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Principles of Economics

by ;
Edition:
7th
ISBN13:

9780131441729

ISBN10:
0131441728
Format:
Hardcover
Pub. Date:
1/1/2004
Publisher(s):
Prentice Hall

Questions About This Book?

What version or edition is this?
This is the 7th edition with a publication date of 1/1/2004.
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  • The New copy of this book will include any supplemental materials advertised. Please check the title of the book to determine if it should include any CDs, lab manuals, study guides, etc.
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Summary

These two highly-respected authors have revised this best-selling book to include more current, modern subject matter and events while maintaining those features that have contributed to its great success. It continues to use stories, graphs, and equations and a unified, logical organization to make economic concepts easy-to-understand and relevant to all readers. Users of this book see the connection between growth, trade, comparative advantage, and the production possibilities frontier. When readers understand how a simple competitive market system works, they are ready to focus on problems of real-world markets.Currency data has been updated through the second quarter of 2003, with coverage of deflation, the effects of the war with Iraq and the war on terrorism, and the wars' impact on the national deficit. A comprehensive overview introducing economics begins the book; subsequent topics include: foundations of microeconomics: consumers and firms; market imperfection and the role of government; concepts and problems in macroeconomics; the goods and money markets; macroeconomic analysis; and the world economy.An excellent desk reference for economists; this book will serve any business owner, as an understanding of basic economics will prove helpful in all ventures.

Table of Contents

Preface xxvii
Introduction
PART I Introduction to Economics
1(100)
The Scope and Method of Economics
1(22)
Why Study Economics?
2(4)
To Learn a Way of Thinking
2(2)
To Understand Society
4(1)
To Understand Global Affairs
4(1)
To Be an Informed Voter
5(1)
The Scope of Economics
6(1)
Microeconomics and Macroeconomics
6(1)
The Diverse Fields of Economics
7(1)
The Method of Economics
7(1)
Further Exploration The Fields of Economics
8(6)
Theories and Models
9(3)
Economic Policy
12(2)
News Analysis An Economic Recovery for the United States in 2005?
14(1)
An Invitation
15(8)
Summary
15(1)
Review Terms and Concepts
15(1)
Problem Set
16(1)
Appendix: How to Read and Understand Graphs
16(7)
The Economic Problem: Scarcity and Choice
23(20)
Scarcity, Choice, and Opportunity Cost
24(12)
Scarcity and Choice in a One-Person Economy
24(1)
Scarcity and Choice in an Economy of Two or More
25(3)
The Production Possibility Frontier
28(5)
Comparative Advantage and the Gains from Trade
33(2)
The Economic Problem
35(1)
Economic Systems
36(2)
Command Economies
36(1)
Laissez-Faire Economies: The Free Market
36(2)
News Analysis Investing in Central and Eastern Europe
38(1)
Mixed Systems, Markets, and Governments
38(1)
Looking Ahead
39(4)
Summary
39(1)
Review Terms and Concepts
40(1)
Problem Set
40(3)
Demand, Supply, and Market Equilibrium
43(28)
Firms and Households: The Basic Decision-Making Units
43(1)
Input Markets and Output Markets: The Circular Flow
44(2)
Demand in Product/Output Markets
46(9)
Changes in Quantity Demanded versus Changes in Demand
46(1)
Price and Quantity Demanded: The Law of Demand
47(2)
Other Determinants of Household Demand
49(2)
Shift of Demand versus Movement Along a Demand Curve
51(3)
From Household Demand to Market Demand
54(1)
Supply in Product/Output Markets
55(5)
Price and Quantity Supplied: The Law of Supply
55(2)
Other Determinants of Supply
57(1)
Shift of Supply versus Movement Along a Supply Curve
57(2)
From Individual Supply to Market Supply
59(1)
Market Equilibrium
60(5)
Excess Demand
60(2)
Excess Supply
62(1)
Changes in Equilibrium
63(2)
Demand and Supply in Product Markets: A Review
65(1)
Looking Ahead: Markets and the Allocation of Resources
65(1)
News Analysis Supply and Demand in the News: 2003
66(5)
Summary
67(1)
Review Terms and Concepts
68(1)
Problem Set
68(3)
Demand and Supply Applications and Elasticity
