1) |
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14-2 The Demand and Supply of Money |
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271 | (3) |
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14-2a The Equilibrium between Money Demand and Money Supply |
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273 | (1) |
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14-3 How Does Monetary Policy Affect the Economy? |
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274 | (5) |
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14-3a The Effects of an Unanticipated Expansionary Monetary Policy |
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276 | (1) |
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14-3b The Effects of an Unanticipated Restrictive Monetary Policy |
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277 | (1) |
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14-3c Shifts in Monetary Policy and Economic Stability |
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278 | (1) |
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14-4 Monetary Policy in the Long Run |
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279 | (3) |
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14-4a The Quantity Theory of Money |
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279 | (1) |
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14-4b Long-Run Impact of Monetary Policy: The Modern View |
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280 | (2) |
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14-4c Money and Inflation |
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282 | (1) |
|
14-5 Money, Economic Stability, and Proper Monetary Policy |
|
|
282 | (2) |
|
14-5a Time Lags, Monetary Shifts, and Economic Stability |
|
|
282 | (1) |
|
14-5b Monetary Policy and Price Stability |
|
|
283 | (1) |
|
14-6 Recent Low Interest Rates and Monetary Policy |
|
|
284 | (3) |
|
14-7 Interest Rates, Velocity of Money, and Monetary Policy |
|
|
287 | (4) |
|
|
|
289 | (1) |
|
Critical Analysis Questions |
|
|
290 | (1) |
|
Chapter 15 Macroeconomic Policy, Economic Stability, and the Federal Debt |
|
|
291 | (20) |
|
15-1 Economic Fluctuations: The Past 100 Years |
|
|
292 | (1) |
|
15-2 Can Discretionary Policy Promote Economic Stability? |
|
|
292 | (1) |
|
15-2a The Time Lag Problem |
|
|
293 | (1) |
|
15-3 Forecasting Tools and Macro Policy |
|
|
293 | (3) |
|
15-3a Index of Leading Indicators |
|
|
294 | (1) |
|
15-3b Computer Forecasting Models |
|
|
295 | (1) |
|
15-3c Market Signals as Forecasting Tools |
|
|
296 | (1) |
|
15-3d Is Accurate Forecasting Feasible? |
|
|
296 | (1) |
|
15-4 How Are Expectations Formed? |
|
|
296 | (2) |
|
15-5 Macro Policy Implications of Adaptive and Rational Expectations |
|
|
298 | (1) |
|
15-6 The Phillips Curve: The View of the 1960s versus Today |
|
|
299 | (4) |
|
15-6a Expectations and the Modern View of the Phillips Curve |
|
|
301 | (2) |
|
15-7 The Growing Federal Debt and Economic Stability |
|
|
303 | (5) |
|
15-7a Deficits, Surpluses, and the National Debt |
|
|
303 | (2) |
|
15-7b Who Owns the National Debt? |
|
|
305 | (1) |
|
15-7c How Does Debt Financing Influence Future Generations? |
|
|
306 | (1) |
|
15-7d Why Is Deficit Spending So Difficult to Control? |
|
|
306 | (1) |
|
15-7e Have Federal Debt Obligations Grown to a Dangerous Level? |
