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What do John Elway, Mick Jagger, Arnold Schwarzenegger, Sandra Day O'Connor and Young MC all have in common? They all studied economics! In beginning your study of economics with this text, you have a unique opportunity to learn the basics through a clear presentation of concepts and exciting real-world applications that demonstrate how economics affects you, every day, in ways you may not even expect. Why do airlines overbook? How did Hurricane Katrina affect the economy? Do drug busts make a difference in crime? Will a higher minimum wage lead to fewer jobs? Are you more likely to be late to some classes than others? Economic analysis seeks answers to questions like these and so much more. Your journey down Economics Road begins with Chapter 1 - Enjoy!

Table of Contents

Prefacep. xix
An Introduction to Economics
Economics: The Science of Scarcity
What Economics Is Aboutp. 1
A Definition of Economicsp. 2
Goods and Badsp. 2
Resourcesp. 2
Scarcity and a Definition of Economicsp. 2
Key Concepts in Economicsp. 5
Opportunity Costp. 5
Benefits and Costsp. 6
Decisions Made at the Marginp. 8
Efficiencyp. 8
Unintended Effectsp. 10
Exchangep. 11
Economic Categoriesp. 12
Positive and Normative Economicsp. 12
Microeconomics and Macroeconomicsp. 13
A Reader Asksp. 13
Analyzing the Scenep. 14
Chapter Summaryp. 15
Key Terms and Conceptsp. 16
Questions and Problemsp. 16
Working with Diagramsp. 17
Two-Variable Diagramsp. 17
Slope of a Linep. 18
Slope of a Line Is Constantp. 18
Slope of a Curvep. 20
The 45[Degree] Linep. 20
Pie Chartsp. 21
Bar Graphsp. 21
Line Graphsp. 21
Appendix Summaryp. 24
Questions and Problemsp. 24
Should You Major in Economics?p. 25
Five Myths about Economics and an Economics Majorp. 26
What Awaits You as an Economics Major?p. 28
What Do Economists Do?p. 29
Places to Find More Informationp. 30
Concluding Remarksp. 30
Economic Activities: Producing and Tradingp. 31
The Production Possibilities Frontierp. 32
The Straight-Line PPF: Constant Opportunity Costsp. 32
The Bowed-Outward (Concave-Downward) PPF: Increasing Opportunity Costsp. 33
Law of Increasing Opportunity Costsp. 34
Economic Concepts within a PPF Frameworkp. 35
Exchange or Tradep. 38
Periods Relevant to Tradep. 39
Trade and the Terms of Tradep. 40
Costs of Tradesp. 40
Trades and Third-Party Effectsp. 42
Production, Trade, and Specializationp. 42
Producing and Tradingp. 42
Profit and a Lower Cost of Livingp. 45
A Benevolent and All-Knowing Dictator Versus the Invisible Handp. 45
A Reader Asksp. 46
Analyzing the Scenep. 47
Chapter Summaryp. 47
Key Terms and Conceptsp. 48
Questions and Problemsp. 48
Working with Numbers and Graphsp. 49
Supply and Demand: Theoryp. 50
A Note about Theoriesp. 51
What Is Demand?p. 51
The Law of Demandp. 52
What Does Ceteris Paribus Mean?p. 52
Four Ways to Represent the Law of Demandp. 52
Two Prices: Absolute and Relativep. 53
Why Does Quantity Demanded Go Down as Price Goes Up?p. 53
Individual Demand Curve and Market Demand Curvep. 54
A Change in Quantity Demanded Versus a Change in Demandp. 55
What Factors Cause the Demand Curve to Shift?p. 57
Movement Factors and Shift Factorsp. 59
Supplyp. 60
The Law of Supplyp. 61
Why Most Supply Curves Are Upward Slopingp. 61
Changes in Supply Mean Shifts in Supply Curvesp. 62
What Factors Cause the Supply Curve to Shift?p. 63
A Change in Supply Versus a Change in Quantity Suppliedp. 64
The Market: Putting Supply and Demand Togetherp. 65
Supply and Demand at Work at an Auctionp. 65
The Language of Supply and Demand: A Few Important Termsp. 66
Moving to Equilibrium: What Happens to Price When There Is a Surplus or a Shortage?p. 67