71(30)
The Price System: Rationing and Allocating Resources
71(5)
Price Rationing
71(2)
Constraints on the Market and Alternative Rationing Mechanisms
73(3)
News Analysis Oil Prices in 2003 Hit $40
76(2)
Prices and the Allocation of Resources
77(1)
Price Floors
78(1)
Supply and Demand Analysis: An Oil Import Fee
78(2)
Supply and Demand and Market Efficiency
80(4)
Consumer Surplus
80(1)
Producer Surplus
81(1)
Competitive Markets Maximize the Sum of Producer and Consumer Surplus
82(1)
Potential Causes of Deadweight Loss from Under-and Overproduction
83(1)
Further Exploration The Drug Wars: A Matter of Supply and Demand
84(1)
Elasticity
84(11)
Price Elasticity of Demand
85(3)
Calculating Elasticities
88(5)
The Determinants of Demand Elasticity
93(1)
Other Important Elasticities
94(1)
Further Exploration London Newspapers and New York City Restaurants Learn about Elasticity
95(1)
Looking Ahead
96(5)
Summary
96(1)
Review Terms and Concepts
97(1)
Problem Set
97(2)
Appendix: Point Elasticity (Optional)
99(2)
MICROECONOMICS
PART II Foundations of Microeconomics: Consumers and Firms
101(152)
Household Behavior and Consumer Choice
101(28)
Household Choice in Output Markets
104(3)
The Determinants of Household Demand
104(1)
The Budget Constraint
104(3)
Further Exploration Opportunity Costs--Then and Now
107(1)
The Basis of Choice: Utility
108(4)
Diminishing Marginal Utility
109(1)
Allocating Income to Maximize Utility
109(2)
The Utility-Maximizing Rule
111(1)
Diminishing Marginal Utility and Downward-Sloping Demand
112(1)
Income and Substitution Effects
112(2)
The Income Effect
113(1)
The Substitution Effect
113(1)
Consumer Surplus
114(1)
Household Choice in Input Markets
115(3)
The Labor Supply Decision
116(1)
The Price of Leisure
117(1)
Income and Substitution Effects of a Wage Change
117(1)
Further Exploration Wages and Interest Rates in 2003
118(11)
Saving and Borrowing: Present versus Future Consumption
118(2)
A Review: Households in Output and Input Markets
120(1)
Summary
120(1)
Review Terms and Concepts
121(1)
Problem Set
121(2)
Appendix: Indifference Curves
123(6)
The Production Process: The Behavior of Profit-Maximizing Firms
129(22)
The Behavior of Profit-Maximizing Firms
132(4)
Profits and Economic Costs
132(2)
Short-Run versus Long-Run Decisions
134(1)
The Bases of Decisions: Market Price of Outputs, Available Technology, and Input Prices
135(1)
The Production Process
136(4)
Production Functions: Total Product, Marginal Product, and Average Product
136(4)
Production Functions with Two Variable Factors of Production
140(1)
Choice of Technology
140(1)
News Analysis Increasing Substitution of Capital for Labor Raises Labor Productivity
141(1)
Looking Ahead: Cost and Supply
142(9)
Summary
142(1)
Review Terms and Concepts
143(1)
Problem Set
143(2)
Appendix: Isoquants and Isocosts
145(6)
Short-Run Costs and Output Decisions
151(22)
Costs in the Short Run
151(11)
Fixed Costs
152(2)
Variable Costs
154(5)
Total Costs
159(2)
Short-Run Costs: A Review
161(1)
Output Decisions: Revenues, Costs, and Profit Maximization
162(4)
Total Revenue (TR) and Marginal Revenue (MR)
163(1)
Comparing Costs and Revenues to Maximize Profit
163(3)
Further Exploration Case Study in Marginal Analysis: An Ice Cream Parlor
166(2)
The Short-Run Supply Curve
167(1)
Looking Ahead
168(5)
Summary
168(1)
Review Terms and Concepts
169(1)
Problem Set
169(4)
Long-Run Costs and Output Decisions
173(24)
Short-Run Conditions and Long-Run Directions
174(6)
Maximizing Profits
174(2)
Minimizing Losses
176(2)
The Short-Run Industry Supply Curve
178(2)
Long-Run Directions: A Review
180(1)
Long-Run Costs: Economies and Diseconomies of Scale
180(2)
Increasing Returns to Scale
181(1)
Further Exploration Why Small Farmers Have Trouble Competing: Economies of Scale in Agriculture and Hog Raising
182(1)
News Analysis Taking Advantage of Economies of Scale in the Automobile Industry
183(2)
Constant Returns to Scale
184(1)
Decreasing Returns to Scale
184(1)
Long-Run Adjustments to Short-Run Conditions
185(4)
Short-Run Profits: Expansion to Equilibrium
186(1)
Short-Run Losses: Contraction to Equilibrium
187(1)
The Long-Run Adjustment Mechanism: Investment Flows toward Profit Opportunities
188(1)
Further Exploration The Long-Run Average Cost Curve: Flat or U-Shaped?