|
|
307 | (1) |
|
15-8 Perspective on Recent Macroeconomic Policy and Economic Instability |
|
|
308 | (3) |
|
|
|
309 | (1) |
|
Critical Analysis Questions |
|
|
309 | (2) |
|
Chapter 16 Creating an Environment for Growth and Prosperity |
|
|
311 | (24) |
|
16-1 Why Is Economic Growth Important? |
|
|
312 | (1) |
|
16-1a The Impact of Sustained Economic Growth |
|
|
312 | (1) |
|
16-2 Sources of Economic Growth and High Incomes |
|
|
313 | (4) |
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|
|
313 | (2) |
|
16-2b Entrepreneurship, Technology, and the Discovery of Better Ways of Doing Things |
|
|
315 | (1) |
|
16-2c Investment in Physical and Human Capital |
|
|
316 | (1) |
|
16-3 What Institutions and Policies Will Promote Growth? |
|
|
317 | (5) |
|
16-3a Legal System: Secure Property Rights, Rule of Law, and Even-Handed Enforcement of Contracts |
|
|
318 | (1) |
|
16-3b Competitive Markets |
|
|
319 | (1) |
|
16-3c Stable Money and Prices |
|
|
319 | (1) |
|
16-3d Avoidance of Regulations that Restrict Trade and Entry into Markets |
|
|
319 | (1) |
|
16-3e Avoidance of High Tax Rates |
|
|
320 | (1) |
|
|
|
321 | (1) |
|
16-4 Economic Freedom as a Measure of Sound Institutions |
|
|
322 | (1) |
|
16-5 Institutions, Policies, and Economic Performance |
|
|
323 | (4) |
|
16-5a Economic Freedom and Per Capita Income |
|
|
324 | (1) |
|
16-5b Economic Freedom and Growth of Per Capita Income |
|
|
325 | (1) |
|
16-5c Economic Freedom and the Poverty Rate |
|
|
326 | (1) |
|
16-5d Economic Freedom and Life Expectancy |
|
|
326 | (1) |
|
16-5e Economic Freedom and Environmental Quality |
|
|
327 | (1) |
|
16-6 Economic Freedom and Per Capita Income: How Strong is the Linkage? |
|
|
327 | (8) |
|
|
|
330 | (1) |
|
Critical Analysis Questions |
|
|
330 | (2) |
|
|
|
332 | (1) |
|
The 2018 Economic Freedom of the World Country Rankings and Ratings |
|
|
332 | (3) |
|
Chapter 17 The Economics of Development |
|
|
335 | (20) |
|
17-1 The Economic Record of the Last 1000 Years |
|
|
336 | (1) |
|
17-2 Theories of Development |
|
|
337 | (4) |
|
17-2a Malthusian Theory of Development |
|
|
337 | (1) |
|
17-2b Colonialism, European Settlements, and Institutions |
|
|
338 | (1) |
|
17-2c Neoclassical Production Function Theory of Development |
|
|
338 | (1) |
|
17-2d Geography and Development |
|
|
339 | (2) |
|
17-3 The Transportation-Communication Revolution |
|
|
341 | (2) |
|
17-4 The Transportation-Communication Revolution and Economic Development |
|
|
343 | (4) |
|
17-5 The Transportation-Communication Revolution and the Historic Economic Progress of the Past 50 Years |
|
|
347 | (4) |
|
17-5a Growth of High-Income and Developing Countries During the Past Half-Century |
|
|
348 | (1) |
|
17-5b Countries With the Best and Worst Growth Records |
|
|
349 | (1) |
|
17-5c Dramatic Reduction in the Worldwide Poverty Rate |
|
|
350 | (1) |
|
17-6 The Transportation-Communication Revolution versus the Industrial Revolution |
|
|
351 | (1) |
|
17-7 The Future of Economic Development |
|
|
352 | (3) |
|
|
|
353 | (1) |
|
Critical Analysis Questions |
|
|
354 | (1) |
|
PART 4 International Economics |
|
|
355 | (42) |
|
Chapter 18 Gaining from International Trade |
|
|
356 | (22) |
|
18-1 The Trade Sector of the United States |
|
|
357 | (1) |
|
18-2 Gains from Specialization and Trade |
|
|
358 | (5) |
|
