Economics and Contemporary Issues (with InfoTrac 1-Semester, Economic Applications Online Product Printed Access Card)

by Moomaw, Ronald L.; Olson, Kent W.

• ISBN13: 9780324321661
• ISBN10: 032432166X
• Edition: 7th
• Format: Paperback
• Copyright: 2006-04-24
• Publisher: South-Western College Pub

Summary

Finally, an issues-oriented approach to economics! ECONOMICS AND CONTEMPORARY ISSUES examines important topics such as the collapse of communism, the role of government in a modern economy, crime, drugs, and poverty. Specifically for non-majors, this economics textbook has the study tools and the easy-to-read writing style that will make class a snap and transitioning into the job market no problem.

Table of Contents

Preface	xi
To the Student	xxi
Economic Growth: An Introduction to Scarcity and Choice	1	(26)
Recent Growth Experiences	3	(4)
Sources of Economic Growth	7	(8)
Production Possibilities for the Individual College Student	7	(1)
Production Possibilities for the Economy	8	(4)
The Best Combination of Goods and Services: Consumption Versus Growth	12	(2)
Resource Accumulation, Technological Improvement, and Efficiency Improvement	14	(1)
Productivity Growth: What Can We Expect in the ``New Economy''?	15	(5)
The Contribution of Capital Intensity Growth: The New Economy?	17	(1)
The Contribution of Technical Progress: The New Economy?	18	(2)
Economic and Productivity Growth in Various Parts of the World	20	(7)
Growth in Europe and Japan: Catching up	20	(1)
Developing Countries after 1950: Some Grow, Some Don't	21	(3)
Summary	24	(3)
An Introduction to Economic Systems and the Workings of the Price System	27	(38)
Market Economic Systems: An Introductory Look	29	(3)
What Does and Economic System Do? It Coordinates	32	(6)
The Division and Specialization of Labor	34	(1)
Comparative Advantage and Specialization	35	(2)
Economic Coordination and the Market System	37	(1)
The Price System as Coordinator	38	(7)
Demand	38	(3)
Supply	41	(2)
Putting the Pieces Together: Demand and Supply	43	(2)
Comparative Systems: An Introductory Sketch	45	(6)
The Price System	45	(1)
Information, Rationing, and Motivation in a Market Economy	46	(2)
Information, Rationing, and Motivation in a Command Economy	48	(2)
Systems and Coordination	50	(1)
Transitions to a Market Economy: Some Experiences	51	(14)
Stable Prices and the Monetary System	52	(2)
Other Economic Reforms	54	(7)
Additional Thoughts on Transition Economies	61	(1)
Summary	62	(3)
Competitive Markets and Government Policy: Agriculture	65	(34)
Demand and Supply Analysis	69	(6)
Other Demand Factors	69	(3)
Other Supply Factors	72	(3)
How Changes in Demand and Supply Affect Equilibrium Price and Quantity	75	(2)
Changes in Demand	75	(1)
Changes in Supply	76	(1)
Changes in Demand and Supply	76	(1)
U.S. Farm Policy	77	(8)
Economic and Historical Characteristics	77	(3)
Competitive Markets and Economic Profits	80	(5)
Price Controls	85	(4)
Rent Seeking	89	(6)
Summary	92	(3)
Appendix: The Price Elasticity of Demand	95	(4)
Efficiency in Resource Allocation: How Much Do We Have? How Much Do We Want?	99	(24)
Introduction	99	(1)
The Meaning of Efficiency in Resource Allocation	100	(1)
Requirements for Achieving Efficiency in Resource Allocation	100	(1)
The Competitive Market: An Example of Efficiency in Resource Allocation	101	(1)
Market Failure: Inefficiency in the Private Sector	102	(6)
Monopoly	103	(1)
External Benefits	104	(2)
Public Goods	106	(1)
External Costs	106	(1)
Imperfect Insurance Markets	107	(1)
Government Failure: Inefficiency in the Public Sector	108	(7)