189(1)
Output Markets: A Final Word
189(8)
Summary
190(1)
Review Terms and Concepts
191(1)
Problem Set
191(1)
Appendix: External Economies and Diseconomies and the Long-Run Industry Supply Curve
192(5)
Input Demand: The Labor and Land Markets
197(18)
Input Markets: Basic Concepts
197(4)
Demand for Inputs: A Derived Demand
197(2)
Inputs: Complementary and Substitutable
199(1)
Diminishing Returns
199(1)
Marginal Revenue Product
199(2)
Labor Markets
201(2)
A Firm Using Only One Variable Factor of Production: Labor
201(2)
News Analysis Baseball Salaries and Marginal Revenue Product in 2003
203(4)
A Firm Employing Two Variable Factors of Production in the Short and Long Run
205(1)
Many Labor Markets
206(1)
Land Markets
207(2)
Rent and the Value of Output Produced on Land
208(1)
The Firm's Profit-Maximization Condition in Input Markets
209(1)
Input Demand Curves
210(1)
Shifts in Factor Demand Curves
210(1)
Resource Allocation and the Mix of Output in Competitive Markets
211(1)
The Distribution of Income
212(1)
Looking Ahead
212(3)
Summary
212(1)
Review Terms and Concepts
213(1)
Problem Set
213(2)
Input Demand: The Capital Market and the Investment Decision
215(18)
Capital, Investment, and Depreciation
215(3)
Capital
216(1)
Investment and Depreciation
217(1)
The Capital Market
218(4)
Capital Income: Interest and Profits
219(2)
Financial Markets in Action
221(1)
News Analysis Putting Their Money Where the Future Is
222(1)
Capital Accumulation and Allocation
223(1)
The Demand for New Capital and the Investment Decision
223(4)
Forming Expectations
223(1)
Comparing Costs and Expected Return
224(3)
A Final Word on Capital
227(6)
Summary
227(1)
Review Terms and Concepts
228(1)
Problem Set
228(1)
Appendix: Calculating Present Value
229(4)
General Equilibrium and the Efficiency of Perfect Competition
233(20)
General Equilibrium Analysis
235(1)
A Technological Advance: The Electronic Calculator
235(1)
News Analysis The Dot-Com Bust and the Labor Market: 2003
236(4)
A Shift in Consumer Preferences: The Wine Industry in the 1970s
238(2)
Formal Proof of a General Competitive Equilibrium
240(1)
Allocative Efficiency and Competitive Equilibrium
240(5)
Pareto Efficiency
241(1)
The Efficiency of Perfect Competition
242(2)
Perfect Competition versus Real Markets
244(1)
The Sources of Market Failure
245(3)
Imperfect Markets
245(1)
Public Goods
246(1)
Externalities
247(1)
Imperfect Information
248(1)
Evaluating the Market Mechanism
248(5)
Summary
249(1)
Review Terms and Concepts
250(1)
Problem Set
251(2)
PART III Market Imperfections and the Role of Government
253(122)
Monopoly and Antitrust Policy
253(28)
Imperfect Competition and Market Power: Core Concepts
253(4)
Defining Industry Boundaries
254(1)
Barriers to Entry
254(2)
Price: The Fourth Decision Variable
256(1)
News Analysis The Drug Wars in 2000
257(1)
Price and Output Decisions in Pure Monopoly Markets
257(8)
Demand in Monopoly Markets
258(5)
Perfect Competition and Monopoly Compared
263(2)
Collusion and Monopoly Compared
265(1)
The Social Costs of Monopoly
265(3)
Inefficiency and Consumer Loss
265(2)
Rent-Seeking Behavior
267(1)
Price Discrimination
268(1)
Examples of Price Discrimination
268(1)
Remedies for Monopoly: Antitrust Policy
269(4)
The Development of Antitrust Law: Historical Background
270(1)
Landmark Antitrust Legislation
270(3)
News Analysis The Politics and Personalities of Antitrust Enforcement
273(1)
The Enforcement of Antitrust Law
273(2)
Initiating Antitrust Actions
273(1)
Sanctions and Remedies
274(1)
Criminal Actions
275(1)
A Natural Monopoly
275(1)
Do Natural Monopolies Still Exist?