18-2a How Trade Expands Consumption Possibilities |
|
|
360 | (2) |
|
18-2b Some Real-World Considerations |
|
|
362 | (1) |
|
18-3 Supply, Demand, and International Trade |
|
|
363 | (2) |
|
18-4 The Economics of Trade Restrictions |
|
|
365 | (3) |
|
18-4a The Economics of Tariffs |
|
|
365 | (2) |
|
18-4b The Economics of Quotas |
|
|
367 | (1) |
|
18-4c Exchange Rate Controls as a Trade Restriction |
|
|
368 | (1) |
|
18-5 Why Do Nations Adopt Trade Restrictions? |
|
|
368 | (3) |
|
78-5a The National-Defense Argument |
|
|
369 | (1) |
|
18-5b The Infant-Industry Argument |
|
|
369 | (1) |
|
18-5c The Antidumping Argument |
|
|
369 | (1) |
|
18-5d Special Interests and the Politics of Trade Restrictions |
|
|
370 | (1) |
|
18-6 Do More Open Economies Perform Better? |
|
|
371 | (1) |
|
18-7 Trade Barriers and Popular Trade Fallacies |
|
|
372 | (2) |
|
18-7a Trade Fallacy 1: Trade Restrictions that Limit Imports Save Jobs and Expand Employment |
|
|
372 | (2) |
|
18-7b Trade Fallacy 2: Free Trade with Low-Wage Countries Like Mexico and China will Reduce the Wages of Americans |
|
|
374 | (1) |
|
18-8 Institutions and the Changing Nature of Global Trade |
|
|
374 | (4) |
|
|
|
376 | (1) |
|
Critical Analysis Questions |
|
|
376 | (2) |
|
Chapter 19 International Finance and the Foreign Exchange Market |
|
|
378 | (19) |
|
19-1 Foreign Exchange Market |
|
|
379 | (2) |
|
19-2 Determinants of the Exchange Rate |
|
|
381 | (1) |
|
19-3 Why Do Exchange Rates Change? |
|
|
382 | (4) |
|
|
|
383 | (1) |
|
19-3b Differences in Rates of Inflation |
|
|
383 | (1) |
|
19-3c Changes in Interest Rates |
|
|
384 | (1) |
|
19-3d Changes in the Business and Investment Climate |
|
|
385 | (1) |
|
19-4 International Finance and Alternative Exchange Rate Regimes |
|
|
386 | (2) |
|
19-4a Fixed Rate, Unified Currency System |
|
|
386 | (1) |
|
19-4b Pegged Exchange Rate Regime |
|
|
387 | (1) |
|
|
|
388 | (4) |
|
19-5a Current-Account Transactions |
|
|
389 | (1) |
|
19-5b Balance on Current Account |
|
|
390 | (1) |
|
19-5c Capital-Account Transactions |
|
|
391 | (1) |
|
19-5d Official Reserve Account |
|
|
391 | (1) |
|
19-5e The Balance of Payments Must Balance |
|
|
392 | (1) |
|
19-6 Exchange Rates, Current Account Balance, and Capital Inflow |
|
|
392 | (5) |
|
|
|
395 | (1) |
|
Critical Analysis Questions |
|
|
395 | (2) |
|
PART 5 Core Microeconomics |
|
|
397 | (174) |
|
Chapter 20 Consumer Choice and Elasticity |
|
|
398 | (18) |
|
20-1 Fundamentals of Consumer Choice |
|
|
399 | (2) |
|
20-2 Marginal Utility, Consumer Choice, and the Demand Curve of an Individual |
|
|
401 | (4) |
|
20-2a Consumer Equilibrium with Many Goods |
|
|
402 | (2) |
|
20-2b Price Changes and Consumer Choice |
|
|
404 | (1) |
|
20-2c Time Costs and Consumer Choice |
|
|
404 | (1) |
|
20-2d Market Demand Reflects the Demand of Individual Consumers |
|
|
405 | (1) |
|
20-3 Elasticity of Demand |
|
|
405 | (6) |
|
20-3a Graphic Representation of Price Elasticity of Demand |
|
|
407 | (1) |
|
20-3b How Large Are the Demand Elasticities of Various Products? |
|
|
408 | (1) |
|
20-3c Why Do the Price Elasticities of Demand Vary? |
|
|
409 | (2) |
|
20-3d Time and Demand Elasticity |
|
|
411 | (1) |
|
20-4 How Demand Elasticity and Price Changes Affect Total Expenditures (or Revenues) on a Product |
|
|
411 | (2) |
|
|
|
413 | (1) |
|
20-6 Price Elasticity of Supply |
|
|
414 | (2) |
|
|
|
414 | (1) |
|