Rent Controls	109	(1)
Agricultural Price Supports	109	(1)
Government-Subsidized Medical Care	110	(1)
Minimum Wage	111	(1)
Taxes	112	(3)
How Much Efficiency Do We Want?	115	(8)
Efficiency Versus Equity: Tax Trade-Offs	116	(1)
Efficiency Versus Innovation	116	(1)
Efficiency and Equity	117	(1)
Efficiency Offsets to Inefficiency	118	(1)
Summary	118	(5)
Market Power: Does It Help or Hurt the Economy?	123	(26)
Monopoly Analysis	124	(6)
Marginal Revenue	125	(2)
The Marginal Principle	127	(1)
Monopoly and Competition Compared	127	(3)
Market Power and Economic Efficiency	130	(3)
The Trend in Market Power	130	(1)
Barriers to Entry	131	(2)
OPEC: A Few Sellers Acting Like a Monopoly	133	(8)
Cartel Formation	134	(1)
The Determinants of Cartel Success	135	(1)
Problems of the OPEC Cartel	136	(4)
Do a Few Firms That Dominate a Market Have Market Power?	140	(1)
Market Power and Technical Progress	141	(3)
Government and Market Power	144	(5)
Summary	145	(4)
Air Pollution: Balancing Benefits and Costs	149	(20)
The Principal Air Pollution Problems	149	(2)
Urban Air Quality	150	(1)
Acid Rain	150	(1)
Global Warming	150	(1)
Stratospheric Ozone Depletion	151	(1)
Hazardous Air Pollutants	151	(1)
The Economic Perspective	151	(2)
Market Failure: Is Government Action Necessary?	153	(3)
Air Pollution Regulation: The Clean Air Act	156	(2)
National Ambient Air Quality Standards (NAAQS)	156	(1)
Emissions Limits	156	(1)
Restricted Technology	156	(1)
New Source Performance Standards	157	(1)
Prescribed Fuels	157	(1)
Offset Requirements	157	(1)
Emissions Trading	157	(1)
Prevention of Significant Deterioration	157	(1)
Monitoring and Compliance	157	(1)
Effects of the Clean Air Act on Air Quality	158	(1)
The Economics of the Clean Air Act: Have We Gone Too Far?	158	(3)
Benefits and Costs of the Clean Air Act, 1970--1990	159	(1)
Benefits and Costs of the Clean Air Act, 1990--2010	160	(1)
Cost-Reducing Measures	161	(8)
Emissions Taxes	161	(1)
Marketable Pollution Permits	162	(2)
Limiting Global Warming: Emissions Permits in an International Context	164	(2)
Summary	166	(3)
Health Care: How Much? For Whom?	169	(20)
The Rising Share of GDP Devoted to Health Care	169	(4)
How Much Can We Afford? Health Care Versus Non-Health Care	171	(1)
How Much Can We Afford? The Government Budget Constraint	172	(1)
How Much Can We Afford? The Rising Household Burden	173	(1)
The Growing Ranks of the Uninsured	173	(2)
Getting Our Money's Worth	175	(5)
Third-Party Payments	175	(2)
Physician-Induced Demand	177	(2)
Defensive Medicine	179	(1)
Federal Tax Exemption for Health Insurance	180	(1)
Limiting Health Care Expenditure Growth	180	(9)
Managed Care	181	(1)
Limiting Expenditure Growth Rationally	182	(4)
Summary	186	(3)
Crime and Drugs: A Modern Dilemma	189	(30)
Public Goods	191	(2)
Government Enforcement of Property Rights	192	(1)
Crime and Crime Control	193	(8)
An Economic Approach to Crime and Crime Control	194	(3)
A Comparison of Crime Trends in the United States and England	197	(4)
Drug Legalization: Competing Views	201	(1)
Liberty: An Argument for Legalization	201	(1)
Paternalism: An Argument Against Legalization	201	(1)
Morality: An Argument Against Legalization	202	(1)
The Final Analysis	202	(1)
A Positive Analysis of Drug Policy	202	(9)
Does Increased Enforcement Work?	205	(2)
Uninteded but Inevitable Consequences of Drug Prohibition	207	(1)
Unintended but Perhaps Avoidable Consequences of Drug Prohibition	208	(1)
Unintended Consequences of Drug Legalizations	209	(2)
Evaluation: Hawks, Doves, and Owls	211	(8)
Competing Views in Practice	211	(1)