276(1)
Imperfect Markets: A Review and a Look Ahead
276(5)
Summary
277(1)
Review Terms and Concepts
278(1)
Problem Set
278(3)
Monopolistic Competition and Oligopoly
281(24)
Monopolistic Competition
282(8)
Product Differentiation, Advertising, and Social Welfare
283(3)
Price and Output Determination in Monopolistic Competition
286(3)
Economic Efficiency and Resource Allocation
289(1)
Oligopoly
290(2)
Oligopoly Models
290(2)
News Analysis Competition and Concentration in the Ice Cream Business
292(8)
Game Theory
294(2)
Repeated Games
296(2)
Oligopoly and Economic Performance
298(1)
Industrial Concentration and Technological Change
299(1)
The Role of Government
300(5)
Regulation of Mergers
300(1)
A Proper Role?
301(1)
Summary
302(1)
Review Terms and Concepts
302(1)
Problem Set
303(2)
Externalities, Public Goods, Imperfect Information, and Social Choice
305(26)
Externalities and Environmental Economics
306(6)
Marginal Social Cost and Marginal-Cost Pricing
306(2)
Private Choices and External Effects
308(2)
Internalizing Externalities
310(2)
News Analysis Externalities Are All Around Us
312(3)
Public (Social) Goods
315(6)
The Characteristics of Public Goods
316(1)
The Public Good Problem as a Prisoner's Dilemma
316(1)
Income Distribution as a Public Good?
317(1)
Public Provision of Public Goods
318(1)
Optimal Provision of Public Goods
318(3)
Local Provision of Public Goods: Tiebout Hypothesis
321(1)
Imperfect Information
321(3)
Adverse Selection: Asymmetric Information
322(1)
Moral Hazard
322(1)
Market Solutions
323(1)
Government Solutions
323(1)
Social Choice
324(3)
The Voting Paradox
324(2)
Government Inefficiency: Theory of Public Choice
326(1)
Rent-Seeking Revisited
326(1)
Government and the Market
327(4)
Summary
328(1)
Review Terms and Concepts
328(1)
Problem Set
329(2)
Income Distribution and Poverty
331(22)
The Utility Possibilities Frontier
331(1)
The Sources of Household Income
332(3)
Wages and Salaries
333(2)
Income from Property
335(1)
Income from the Government: Transfer Payments
335(1)
The Distribution of Income
335(6)
Income Inequality in the United States
336(2)
Poverty
338(2)
The Distribution of Wealth
340(1)
News Analysis Hunger in the United States in 2003
341(1)
The Redistribution Debate
341(3)
Arguments against Redistribution
342(1)
Arguments in Favor of Redistribution
342(2)
Redistribution Programs and Policies
344(4)
Financing Redistribution Programs: Taxes
344(1)
Expenditure Programs
345(3)
News Analysis Major Welfare Reform Takes Effect in 1997
348(1)
How Effective Are Antipoverty Programs?
348(1)
Government or the Market? A Review
349(4)
Summary
349(1)
Review Terms and Concepts
350(1)
Problem Set
350(3)
Public Finance: The Economics of Taxation
353(22)
The Economics of Taxation
353(7)
Taxes: Basic Concepts
353(3)
Tax Equity
356(1)
What Is the ``Best'' Tax Base?
357(3)
The Gift and Estate Tax
360(1)
Tax Incidence: Who Pays?
360(6)
The Incidence of Payroll Taxes
361(3)
The Incidence of Corporate Profits Taxes
364(1)
The Overall Incidence of Taxes in the United States: Empirical Evidence
365(1)
Excess Burdens and the Principle of Neutrality
366(3)
How Do Excess Burdens Arise?
