List of Key Graphs | p. vi |
Preface | p. vii |
Contributors | p. xiii |
An Introduction to Economics and the Economy | |
To the Student | p. 2 |
The Nature and Method of Economics | p. 3 |
The Economic Perspective | p. 3 |
Consider This: Free for All? | p. 4 |
Why Study Economics? | p. 5 |
Economic Methodology | p. 6 |
Macroeconomics and Microeconomics | p. 9 |
Pitfalls to Sound Reasoning | p. 10 |
A Look Ahead | p. 12 |
Last Word: Fast-Food Lines: An Economic Perspective | p. 12 |
Graphs and Their Meaning | p. 15 |
The Economizing Problem | p. 22 |
The Foundation of Economics | p. 22 |
Economics: Employment and Efficiency | p. 24 |
Unemployment, Growth, and the Future | p. 28 |
Consider This: A Matter of Degrees: Is College Worth the Cost? | p. 32 |
Economic Systems | p. 33 |
The Circular Flow Model | p. 34 |
Last Word: September 11, 2001, and the War on Terrorism | p. 35 |
Individual Markets: Demand and Supply | p. 39 |
Markets | p. 39 |
Demand | p. 40 |
Supply | p. 45 |
Supply and Demand: Market Equilibrium | p. 48 |
Consider This: The Cutting Edge | p. 50 |
Application: Government-Set Prices | p. 52 |
Last Word: Ticket Scalping: A Bum Rap? | p. 55 |
Applications and Extensions of Supply and Demand Analysis | p. 59 |
Changes in Supply and Demand | p. 1 |
Preset Prices | p. 4 |
Consider This: Taking Back a "Gift" | p. 5 |
Nonpriced Goods: The American Bison | p. 6 |
Consumer and Producer Surplus | p. 7 |
Last Word: Efficiency Gains from Generic Drugs | p. 11 |
The Market System | p. 60 |
Characteristics of the Market System | p. 60 |
The Market System at Work | p. 64 |
Consider This: McHits and McMisses | p. 66 |
Competition and the "Invisible Hand" | p. 69 |
Last Word: Shuffling the Deck | p. 70 |
The U.S. Economy: Private and Public Sectors | p. 73 |
Households as Income Receivers | p. 73 |
Households as Spenders | p. 74 |
The Business Population | p. 75 |
Legal Forms of Businesses | p. 76 |
The Public Sector: Government's Role | p. 79 |
Consider This: Street Entertainers | p. 82 |
The Circular Flow Revisited | p. 83 |
Government Finance | p. 84 |
Federal Finance | p. 85 |
State and Local Finance | p. 87 |
Last Word: The Financing of Corporations | p. 88 |
The United States in the Global Economy | p. 91 |
International Linkages | p. 91 |
The United States and World Trade | p. 92 |
Specialization and Comparative Advantage | p. 96 |
The Foreign Exchange Market | p. 99 |
Consider This: A Ticket to Ride | p. 100 |
Government and Trade | p. 101 |
Multilateral Trade Agreements and Free-Trade Zones | p. 103 |
Global Competition | p. 106 |
Last Word: Petition of the Candlemakers, 1845 | p. 106 |
Macroeconomic Measurement and Basic Concepts | |
Measuring Domestic Output and National Income | p. 112 |
Assessing the Economy's Performance | p. 112 |
Gross Domestic Product | p. 112 |
The Expenditures Approach | p. 115 |
Consider This: Stock Answers about Flows | p. 117 |
The Income Approach | p. 118 |
Other National Accounts | p. 120 |
Nominal GDP versus Real GDP | p. 123 |
Shortcomings of GDP | p. 125 |
Last Word: Feeding the GDP Accounts | p. 127 |
Introduction to Economic Growth and Instability | p. 131 |
Economic Growth | p. 131 |
The Business Cycle | p. 133 |
Unemployment | p. 135 |
Inflation | p. 141 |
Consider This: Clipping Coins | p. 143 |
Redistribution Effects of Inflation | p. 144 |
Effects of Inflation on Output | p. 147 |
Last Word: The Stock Market and the Economy | p. 149 |
Basic Macroeconomic Relationships | p. 152 |
The Income-Consumption and Income-Saving Relationships | p. 152 |
Consider This: What Wealth Effect? | p. 159 |
The Interest-Rate-Investment Relationship | p. 159 |
The Multiplier Effect | p. 164 |
Last Word: Squaring the Economic Circle | p. 167 |
Macroeconomic Models and Fiscal Policy | |
The Aggregate Expenditures Model | p. 172 |
Simplifications | p. 172 |
Consumption and Investment Schedules | p. 172 |
Equilibrium GDP: C + I[subscript g] = GDP | p. 173 |
Other Features of Equilibrium GDP | p. 176 |
Changes in Equilibrium GDP and the Multiplier | p. 177 |
Adding International Trade | p. 179 |
Adding the Public Sector | p. 182 |
Equilibrium versus Full-Employment GDP | p. 185 |
Limitations of the Model | p. 187 |
Last Word: Say's Law, the Great Depression, and Keynes | p. 188 |