Critical Analysis Questions |
|
|
414 | (2) |
|
Chapter 21 Costs and the Supply of Goods |
|
|
416 | (22) |
|
21-1 The Organization of the Business Firm |
|
|
417 | (2) |
|
21-1a Incentives, Cooperation, and the Nature of the Firm |
|
|
417 | (1) |
|
21-1b Three Types of Business Firms |
|
|
418 | (1) |
|
21-2 How Well Does the Corporate Structure Work? |
|
|
419 | (1) |
|
21-3 The Economic Role of Costs |
|
|
420 | (1) |
|
21-3a Calculating Economic Costs and Profits |
|
|
420 | (1) |
|
21-3b How Do Economic and Accounting Profit Differ? |
|
|
420 | (1) |
|
21-4 Short-Run and Long-Run Time Periods |
|
|
421 | (1) |
|
|
|
422 | (1) |
|
21-6 Output and Costs in the Short Run |
|
|
423 | (5) |
|
21-6a Diminishing Returns and Production in the Short Run |
|
|
424 | (2) |
|
21-6b Diminishing Returns and the Shape of the Cost Curves |
|
|
426 | (2) |
|
21-7 Output and Costs in the Long Run |
|
|
428 | (3) |
|
21-7a Economies and Diseconomies of Scale |
|
|
429 | (2) |
|
27-7b Alternative Shapes of the LRATC |
|
|
431 | (1) |
|
21-8 What Factors Cause Cost Curves to Shift? |
|
|
431 | (2) |
|
21-8a Prices of Resources |
|
|
432 | (1) |
|
|
|
433 | (1) |
|
|
|
433 | (1) |
|
|
|
433 | (1) |
|
21-9 The Economic Way of Thinking About Costs |
|
|
433 | (5) |
|
21-9a What Are Sunk Costs? |
|
|
435 | (1) |
|
21-9b How Will Cost Influence Supply? |
|
|
435 | (1) |
|
|
|
436 | (1) |
|
Critical Analysis Questions |
|
|
436 | (2) |
|
Chapter 22 Price Takers and the Competitive Process |
|
|
438 | (19) |
|
22-1 Price Takers and Price Searchers |
|
|
439 | (1) |
|
22-2 What Are the Characteristics of Price-Taker Markets? |
|
|
439 | (1) |
|
22-3 How Does the Price Taker Maximize Profit? |
|
|
440 | (4) |
|
22-3a Profit Maximizing--A Numeric Example |
|
|
441 | (1) |
|
22-3b Losses and When to Go Out of Business |
|
|
442 | (2) |
|
22-4 The Firm's Short-Run Supply Curve |
|
|
444 | (1) |
|
22-5 The Short-Run Market Supply Curve |
|
|
445 | (1) |
|
22-6 Price and Output in Price-Taker Markets |
|
|
445 | (6) |
|
22-6a Long-Run Equilibrium |
|
|
446 | (1) |
|
22-6b How Will the Market Respond to an Increase in Demand? |
|
|
447 | (1) |
|
22-6c How Will the Market Respond to a Decrease in Demand? |
|
|
448 | (1) |
|
22-6d The Long-Run Market Supply Curve |
|
|
448 | (2) |
|
22-6e Supply Elasticity and the Role of Time |
|
|
450 | (1) |
|
22-7 The Role of Profits and Losses |
|
|
451 | (1) |
|
22-8 Competition Promotes Prosperity |
|
|
452 | (5) |
|
|
|
454 | (1) |
|
Critical Analysis Questions |
|
|
454 | (3) |
|
Chapter 23 Price-Searcher Markets with Low Entry Barriers |
|
|
457 | (16) |
|
23-1 Competitive Price-Searcher Markets |
|
|
458 | (3) |
|
23-1a Price and Output in Competitive Price-Searcher Markets |
|
|
458 | (3) |
|
23-2 Contestable Markets and the Competitive Process |
|
|
461 | (1) |
|
23-3 Evaluating Competitive Price-Searcher Markets |
|
|
462 | (2) |
|
23-4 A Special Case: Price Discrimination |
|
|
464 | (2) |
|
23-5 Entrepreneurship and Economic Progress |
|
|
466 | (7) |
|
23-5a Technology, Entrepreneurship, and Dynamic Competition |
|
|
468 | (1) |
|
23-5b Dynamic Competition, Innovation, and Business Failures |
|
|
469 | (1) |
|
|
|
470 | (1) |
|
Critical Analysis Questions |
|
|
471 | (2) |
|
Chapter 24 Price-Searcher Markets with High Entry Barriers |
|
|
473 | (23) |
|
24-1 Why Are Entry Barriers Sometimes High? |
|
|
474 | (1) |
|
|
|