366(2)
The Principle of Second Best
368(1)
News Analysis The President's Tax Plan in 2003
369(1)
Measuring Excess Burdens
369(6)
Excess Burdens and the Degree of Distortion
370(1)
Summary
371(1)
Review Terms and Concepts
372(1)
Problem Set
372(3)
MACROECONOMICS
PART IV Concepts and Problems in Macroeconomics
375(56)
Introduction to Macroeconomics
375(16)
The Roots of Macroeconomics
376(1)
The Great Depression
376(1)
Recent Macroeconomic History
376(1)
Further Exploration The Great Depression and John Maynard Keynes
377(1)
Macroeconomic Concerns
378(2)
Inflation and Deflation
379(1)
Output Growth: Short Run and Long Run
379(1)
Unemployment
380(1)
Government in the Macroeconomy
380(1)
Fiscal Policy
380(1)
Monetary Policy
380(1)
Growth Policies
381(1)
The Components of the Macroeconomy
381(3)
The Circular Flow Diagram
381(2)
The Three Market Arenas
383(1)
The Methodology of Macroeconomics
384(1)
Connections to Microeconomics
384(1)
Aggregate Demand and Aggregate Supply
384(1)
The U.S. Economy in the Twentieth Century: Trends and Cycles
385(6)
Expansion and Contraction: The Business Cycle
386(1)
The U.S. Economy Since 1970
387(2)
Summary
389(1)
Review Terms and Concepts
390(1)
Problem Set
390(1)
Measuring National Output and National Income
391(20)
Gross Domestic Product
391(2)
Final Goods and Services
392(1)
Exclusion of Used Goods and Paper Transactions
392(1)
Exclusion of Output Produced Abroad by Domestically Owned Factors of Production
393(1)
Calculating GDP
393(3)
The Expenditure Approach
394(2)
Further Exploration GDP: One of the Great Inventions of the 20th Century--Survey of Current Business
396(3)
The Income Approach
398(1)
From GDP to Disposable Personal Income
399(2)
Nominal versus Real GDP
401(3)
Calculating Real GDP
402(1)
Calculating the GDP Deflator
403(1)
The Problems of Fixed Weights
404(1)
Limitations of the GDP Concept
404(2)
GDP and Social Welfare
405(1)
The Underground Economy
405(1)
Gross National Income per Capita
406(1)
Looking Ahead
406(5)
Summary
407(1)
Review Terms and Concepts
407(1)
Problem Set
408(3)
Long-Run and Short-Run Concerns: Growth, Productivity, Unemployment, and Inflation
411(20)
Long-Run Output and Productivity Growth
411(3)
Recessions, Depressions, and Unemployment
414(5)
Defining and Measuring Unemployment
414(2)
Components of the Unemployment Rate
416(2)
The Costs of Unemployment
418(1)
News Analysis Rising Unemployment in 2003
419(3)
The Benefits of Recessions
421(1)
Inflation
422(3)
Defining Inflation
422(1)
Price Indexes
423(2)
Further Exploration World Economy in Transition: Bias in the US Consumer Price Index: Why It Could Be Important
425(2)
The Costs of Inflation
425(2)
Inflation: Public Enemy Number One?
427(1)
Looking Ahead
427(4)
Summary
427(1)
Review Terms and Concepts
428(1)
Problem Set
428(3)
PART V The Goods and Money Markets
431(84)
Aggregate Expenditure and Equilibrium Output
431(22)
Aggregate Output and Aggregate Income (Y)
432(8)
Income, Consumption, and Saving (Y, C, and S)
433(1)
Explaining Spending Behavior
433(4)
Planned Investment (I)
437(3)
Planned Aggregate Expenditure (AE)
440(1)
Equilibrium Aggregate Output (Income)
440(3)
The Saving/Investment Approach to Equilibrium
442(1)
News Analysis Inventories Rise and the Economy Slows in 2003
443(2)
Adjustment to Equilibrium
443(2)
The Multiplier
445(3)
The Multiplier Equation
447(1)
Further Exploration The Paradox of Thrift
448(2)
The Size of the Multiplier in the Real World
449(1)
The Multiplier in Action: Recovering from the Great Depression
449(1)
Looking Ahead
450(3)
Summary
450(1)
Review Terms and Concepts
451(1)
Problem Set
451(1)
Appendix: Deriving the Multiplier Algebraically
452(1)
The Government and Fiscal Policy
453(22)
Government in the Economy
454(4)
Government Purchases (G), Net Taxes (T), and Disposable Income (Yd)
454(2)
Equilibrium Output: Y=C+I+G
456(2)
Fiscal Policy at Work: Multiplier Effects
458(6)
The Government Spending Multiplier
459(2)
The Tax Multiplier
461(1)
The Balanced-Budget Multiplier
462(2)
The Federal Budget
464(1)
The Budget
464(1)
News Analysis Debate: Tax Cuts and the Deficit in 2003
465(1)
The Surplus or Deficit
465(1)
The Debt
466(1)
The Economy's Influence on the Government Budget
466(2)
Tax Revenues Depend on the State of the Economy
467(1)
Some Government Expenditures Depend on the State of the Economy
467(1)
Automatic Stabilizers
467(1)
Fiscal Drag
467(1)
Full-Employment Budget
468(1)
Looking Ahead
468(7)
Summary
468(1)
Review Terms and Concepts
469(1)
Problem Set
469(1)
Appendix A: Deriving the Fiscal Policy Multipliers
470(1)
Appendix B: The Case in Which Tax Revenues Depend on Income
471(4)
The Money Supply and the Federal Reserve System
475(24)
An Overview of Money
475(4)
What Is Money?