Current Policy	211	(2)
Owlish Criticism	213	(2)
Summary	215	(4)
College Education: Is It Worth the Cost?	219	(18)
How to Evaluate an Investment	220	(2)
Determine Costs and Benefits	220	(1)
Adjust for Date of Occurrence	220	(1)
Apply an Investment Decision Rule	221	(1)
Investing in a College Education: Monetary Benefits and Costs	222	(6)
The Student's Perspective	223	(4)
The Social Perspective	227	(1)
Investing in a College Education: Nonmonetary Benefits and Costs	228	(2)
Nonmonetary Student Benefits	228	(1)
Nonmonetary Student Costs	229	(1)
Nonmonetary External Benefits	229	(1)
Nonmonetary External Costs	230	(1)
Is Government Support Necessary?	230	(7)
Ensuring that Society Invests Enough in College Education	231	(1)
Ensuring that Student Borrowing Reflects the Social Risk of Default	231	(2)
Increasing Enrollment of Lower-Income Students	233	(1)
Summary	234	(3)
Educational Reform: The Role of Incentives and Choice	237	(28)
The Nature of the Problem	238	(2)
Arguments for Public Support of Schools	240	(3)
The Economics of Student Achievement	243	(2)
High-Stakes Testing	245	(4)
The Economics of Investing in High-Stakes Testing	247	(2)
The Economic Organization of Public Education	249	(6)
Decision Making and Markets	250	(2)
Decision Making and State-Owned Enterprises	252	(1)
Decision Making and Public Schools	253	(2)
Government Policy	255	(10)
``Improve or Else''	256	(2)
``Consumer Choice''	258	(2)
``Improve or Else'' and ``Consumer Choice''	260	(1)
Summary	261	(4)
Poverty: Old and New Approaches to a Persistent Problem	265	(26)
The Scope of the Problem	266	(3)
Antipoverty Effectiveness of Government Transfers	269	(3)
Income-Tested Transfers and Income from Work	272	(6)
Food Stamps	272	(2)
Earned Income Tax Credit (EITC)	274	(1)
Temporary Assistance for Needy Families (TANF)	275	(1)
TANF + Food Stamps + EITC	276	(2)
Making Work Pay	278	(8)
Unemployment Policy	278	(1)
Childcare Assistance	279	(2)
Medical Protection	281	(1)
Minimum Wage	281	(1)
Wage Subsidies	282	(1)
Labor Market Discrimination Policy	282	(4)
Making Fathers Pay	286	(5)
Child Support Assistance	286	(1)
Child Support Assurance	287	(1)
Summary	287	(4)
Tracking and Explaining the Macroeconomy	291	(24)
Gross Domestic Product (GDP)	292	(1)
GDP'S Components	293	(3)
Consumption	293	(1)
Gross Investment	294	(1)
Government Purchases	295	(1)
Net Exports	296	(1)
Nominal GDP, Real GDP, and the GDP Deflator	296	(3)
The Nation's Economic Performance	299	(3)
Determining the Nation's Output and Price Level	302	(13)
Aggregate Demand	302	(4)
Aggregate Supply	306	(3)
Aggregate Demand and Supply Interaction	309	(3)
Summary	312	(3)
Unemployment: The Legacy of Recession, Technological Change, and Free Choice	315	(24)
Costs of Unemployment	315	(2)
Economic Costs	316	(1)
Non-Economic Costs	316	(1)
The Unemployment Rate	317	(1)
Principal Types of Unemployment	318	(2)
Frictional Unemployment	318	(1)
Structural Unemployment	319	(1)
Cyclical Unemployment	320	(1)
Full Employment and the Natural Rate of Unemployment	320	(1)
The Minimum Wage: An Unnatural Contributor to the Natural Rate	321	(2)
Causes of Recessions	323	(2)
Demand Shocks	324	(1)
Supply Shocks	324	(1)
Policies to Reduce Unemployment	325	(6)
Cyclical Unemployment	325	(4)
Structural Unemployment	329	(1)
Frictional Unemployment	330	(1)
Unemployment in Europe	331	(4)
Impediments to Hiring	331	(1)
Impediments to Accepting Employment	332	(1)
Summary	332	(3)
Appendix: The Labor Market	335	(4)
Inflation: A Monetary Phenomenon	339	(32)
Defining Inflation	339	(1)
Measuring Inflation	340	(2)