Speed of Moving to Equilibriump. 68
Moving to Equilibrium: Maximum and Minimum Pricesp. 68
Equilibrium in Terms of Consumers' and Producers' Surplusp. 70
What Can Change Equilibrium Price and Quantity?p. 71
Price Controlsp. 73
Price Ceiling: Definition and Effectsp. 73
Do Buyers Prefer Lower Prices to Higher Prices?p. 76
Price Floor: Definition and Effectsp. 76
A Reader Asksp. 77
Analyzing the Scenep. 78
Chapter Summaryp. 78
Key Terms and Conceptsp. 79
Questions and Problemsp. 80
Working with Numbers and Graphsp. 80
Supply and Demand: Practicep. 82
Why Do Colleges Use GPAs, ACTs, and SATs for Purposes of Admission?p. 83
What Will Happen to the Price of Marijuana If the Purchase and Sale of Marijuana Are Legalized?p. 84
Where Did You Get That Music?p. 85
Television Shows During the Olympicsp. 86
Who Feeds Cleveland?p. 86
The Minimum Wage Lawp. 87
Loud Talking at a Restaurantp. 88
Price Ceiling in the Kidney Marketp. 89
Healthcare and the Right to Sue Your HMOp. 91
Being Late to Classp. 92
If Gold Prices Are the Same Everywhere, Then Why Aren't House Prices?p. 93
Do You Pay for Good Weather?p. 94
Paying Ail Professors the Same Salaryp. 94
Price Floors and Winners and Losersp. 96
College Superathletesp. 97
Supply and Demand on a Freewayp. 99
What Does Price Have to Do with Getting to Class on Time?p. 101
The Space Within Spacep. 102
10 A.M. Classes in Collegep. 102
Who Pays the Tax?p. 103
A Reader Asksp. 105
Analyzing the Scenep. 105
Chapter Summaryp. 106
Key Terms and Conceptsp. 107
Questions and Problemsp. 108
Working with Numbers and Graphsp. 109
Macroeconomic Fundamentals
Macroeconomic Measurements, Part I: Prices and Unemploymentp. 111
How to Approach the Study of Macroeconomicsp. 112
Macroeconomic Problemsp. 112
Macroeconomic Theoriesp. 112
Macroeconomic Policiesp. 113
Different Views of How the Economy Worksp. 113
Three Macroeconomic Organizational Categoriesp. 113
Macroeconomic Measuresp. 115
Measuring Prices Using the CPIp. 115
Inflation and the CPIp. 117
The Substitution Bias in Fixed-Weighted Measuresp. 118
GDP Implicit Price Deflatorp. 119
Converting Dollars from One Year to Anotherp. 119
Measuring Unemploymentp. 120
Who Are the Unemployed?p. 121
The Unemployment and Employment Ratesp. 122
Reasons for Unemploymentp. 123
Discouraged Workersp. 123
Types of Unemploymentp. 123
What Is Full Employment?p. 125
Cyclical Unemploymentp. 125
A Reader Asksp. 127
Analyzing the Scenep. 127
Chapter Summaryp. 128
Key Terms and Conceptsp. 129
Questions and Problemsp. 129
Working with Numbers and Graphsp. 129
Macroeconomic Measurements, Part II: GDP and Real GDPp. 131
Gross Domestic Productp. 132
Three Ways to Compute GDPp. 132
What GDP Omitsp. 133
GDP Is Not Adjusted for Bads Generated in the Production of Goodsp. 134
Per Capita GDPp. 134
Is Either GDP or Per Capita GDP a Measure of Happiness or Well-Being?p. 134
The Expenditure Approach to Computing GDP for a Real-World Economyp. 136
Expenditures in a Real-World Economyp. 136
Computing GDP Using the Expenditure Approachp. 137
The Income Approach to Computing GDP for a Real-World Economyp. 138
Computing National Incomep. 141
From National Income to GDP: Making Some Adjustmentsp. 141
Other National Income Accounting Measurementsp. 143
Net Domestic Productp. 143
Personal Incomep. 143
Disposable Incomep. 144
Real GDPp. 144
Why We Need Real GDPp. 144
Computing Real GDPp. 145
The General Equation for Real GDPp. 145
What Does It Mean If Real GDP Is Higher in One Year Than in Another Year?p. 145
Real GDP, Economic Growth, and Business Cyclesp. 146
A Reader Asksp. 148
Analyzing the Scenep. 148
Chapter Summaryp. 149
Key Terms and Conceptsp. 150
Questions and Problemsp. 150