475(2)
Commodity and Fiat Monies
477(1)
Measuring the Supply of Money in the United States
477(2)
The Private Banking System
How Banks Create Money
479(1)
A Historical Perspective: Goldsmiths
479(1)
News Analysis A Cashless Society in Russia, 1997
480(5)
The Modern Banking System
481(2)
The Creation of Money
483(2)
The Money Multiplier
485(1)
The Federal Reserve System
485(3)
Functions of the Federal Reserve
487(1)
News Analysis Central Banks Worry about Inflation and Deflation in 2003
488(1)
The Federal Reserve Balance Sheet
488(1)
How the Federal Reserve Controls the Money Supply
489(6)
The Required Reserve Ratio
490(1)
The Discount Rate
491(1)
Open Market Operations
492(3)
The Supply Curve for Money
495(1)
Looking Ahead
495(4)
Summary
495(1)
Review Terms and Concepts
496(1)
Problem Set
496(3)
Money Demand, the Equilibrium Interest Rate, and Monetary Policy
499(16)
The Demand for Money
499(5)
The Transaction Motive
500(1)
Money Management and the Optimal Balance
500(3)
The Speculation Motive
503(1)
The Total Demand for Money
503(1)
Further Exploration The Bond Market, the Money Market, and the Speculation Motive
504(2)
Transactions Volume and the Price Level
504(1)
The Determinants of Money Demand: Review
505(1)
The Equilibrium Interest Rate
506(3)
Supply and Demand in the Money Market
506(2)
Changing the Money Supply to Affect the Interest Rate
508(1)
Increases in Y and Shifts in the Money Demand Curve
508(1)
Looking Ahead: The Federal Reserve and Monetary Policy
509(6)
Summary
510(1)
Review Terms and Concepts
510(1)
Problem Set
510(1)
Appendix A: The Various Interest Rates in the U.S. Economy
511(2)
Appendix B: The Demand For Money: A Numerical Example
513(2)
PART VI Macroeconomic Analysis
515(150)
Money, the Interest Rate, and Output: Analysis and Policy
515(20)
The Links between the Goods Market and the Money Market
515(4)
Investment, the Interest Rate, and the Goods Market
516(2)
Money Demand, Aggregate Output (Income), and the Money Market
518(1)
Combining the Goods Market and the Money Market
519(3)
Expansionary Policy Effects
520(2)
News Analysis Lower Interest Rates Increase Activity in the Housing Market in 2003
522(4)
Contractionary Policy Effects
524(1)
The Macroeconomic Policy Mix
525(1)
Other Determinants of Planned Investment
526(1)
Looking Ahead: The Price Level
526(9)
Summary
527(1)
Review Terms and Concepts
527(1)
Problem Set
528(1)
Appendix: The Is-Lm Diagram
529(6)
Aggregate Demand, Aggregate Supply, and Inflation
535(22)
The Aggregate Demand Curve
533(5)
Deriving the Aggregate Demand Curve
534(1)
The Aggregate Demand Curve: A Warning
535(1)
Other Reasons for a Downward-Sloping Aggregate Demand Curve
536(1)
Aggregate Expenditure and Aggregate Demand
537(1)
Shifts of the Aggregate Demand Curve
537(1)
The Aggregate Supply Curve
538(6)
The Aggregate Supply Curve: A Warning
539(1)
Aggregate Supply in the Short Run
539(3)
Shifts of the Short-Run Aggregate Supply Curve
542(2)
The Equilibrium Price Level
544(1)
The Long-Run Aggregate Supply Curve
545(1)
Potential GDP
545(1)
Aggregate Demand, Aggregate Supply, and Monetary and Fiscal Policy
546(2)
Long-Run Aggregate Supply and Policy Effects
548(1)
News Analysis Increase in Government Spending without Fear of Inflation: 2003
548(1)
Further Exploration The Simple ``Keynesian'' Aggregate Supply Curve
549(1)
Causes of Inflation
550(3)
Inflation versus Sustained Inflation: A Reminder
550(1)
Demand-Pull Inflation
550(1)
Cost-Push, or Supply-Side, Inflation
550(1)
Expectations and Inflation
551(1)
Money and Inflation
552(1)
Sustained Inflation as a Purely Monetary Phenomenon
553(1)
Looking Ahead
553(4)
Summary
554(1)
Review Terms and Concepts
555(1)
Problem Set
555(2)
The Labor Market, Unemployment, and Inflation
557(18)
The Labor Market: Basic Concepts
557(1)
The Classical View of the Labor Market
558(1)
News Analysis Employment and Unemployment in 2003
559(2)
The Classical Labor Market and the Aggregate Supply Curve
560(1)
The Unemployment Rate and the Classical View
560(1)
Explaining the Existence of Unemployment
561(3)
Sticky Wages
561(1)
Efficiency Wage Theory
562(1)
Imperfect Information
563(1)
Minimum Wage Laws
563(1)
An Open Question
563(1)
The Short-Run Relationship between the Unemployment Rate and Inflation
564(5)
The Phillips Curve: A Historical Perspective
566(1)
Aggregate Supply and Aggregate Demand Analysis and the Phillips Curve
567(1)
Expectations and the Phillips Curve
568(1)
Is There a Short-Run Trade-Off between Inflation and Unemployment?