The GDP Deflator	340	(1)
The Consumer Price Index	340	(2)
Calculating the Inflation Rate	342	(1)
Recent Experience	342	(1)
Effects of Inflation	342	(5)
The Redistribution of Income and Wealth	343	(2)
Inflation and Government	345	(1)
Inflation and Net Exports	346	(1)
Other Effects	347	(1)
Money and the Money Supply	347	(3)
Money's Functions	347	(1)
The Money Supply	348	(2)
The Federal Reserve	350	(1)
Causes of Inflation	350	(7)
The Quantity Theory of Money	350	(4)
Inflation Is a Monetary Phenomenon	354	(1)
Inflation as a Monetary Phenomenon: Two Qualifications	355	(1)
Monopolies, Oil Markets, and Inflation	356	(1)
Inflation and Policy	357	(6)
Monetary Policy	357	(1)
Fiscal Policy	358	(1)
Monetary Policy in Action	358	(2)
Summary	360	(3)
Appendix: Money Creation and Monetary Policy	363	(8)
Sustained Budget Deficits: Is This Any Way to Run a Government?	371	(18)
The Budget, Budget Balances, and Debt	371	(2)
The Budget	371	(1)
Budget Balances	372	(1)
Debt	373	(1)
What's in Store?	373	(7)
The Deficit Over the Next Decade: Better or Worse?	373	(2)
The Long-run Deficit: Unsustainable	375	(2)
The Long-Run Fiscal Imbalance: Now for Some Really Large Numbers	377	(3)
Wait a Minute: Can't We Grow Our Way Out of the Problem?	380	(1)
How Will the Economy Be Affected?	381	(3)
In the Short-Run: Positively, If	381	(1)
In the Long Run: There Is No Silver Lining	381	(3)
How Will This Problem Affect You?	384	(1)
What Would Help?	385	(4)
Account for Long-Run Liabilities of Policy Choices	385	(1)
Hold the Line	385	(1)
Fix Social Security, But Especially Medicare and Medicaid	385	(1)
Summary	386	(3)
Social Security: Leading Issues and Approaches to Reform	389	(24)
Principal Features of Social Security	389	(3)
Social Security Trust Funds	390	(1)
Retirement Benefits	390	(2)
Leading Issues in Social Security	392	(11)
Is Social Security a Welfare Program?	392	(1)
Does Social Security Induce Early Retirement?	392	(1)
Does Social Security Reduce Household Savings?	393	(1)
Does Social Security Provide Low Individual Rates of Return?	394	(3)
Who Pays the Social Security Tax?	397	(2)
Can Social Security Fulfill Its Long-Run Obligations?	399	(4)
Approaches to Social Security Reform	403	(10)
Fixing the Current System	403	(2)
Investing in Private Securities	405	(4)
Summary	409	(4)
International Trade: Beneficial, but Controversial	413	(20)
Comparative Advantage: The Basis for Trade	413	(4)
Net Welfare Gains from Free Trade of Existing Products	417	(2)
Net Welfare Gains from Imports	417	(1)
Net Welfare Gains from Exports	418	(1)
Welfare Gains from Free Trade of New Varieties of Existing Products	419	(1)
Decreasing Costs	420	(1)
Increased Competition	420	(1)
If Free Trade Is So Beneficial, What About . . .?	421	(3)
U.S. Jobs Lost	421	(1)
Cheap Foreign Labor	422	(1)
National Defense	423	(1)
Infant Industries	423	(1)
Trade Deficits	423	(1)
Trade Policy	424	(9)
Tariffs	425	(1)
Quotas	426	(1)
Voluntary Export Restraints	426	(1)
Trade Agreements	426	(3)
Trade Adjustment Assistance	429	(1)
Summary	430	(3)
Financing Trade and the Trade Deficit	433	(16)
Pricing the Medium of Exchange: Currency Markets	434	(5)
Flexible-Rate Currency Market	434	(3)
Fixed-Rate Currency Markets	437	(2)
Financing the Trade Deficit	439	(1)
The Balance of Payments	439	(1)
Have We Accumulated Too Much Debt?	440	(2)
Should Countries Have Flexible or Fixed Currency Exchange Rates?	442	(2)
The Case for Flexible-Rate Currency Markets	442	(1)
The Case for Fixed-Rate Currency Markets	443	(1)
Should Capital Flows be Controlled?	444	(5)
Summary	446	(3)
Glossary	449	(10)
Index	459