Working with Numbers and Graphsp. 151
Macroeconomic Stability, Instability, and Fiscal Policy
Aggregate Demand and Aggregate Supplyp. 152
The Two Sides to an Economyp. 153
Aggregate Demandp. 153
Why Does the Aggregate Demand Curve Slope Downward?p. 153
A Change in the Quantity Demanded of Real GDP Versus a Change in Aggregate Demandp. 156
Changes in Aggregate Demand: Shifts in the AD Curvep. 156
How Spending Components Affect Aggregate Demandp. 157
Factors That Can Change C, I, G, and NX (EX - IM) and Therefore Can Change ADp. 158
Can a Change in the Money Supply Change Aggregate Demand?p. 161
Short-Run Aggregate Supplyp. 162
Short-Run Aggregate Supply Curve: What It Is and Why It Is Upward Slopingp. 162
What Puts the "Short Run" in SRAS?p. 163
Changes in Short-Run Aggregate Supply: Shifts in the SRAS Curvep. 163
Putting AD and SRAS Together: Short-Run Equilibriump. 165
How Short-Run Equilibrium in the Economy Is Achievedp. 166
Thinking in Terms of Short-Run Equilibrium Changes in the Economyp. 167
An Important Exhibitp. 169
Long-Run Aggregate Supplyp. 170
Going from the Short Run to the Long Runp. 170
Short-Run Equilibrium, Long-Run Equilibrium, and Disequilibriump. 172
A Reader Asksp. 173
Analyzing the Scenep. 173
Chapter Summaryp. 174
Key Terms and Conceptsp. 175
Questions and Problemsp. 175
Working with Numbers and Graphsp. 176
The Self-Regulating Economyp. 177
The Classical Viewp. 178
Classical Economists and Say's Lawp. 178
Classical Economists and Interest Rate Flexibilityp. 178
Classical Economists on Prices and Wagesp. 180
Three States of the Economyp. 181
Real GDP and Natural Real GDP: Three Possibilitiesp. 181
The Labor Market and the Three States of the Economyp. 182
One Nagging Question: How Can the Unemployment Rate Be Less Than the Natural Unemployment Rate?p. 184
The Self-Regulating Economyp. 185
What Happens If the Economy Is in a Recessionary Gap?p. 185
What Happens If the Economy Is in an Inflationary Gap?p. 186
The Self-Regulating Economy: A Recapp. 188
Policy Implication of Believing the Economy Is Self-Regulatingp. 189
Changes in a Self-Regulating Economy: Short Run and Long Runp. 189
A Reader Asksp. 191
Analyzing the Scenep. 191
Chapter Summaryp. 192
Key Terms and Conceptsp. 193
Questions and Problemsp. 193
Working with Numbers and Graphsp. 194
Economic Instability: A Critique of the Self-Regulating Economyp. 195
Questioning the Classical Positionp. 196
Keynes's Criticism of Say's Law in a Money Economyp. 196
Keynes on Wage Ratesp. 198
New Keynesians and Wage Ratesp. 198
Keynes on Pricesp. 199
Is It a Question of the Time It Takes for Wages and Prices to Adjust?p. 200
The Simple Keynesian Modelp. 201
Assumptionsp. 201
The Consumption Functionp. 201
Consumption and Savingp. 203
The Multiplierp. 203
The Multiplier and Realityp. 205
The Simple Keynesian Model in the AD-AS Frameworkp. 206
Shifts in the Aggregate Demand Curvep. 206
The Keynesian Aggregate Supply Curvep. 206
The Economy in a Recessionary Gapp. 208
Government's Role in the Economyp. 209
The Theme of the Simple Keynesian Modelp. 209
The Simple Keynesian Model in the TE-TP Frameworkp. 210
Deriving a Total Expenditures (TE) Curvep. 210
What Will Shift the TE Curve?p. 211
Comparing Total Expenditures (TE) and Total Production (TP)p. 212
Moving from Disequilibrium to Equilibriump. 212
The Graphical Representation of the Three States of the Economy in the TE-TP Frameworkp. 213
The Economy in a Recessionary Gap and the Role of Governmentp. 214
The Theme of the Simple Keynesian Modelp. 216
A Reader Asksp. 216
Analyzing the Scenep. 217
Chapter Summaryp. 218
Key Terms and Conceptsp. 219
Questions and Problemsp. 219
Working with Numbers and Graphsp. 220