569(1)
The Long-Run Aggregate Supply Curve, Potential GDP, and the Natural Rate of Unemployment
569(2)
The Nonaccelerating Inflation Rate of Unemployment (NAIRU)
570(1)
Looking Ahead
571(4)
Summary
572(1)
Review Terms and Concepts
572(1)
Problem Set
573(2)
Macroeconomic Issues and Policy
575(18)
Time Lags Regarding Monetary and Fiscal Policy
575(4)
Stabilization: ``The Fool in the Shower''
575(2)
Recognition Lags
577(1)
Implementation Lags
577(1)
Response Lags
577(2)
Monetary Policy
579(5)
Targeting the Interest Rate
579(1)
The Fed's Response to the State of the Economy
580(1)
Policy Since 1990
581(3)
Fiscal Policy: Deficit Targeting
584(1)
News Analysis Bush Fiscal Policy and the Deficit 2003
585(4)
The Effects of Spending Cuts on the Deficit
586(1)
Economic Stability and Deficit Reduction
587(1)
Summary
588(1)
Fiscal Policy Since 1990
589(4)
Summary
591(1)
Review Terms and Concepts
592(1)
Problem Set
592(1)
The Stock Market and the Economy
593(14)
Stocks and Bonds
593(2)
Bonds
593(1)
Stocks
594(1)
Further Exploration Reading a Bond Table
595(1)
Determining the Price of a Stock
595(1)
Further Exploration Reading the Stock Pages
596(1)
The Stock Market Since 1948
597(3)
Stock Market Effects on the Economy
600(7)
The Crash of October 1987
600(1)
The Boom of 1995--2000
600(4)
Fed Policy and the Stock Market
604(1)
Summary
605(1)
Key Terms and Concepts
605(1)
Problem Set
605(2)
Household and Firm Behavior in the Macroeconomy: A Further Look
607(24)
Households: Consumption and Labor Supply Decisions
607(6)
The Keynesian Theory of Consumption: A Review
607(1)
The Life-Cycle Theory of Consumption
608(2)
The Labor Supply Decision
610(2)
Interest Rate Effects on Consumption
612(1)
Government Effects on Consumption and Labor Supply: Taxes and Transfers
612(1)
A Possible Employment Constraint on Households
612(1)
News Analysis Falling Interest Rates Designed to Stimulate Spending in 2003
613(4)
A Summary of Household Behavior
614(1)
The Household Sector Since 1970
615(2)
Firms: Investment and Employment Decisions
617(7)
Expectations and Animal Spirits
618(2)
Excess Labor and Excess Capital Effects
620(1)
Inventory Investment
620(2)
A Summary of Firm Behavior
622(1)
The Firm Sector Since 1970
622(2)
Productivity and the Business Cycle
624(1)
The Relationship between Output and Unemployment
625(1)
The Size of the Multiplier
626(5)
Summary
627(1)
Review Terms and Concepts
628(1)
Problem Set
629(2)
Long-Run Growth
631(18)
The Growth Process: From Agriculture to Industry
631(2)
The Sources of Economic Growth
633(4)
An Increase in Labor Supply
633(1)
Increases in Physical Capital
634(1)
Increases in Human Capital
635(1)
Increases in Productivity
636(1)
Growth and Productivity in the United States
637(2)
Sources of Growth in the U.S. Economy: 1929--1982
638(1)
Labor Productivity: 1952 I--2003 II
638(1)
Economic Growth and Public Policy
639(1)
News Analysis Productivity and Growth in the United States and Europe
640(1)
Suggested Public Policies
640(1)
Further Exploration Can We Really Measure Productivity Changes?