474 | (1) |
|
24-1b Government Licensing and Other Legal Barriers to Entry |
|
|
474 | (1) |
|
|
|
474 | (1) |
|
24-1d Control Over an Essential Resource |
|
|
475 | (1) |
|
24-2 Characteristics of a Monopoly |
|
|
475 | (3) |
|
24-2a Price and Output under Monopoly |
|
|
476 | (2) |
|
24-3 The Characteristics of an Oligopoly |
|
|
478 | (2) |
|
24-3a Interdependence among Oligopolistic Firms |
|
|
478 | (1) |
|
24-3b Substantial Economies of Scale |
|
|
479 | (1) |
|
24-3c Significant Barriers to Entry |
|
|
479 | (1) |
|
24-3d Identical or Differentiated Products |
|
|
479 | (1) |
|
24-4 Price and Output under Oligopoly |
|
|
480 | (5) |
|
24-4a The Incentive to Collude and to Cheat |
|
|
481 | (1) |
|
24-4b Obstacles to Collusion |
|
|
482 | (2) |
|
24-4c Uncertainty and Oligopoly |
|
|
484 | (1) |
|
24-5 Market Power and Profit--The Early Bird Catches the Worm |
|
|
485 | (1) |
|
24-6 Defects of Markets with High Entry Barriers |
|
|
486 | (1) |
|
24-7 Policy Alternatives When Entry Barriers Are High |
|
|
487 | (4) |
|
24-7a Antitrust Policy and Controlling the Structure of an Industry |
|
|
487 | (1) |
|
24-7b Reduce Artificial Barriers to Trade |
|
|
488 | (1) |
|
|
|
488 | (1) |
|
24-7d Problems with Regulation |
|
|
489 | (1) |
|
24-7e Supply Market with Government Production |
|
|
490 | (1) |
|
24-7f Pulling It Together |
|
|
491 | (1) |
|
24-8 Dynamic Competition in the Digital Age |
|
|
491 | (5) |
|
|
|
493 | (1) |
|
Critical Analysis Questions |
|
|
494 | (2) |
|
Chapter 25 The Supply of and Demand for Productive Resources |
|
|
496 | (19) |
|
25-1 Resource Markets and Human and Nonhuman Resources |
|
|
497 | (1) |
|
25-2 The Demand for Resources |
|
|
498 | (4) |
|
25-2a Substitution in Production |
|
|
499 | (1) |
|
25-2b Substitution in Consumption |
|
|
499 | (1) |
|
25-2c How Time Changes the Demand for Resources |
|
|
500 | (1) |
|
25-2d Shifts in the Demand for a Resource |
|
|
500 | (2) |
|
25-3 Marginal Productivity and the Firm's Hiring Decision |
|
|
502 | (5) |
|
25-3a Using a Variable Resource with a Fixed Resource |
|
|
502 | (2) |
|
25-3b MRP and the Firm's Demand Curve for a Resource |
|
|
504 | (1) |
|
25-3c Multiple Resources and How Much to Use of Each |
|
|
505 | (1) |
|
25-3d Maximizing Profits When Multiple Resources Are Used |
|
|
505 | (1) |
|
25-3e Cost Minimization When Multiple Resources Are Used |
|
|
505 | (2) |
|
25-4 The Supply of Resources |
|
|
507 | (3) |
|
25-4a Short-Run versus Long-Run Resource Supply |
|
|
507 | (2) |
|
|
|
509 | (1) |
|
|
|
509 | (1) |
|
25-5 Supply, Demand, and Resource Prices |
|
|
510 | (5) |
|
25-5a The Coordinating Function of Resource Prices |
|
|
511 | (1) |
|
|
|
512 | (1) |
|
Critical Analysis Questions |
|
|
513 | (2) |
|
Chapter 26 Earnings, Productivity, and the Job Market |
|
|
515 | (17) |
|
26-1 Why Do Earnings Differ? |
|
|
516 | (8) |
|
26-1a Earnings Differentials Due to Nonidentical Workers |
|
|
516 | (5) |
|
26-1b Earnings Differentials Due to Nonidentical Jobs |
|
|
521 | (1) |
|
26-1c Earnings Differentials Due to the Immobility of Labor |
|
|
521 | (2) |
|
26-1d Sources of Wage Differentials: A Summary |
|
|
523 | (1) |
|
26-2 The Economics of Employment Discrimination |
|
|
524 | (2) |
|
26-2a How Much Impact Does Employment Discrimination Have on Earnings? |
|
|
525 | (1) |
|
26-3 The Link between Productivity and Earnings |
|
|
526 | (6) |
|