The Federal Budget and Fiscal Policyp. 221
The Federal Budgetp. 222
Government Expendituresp. 222
Government Tax Revenuesp. 223
Budget Deficit, Surplus, or Balancep. 225
Structural and Cyclical Deficitsp. 226
The Public Debtp. 226
Fiscal Policyp. 226
Some Relevant Fiscal Policy Termsp. 227
Two Important Notesp. 227
Demand-Side Fiscal Policyp. 227
Shifting the Aggregate Demand Curvep. 227
Fiscal Policy: A Keynesian Perspectivep. 228
Crowding Out: Questioning Expansionary Fiscal Policyp. 229
Lags and Fiscal Policyp. 232
Crowding Out, Lags, and the Effectiveness of Fiscal Policyp. 233
Supply-Side Fiscal Policyp. 233
Marginal Tax Rates and Aggregate Supplyp. 233
The Laffer Curve: Tax Rates and Tax Revenuesp. 234
A Reader Asksp. 237
Analyzing the Scenep. 238
Chapter Summaryp. 238
Key Terms and Conceptsp. 239
Questions and Problemsp. 240
Working with Numbers and Graphsp. 240
Money, the Economy, and Monetary Policy
Money and Bankingp. 241
Money: What Is It and How Did It Come to Be?p. 242
Money: A Definitionp. 242
Three Functions of Moneyp. 242
From a Barter to a Money Economy: The Origins of Moneyp. 243
Money in a Prisoner of War Campp. 244
Money, Leisure, and Outputp. 244
What Gives Money Its Value?p. 245
Defining the Money Supplyp. 246
M1p. 246
M2p. 246
Where Do Credit Cards Fit In?p. 247
How Banking Developedp. 249
The Early Bankersp. 249
The Federal Reserve Systemp. 249
The Money Creation Processp. 249
The Bank's Reserves and Morep. 250
The Banking System and the Money Expansion Processp. 251
Why Maximum? Answer: No Cash Leakages and Zero Excess Reservesp. 254
Who Created What?p. 254
It Works in Reverse: The "Money Destruction" Processp. 255
We Change Our Examplep. 256
A Reader Asksp. 257
Analyzing the Scenep. 257
Chapter Summaryp. 258
Key Terms and Conceptsp. 258
Questions and Problemsp. 259
Working with Numbers and Graphsp. 259
The Federal Reserve Systemp. 260
The Structure and Functions of the Fedp. 261
The Structure of the Fedp. 261
The Functions of the Fedp. 262
Fed Tools for Controlling the Money Supplyp. 264
Open Market Operationsp. 264
The Required Reserve Ratiop. 267
The Discount Ratep. 267
A Reader Asksp. 269
Analyzing the Scenep. 270
Chapter Summaryp. 270
Key Terms and Conceptsp. 270
Questions and Problemsp. 271
Working with Numbers and Graphsp. 271
Money and the Economyp. 272
Money and the Price Levelp. 273
The Equation of Exchangep. 273
From the Equation of Exchange to the Simple Quantity Theory of Moneyp. 274
The Simple Quantity Theory of Money in an AD-AS Frameworkp. 275
Dropping the Assumptions That V and Q Are Constantp. 277
Monetarismp. 278
Monetarist Viewsp. 278
Monetarism and AD-ASp. 279
The Monetarist View of the Economyp. 281
Inflationp. 281
One-Shot Inflationp. 282
Continued Inflationp. 284
Money and Interest Ratesp. 287
What Economic Variables Are Affected by a Change in the Money Supply?p. 287
The Money Supply, the Loanable Funds Market, and Interest Ratesp. 288
So What Happens to the Interest Rate as the Money Supply Changes?p. 292
The Nominal and Real Interest Ratesp. 292
A Reader Asksp. 293
Analyzing the Scenep. 294
Chapter Summaryp. 295
Key Terms and Conceptsp. 296
Questions and Problemsp. 296
Working with Numbers and Graphsp. 297
Monetary Policyp. 298
The Money Marketp. 299
The Demand for Moneyp. 299
The Supply of Moneyp. 300
Equilibrium in the Money Marketp. 300
Transmission Mechanismsp. 300
The Keynesian Transmission Mechanism: Indirectp. 301
The Keynesian Mechanism May Get Blockedp. 301
The Monetarist Transmission Mechanism: Directp. 305
Monetary Policy and the Problem of Inflationary and Recessionary Gapsp. 306
Monetary Policy and the Activist-Nonactivist Debatep. 308