641(2)
Growth Policy: A Long-Run Proposition
643(1)
The Pros and Cons of Growth
643(6)
The Progrowth Argument
643(1)
The Antigrowth Argument
644(2)
Summary
646(1)
Review Terms and Concepts
647(1)
Problem Set
647(2)
Debates in Macroeconomics: Monetarism, New Classical Theory, and Supply-Side Economics
649(16)
Keynesian Economics
649(1)
Monetarism
650(4)
The Velocity of Money
650(1)
The Quantity Theory of Money
651(1)
Inflation as a Purely Monetary Phenomenon
652(1)
The Keynesian/Monetarist Debate
653(1)
News Analysis Inflation and Money Supply Growth in Brazil: 2000
654(1)
New Classical Macroeconomics
654(4)
The Development of New Classical Macroeconomics
654(1)
Rational Expectations
655(1)
The Lucas Supply Function
656(1)
Evaluating Rational-Expectations Theory
657(1)
Real Business Cycle Theory
658(1)
Supply-Side Economics
658(2)
Evaluating Supply-Side Economics
660(1)
Testing Alternative Macroeconomic Models
660(5)
Summary
661(1)
Review Terms and Concepts
662(1)
Problem Set
662(3)
INTERNATIONAL ECONOMICS
PART VII The World Economy
665
International Trade, Comparative Advantage, and Protectionism
665(22)
Trade Surpluses and Deficits
666(1)
The Economic Basis for Trade: Comparative Advantage
667(8)
Absolute Advantage versus Comparative Advantage
667(5)
Terms of Trade
672(1)
Exchange Rates
672(3)
The Sources of Comparative Advantage
675(1)
The Heckscher-Ohlin Theorem
675(1)
Other Explanations for Observed Trade Flows
676(1)
Trade Barriers: Tariffs, Export Subsidies, and Quotas
676(2)
News Analysis Trade Games
678(1)
Free Trade or Protection?
679(3)
The Case for Free Trade
679(1)
The Case for Protection
680(2)
Further Exploration A Petition
682(1)
An Economic Consensus
683(4)
Summary
684(1)
Review Terms and Concepts
685(1)
Problem Set
685(2)
Open-Economy Macroeconomics: The Balance of Payments and Exchange Rates
687(26)
The Balance of Payments
688(3)
The Current Account
689(1)
The Capital Account
690(1)
The United States as a Debtor Nation
691(1)
Equilibrium Output (Income) in an Open Economy
691(5)
The International Sector and Planned Aggregate Expenditure
692(2)
Imports and Exports and the Trade Feedback Effect
694(1)
Import and Export Prices and the Price Feedback Effect
695(1)
The Open Economy with Flexible Exchange Rates
696(5)
The Market for Foreign Exchange
696(3)
Factors that Affect Exchange Rates
699(1)
The Effects of Exchange Rates on the Economy
700(1)
News Analysis The Weak U.S. Dollar and Canadian Economy in 2003
701(4)
An Interdependent World Economy
705(8)
Summary
705(1)
Review Terms and Concepts
706(1)
Problem Set
706(1)
Appendix: World Monetary Systems Since 1900
707(6)
Globalization
713(16)
The Global Circular Flow
713(1)
A Brief History of Economic Globalization
714(2)
The Benefits and Costs of Globalization
716(2)
The Free-Trade Debate Revisited
716(2)
News Analysis Farm Subsidies and Fair Trade in 2003
718(5)
Trade, Growth, and Poverty
719(1)
The Globalization of Labor Markets: The Economics of Immigration
719(3)
Capital Mobility
722(1)
Public Policy and Globalization
723(2)
Global Externalities and Public Goods
723(1)
Nongovernmental Organizations and International Economics: The Washington Consensus
724(1)
Globalization, Capitalism, and Democracy
725(1)
A Final Word
725(4)
Summary
726(1)
Review Terms and Concepts
726(1)
Problem Set
726(3)
Economic Growth in Developing and Transitional Economies
729
Life in the Developing Nations: Population and Poverty
730(1)
Economic Development: Sources and Strategies
731(5)
The Sources of Economic Development
731(2)
Strategies for Economic Development
733(3)
News Analysis Trade and Development in Africa--2003
736(2)
Growth versus Development: The Policy Cycle
737(1)
Issues in Economic Development
738(3)
Population Growth
738(2)
Developing-Country Debt Burdens
740(1)
Economies in Transition
741(3)
Political Systems and Economic Systems: Socialism, Capitalism, and Communism
742(1)
Central Planning versus the Market
743(1)
The End of the Soviet Union
744(1)
The Transition to a Market Economy
744(1)
Six Basic Requirements for Successful Transition
744(1)
News Analysis Economic Conditions in Russia in 2003
745
Summary
748(1)
Review Terms and Concepts
749(1)
Problem Set
749
Glossary 1(1)
Index 1(1)
Photo Credits 1


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