26-3a Robots, Productivity, and the Future of Employment |
|
|
527 | (1) |
|
26-3b Productivity and Compensation: Measurement Problems |
|
|
528 | (2) |
|
|
|
530 | (1) |
|
Critical Analysis Questions |
|
|
530 | (2) |
|
Chapter 27 Investment, the Capital Market, and the Wealth of Nations |
|
|
532 | (19) |
|
|
|
533 | (1) |
|
|
|
534 | (2) |
|
27-2a How Interest Rates Are Determined |
|
|
534 | (1) |
|
27-2b The Money Rate versus the Real Rate of Interest |
|
|
535 | (1) |
|
27-2c Interest Rates and Risk |
|
|
536 | (1) |
|
27-3 The Present Value of Future Income and Costs |
|
|
536 | (2) |
|
27-4 Present Value, Profitability, and Investment |
|
|
538 | (3) |
|
27-4a Expected Future Earnings, the Interest Rate, and Asset Values |
|
|
539 | (2) |
|
27-4b Asset Prices, Business Investment, and Efficiency |
|
|
541 | (1) |
|
27-5 Investing in Human Capital |
|
|
541 | (1) |
|
27-6 Uncertainty, Entrepreneurship, and Profit |
|
|
542 | (4) |
|
27-6a Returns to Physical and Human Capital |
|
|
545 | (1) |
|
27-7 Why Is the Capital Market So Important? |
|
|
546 | (5) |
|
|
|
549 | (1) |
|
Critical Analysis Questions |
|
|
549 | (2) |
|
Chapter 28 Income Inequality and Poverty |
|
|
551 | (20) |
|
28-1 How Much Income Inequality Exists in the United States? |
|
|
552 | (5) |
|
28-1a The Factors Affecting Income Distribution |
|
|
553 | (2) |
|
28-1b Why Has Income Inequality Increased? |
|
|
555 | (2) |
|
28-2 Household Expenditures and Economic Inequality |
|
|
557 | (1) |
|
28-3 Income Mobility and Inequality in Economic Status |
|
|
558 | (2) |
|
28-4 Poverty in the United States |
|
|
560 | (6) |
|
28-4a Transfer Payments and the Poverty Rate |
|
|
561 | (1) |
|
28-4b Why Haven't Anti-Poverty Programs Been More Effective? |
|
|
562 | (2) |
|
28-4c Estimating the Costs of Redistribution |
|
|
564 | (1) |
|
28-4d Why Transfers Often Fail to Improve the Well-Being of their Recipients |
|
|
565 | (1) |
|
28-5 Income Inequality: Some Concluding Thoughts |
|
|
566 | (5) |
|
|
|
567 | (1) |
|
Critical Analysis Questions |
|
|
568 | (3) |
|
PART 6 Applying the Basics: Special Topics in Economics |
|
|
571 | (130) |
|
Special Topic 1 Government Spending and Taxation |
|
|
572 | (15) |
|
Special Topic 2 The Economics of Social Security |
|
|
587 | (10) |
|
Special Topic 3 The Stock Market: Its Function, Performance, and Potential as an Investment Opportunity |
|
|
597 | (11) |
|
Special Topic 4 Keynes and Hayek: Contrasting Views on Sound Economics and the Role of Government |
|
|
608 | (7) |
|
Special Topic 5 The 2020 COVID-19 Recession: Cause, Response, and Implications for the Future |
|
|
615 | (8) |
|
Special Topic 6 The Great Recession of 2008-2009: Causes and Response |
|
|
623 | (14) |
|
Special Topic 7 Lessons from the Great Depression |
|
|
637 | (14) |
|
Special Topic 8 The Economics of Health Care |
|
|
651 | (12) |
|
Special Topic 9 Earnings Differences between Men and Women |
|
|
663 | (7) |
|
Special Topic 10 Do Labor Unions Increase the Wages of Workers? |
|
|
670 | (11) |
|
Special Topic 11 The Question of Resource Exhaustion |
|
|
681 | (10) |
|
Special Topic 12 Difficult Environmental Cases and the Role of Government |
|
|
691 | (10) |
| Appendix A General Business and Economics Indicators for the United States |
|
701 | (7) |
| Appendix B Answers to Selected Critical Analysis Questions |
|
708 | (17) |
| Glossary |
|
725 | (12) |
| Index |
|
737 | |