The Case for Activist (or Discretionary) Monetary Policyp. 309
The Case for Nonactivist (or Rules-Based) Monetary Policyp. 309
Nonactivist Monetary Proposalsp. 312
A Constant-Money-Growth-Rate Rulep. 312
A Predetermined-Money-Growth-Rate Rulep. 312
The Fed and the Taylor Rulep. 313
Inflation Targetingp. 314
A Reader Asksp. 315
Analyzing the Scenep. 316
Chapter Summaryp. 316
Key Terms and Conceptsp. 317
Questions and Problemsp. 317
Working with Numbers and Graphsp. 318
Expectations and Growth
Expectations Theory and the Economyp. 319
Phillips Curve Analysisp. 320
The Phillips Curvep. 320
Samuelson and Solow: The Phillips Curve Is Americanizedp. 320
The Controversy Begins: Are There Really Two Phillips Curves?p. 321
Things Aren't Always as We Thoughtp. 321
Friedman and the Natural Rate Theoryp. 321
How Do People Form Their Expectations?p. 324
Rational Expectations and New Classical Theoryp. 326
Rational Expectationsp. 326
Do People Anticipate Policy?p. 326
New Classical Theory: The Effects of Unanticipated and Anticipated Policyp. 327
Policy Ineffectiveness Proposition (PIP)p. 328
Rational Expectations and Incorrectly Anticipated Policyp. 329
How to Fall into a Recession Without Really Tryingp. 330
New Keynesians and Rational Expectationsp. 332
Looking at Things from the Supply Side: Real Business Cycle Theoristsp. 333
A Reader Asksp. 335
Analyzing the Scenep. 335
Chapter Summaryp. 336
Key Terms and Conceptsp. 337
Questions and Problemsp. 337
Working with Numbers and Graphsp. 338
Economic Growthp. 339
A Few Basics About Economic Growthp. 340
Do Economic Growth Rates Matter?p. 340
Growth Rates in Selected Countriesp. 341
Two Types of Economic Growthp. 342
Economic Growth and the Price Levelp. 343
What Causes Economic Growth?p. 345
Natural Resourcesp. 345
Laborp. 345
Capitalp. 346
Technological Advancesp. 347
Free Trade as Technologyp. 347
Property Rights Structurep. 347
Economic Freedomp. 347
Policies to Promote Economic Growthp. 349
Economic Growth and Special Interest Groupsp. 350
New Growth Theoryp. 351
What Was Wrong with the Old Theory? Or What's New with New Growth Theory?p. 351
Discovery, Ideas, and Institutionsp. 353
Expanding Our Horizonsp. 353
A Reader Asksp. 354
Analyzing the Scenep. 355
Chapter Summaryp. 355
Key Terms and Conceptsp. 356
Questions and Problemsp. 357
Working with Numbers and Graphsp. 357
The Global Economy
International Economics and Globalization
International Tradep. 359
International Trade Theoryp. 360
How Do Countries Know What to Trade?p. 360
How Do Countries Know When They Have a Comparative Advantage?p. 363
Trade Restrictionsp. 365
The Distributional Effects of International Tradep. 365
Consumers' and Producers' Surplusp. 365
The Benefits and Costs of Trade Restrictionsp. 366
If Free Trade Results in Net Gain, Why Do Nations Sometimes Restrict Trade?p. 369
The World Trade Organization (WTO)p. 373
A Reader Asksp. 374
Analyzing the Scenep. 374
Chapter Summaryp. 375
Key Terms and Conceptsp. 376
Questions and Problemsp. 376
Working with Numbers and Graphsp. 377
International Financep. 378
The Balance of Paymentsp. 379
Current Accountp. 380
Capital Accountp. 383
Official Reserve Accountp. 383
Statistical Discrepancyp. 383
What the Balance of Payments Equalsp. 384
The Foreign Exchange Marketp. 384
The Demand for Goodsp. 385
The Demand for and Supply of Currenciesp. 385
Flexible Exchange Ratesp. 387
The Equilibrium Exchange Ratep. 387
Changes in the Equilibrium Exchange Ratep. 388
Factors That Affect the Equilibrium Exchange Ratep. 388
Fixed Exchange Ratesp. 391
Fixed Exchange Rates and Overvalued/Undervalued Currencyp. 392
What Is So Bad About an Overvalued Dollar?p. 393
Government Involvement in a Fixed Exchange Rate Systemp. 394
Options Under a Fixed Exchange Rate Systemp. 394
The Gold Standardp. 396
Fixed Exchange Rates Versus Flexible Exchange Ratesp. 398
Promoting International Tradep. 398
Optimal Currency Areasp. 399
The Current International Monetary Systemp. 400
A Reader Asksp. 402
Analyzing the Scenep. 403
Chapter Summaryp. 403
Key Terms and Conceptsp. 404
Questions and Problemsp. 405
Working with Numbers and Graphsp. 405
Globalizationp. 406
What Is Globalization?p. 407
A Smaller Worldp. 407
A World Economyp. 407
Two Ways to "See" Globalizationp. 408
No Barriersp. 408
A Union of Statesp. 408
Globalization Factsp. 408
International Tradep. 409
Foreign Exchange Tradingp. 409
Foreign Direct Investmentp. 409
Personal Investmentsp. 411
The World Trade Organizationp. 411
Business Practicesp. 411
Movement Toward Globalizationp. 411
The End of the Cold Warp. 411
Advancing Technologyp. 412
Policy Changesp. 412
Benefits and Costs of Globalizationp. 414
The Benefitsp. 414
The Costsp. 416
The Continuing Globalization Debatep. 417
More or Less Globalization: A Tug of War?p. 418
Less Globalizationp. 418
More Globalizationp. 419
A Reader Asksp. 420
Analyzing the Scenep. 420
Chapter Summaryp. 421
Key Terms and Conceptsp. 421
Questions and Problemsp. 422
Practical Economics
Financial Matters
Stocks, Bonds, Futures, and Optionsp. 423
Financial Marketsp. 24
Stocksp. 424
Where Are Stocks Bought and Sold?p. 424
The Dow Jones Industrial Average (DJIA)p. 426
How the Stock Market Worksp. 427
Why Do People Buy Stock?p. 429
How to Buy and Sell Stockp. 430
Buying Stocks or Buying the Marketp. 430
How to Read the Stock Market Pagep. 432
Bondsp. 434
The Components of a Bondp. 434
Bond Ratingsp. 434
Bond Prices and Yields (or Interest Rates)p. 435
Types of Bondsp. 435
How to Read the Bond Market Pagep. 436
Risk and Returnp. 437
Futures and Optionsp. 438
Futuresp. 438
Optionsp. 440
A Reader Asksp. 441
Analyzing the Scenep. 442
Chapter Summaryp. 443
Key Terms and Conceptsp. 443
Questions and Problemsp. 443
Working with Numbers and Graphsp. 444
Web Chapters
Web Chapters
Agriculture: Farmers' Problems, Government Policies, and Unintended Effectsp. 741
Agriculture: The Issuesp. 742
A Few Factsp. 742
Agriculture and Income Inelasticityp. 743
Agriculture and Price Inelasticityp. 743
Price Variability and Futures Contractsp. 744
Can Bad Weather Be Good for Farmers?p. 745
Agricultural Policiesp. 746
Price Supportsp. 746
Restricting Supplyp. 746
Target Prices and Deficiency Paymentsp. 748
Production Flexibility Contract Payments, (Fixed) Direct Payments, and Countercyclical Paymentsp. 749
Nonrecourse Commodity Loansp. 749
A Reader Asksp. 750
Analyzing the Scenep. 751
Chapter Summaryp. 751
Key Terms and Conceptsp. 751
Questions and Problemsp. 752
Working with Numbers and Graphsp. 753
International Impacts on the Economyp. 753
International Factors and Aggregate Demandp. 754
Net Exportsp. 754
The J-Curvep. 755
International Factors and Aggregate Supplyp. 756
Foreign Input Pricesp. 756
Why Do Foreign Input Prices Change?p. 757
Factors That Affect Both Aggregate Demand and Aggregate Supplyp. 757
The Exchange Ratep. 757
What Role Do Interest Rates Play?p. 758
Deficits: International Effects and Domestic Feedbackp. 759
The Budget Deficit and Expansionary Fiscal Policyp. 759
The Budget Deficit and Contractionary Fiscal Policyp. 760
The Effects of Monetary Policyp. 761
A Reader Asksp. 763
Analyzing the Scenep. 764
Chapter Summaryp. 764
Key Terms and Conceptsp. 765
Questions and Problemsp. 765
Working with Numbers and Graphsp. 766
Self-Test Appendixp. 445
Glossaryp. 459
Indexp. 467
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