Aggregate Demand and Aggregate Supply | p. 193 |
Aggregate Demand | p. 193 |
Aggregate Supply | p. 197 |
Equilibrium and Changes in Equilibrium | p. 201 |
Consider This: Ratchet Effect | p. 205 |
Last Word: Why Is Unemployment in Europe So High? | p. 207 |
The Relationship of the Aggregate Demand Curve to the Aggregate Expenditures Model | p. 211 |
Fiscal Policy | p. 214 |
Legislative Mandates | p. 214 |
Fiscal Policy and the AD-AS Model | p. 215 |
Built-In Stability | p. 218 |
Evaluating Fiscal Policy | p. 220 |
Problems, Criticisms, and Complications | p. 223 |
Last Word: The Leading Indicators | p. 227 |
Current Thinking on Fiscal Policy | p. 228 |
Money, Banking, and Monetary Policy | |
Money and Banking | p. 232 |
The Functions of Money | p. 232 |
The Supply of Money | p. 233 |
Consider This: Are Credit Cards Money? | p. 236 |
What "Backs" the Money Supply? | p. 236 |
The Demand for Money | p. 238 |
The Money Market | p. 240 |
The Federal Reserve and the Banking System | p. 242 |
Recent Developments in Money and Banking | p. 245 |
Last Word: The Global Greenback | p. 248 |
How Banks and Thrifts Create Money | p. 252 |
The Balance Sheet of a Commercial Bank | p. 252 |
Prologue: The Goldsmiths | p. 252 |
A Single Commercial Bank | p. 253 |
The Banking System: Multiple-Deposit Expansion | p. 260 |
Last Word: The Bank Panics of 1930 to 1933 | p. 265 |
Monetary Policy | p. 268 |
Consolidated Balance Sheet of the Federal Reserve Banks | p. 268 |
Tools of Monetary Policy | p. 270 |
Monetary Policy, Real GDP, and the Price Level | p. 276 |
Monetary Policy in Action | p. 279 |
Consider This: Pushing on a String | p. 282 |
The "Big Picture" | p. 286 |
Last Word: For the Fed, Life Is a Metaphor | p. 287 |
Long-Run Perspectives and Macroeconomic Debates | |
Extending the Analysis of Aggregate Supply | p. 292 |
From Short Run to Long Run | p. 292 |
Applying the Extended AD-AS Model | p. 295 |
The Inflation-Unemployment Relationship | p. 297 |
The Long-Run Phillips Curve | p. 300 |
Taxation and Aggregate Supply | p. 302 |
Consider This: Sherwood Forest | p. 304 |
Last Word: Has the Impact of Oil Prices Diminished? | p. 305 |
Economic Growth | p. 308 |
Ingredients of Growth | p. 308 |
Production Possibilities Analysis | p. 309 |
U.S. Economic Growth Rates | p. 312 |
Accounting for Growth | p. 312 |
Consider This: Economic Growth Rates Matter! | p. 313 |
The Productivity Acceleration: A New Economy? | p. 316 |
Is Growth Desirable and Sustainable? | p. 320 |
Last Word: Women and Economic Growth | p. 322 |
Deficits, Surpluses, and the Public Debt | p. 325 |
Deficits, Surpluses, and Debt: Definitions | p. 325 |
Budget Philosophies | p. 325 |
The Public Debt: Facts and Figures | p. 326 |
False Concerns | p. 329 |
Substantive Issues | p. 330 |
Deficits and Surpluses: 1992-2012 | p. 332 |
Last Word: The Long-Run Fiscal Imbalance: Social Security | p. 334 |
Disputes over Macro Theory and Policy | p. 338 |
Some History: Classical Economics and Keynes | p. 338 |
What Causes Macro Instability? | p. 340 |
Does the Economy "Self-Correct"? | p. 344 |
Rules or Discretion? | p. 347 |
Consider This: On the Road Again | p. 348 |
Summary of Alternative Views | p. 350 |
Last Word: The Taylor Rule: Could a Robot Replace Alan Greenspan? | p. 351 |
International Economics and the World Economy | |
International Trade | p. 356 |
Some Key Facts | p. 356 |
The Economic Basis for Trade | p. 357 |
Comparative Advantage: Graphical Analysis | p. 358 |
Supply and Demand Analysis of Exports and Imports | p. 363 |
Trade Barriers | p. 366 |
The Case for Protection: A Critical Review | p. 369 |
Consider This: Shooting Yourself in the Foot | p. 370 |
Last Word: The WTO Protests | p. 372 |
The World Trade Organization | p. 373 |
Exchange Rates, the Balance of Payments, and Trade Deficits | p. 377 |
Financing International Trade | p. 377 |
The Balance of Payments | p. 378 |
Flexible Exchange Rates | p. 381 |
Consider This: The Big Mac Index | p. 383 |
Fixed Exchange Rates | p. 386 |
International Exchange-Rate Systems | p. 388 |
Recent U.S. Trade Deficits | p. 392 |
Last Word: Speculation in Currency Markets | p. 394 |
The Economics of Developing Countries | p. 397 |
The Rich and the Poor | p. 1 |
Obstacles to Economic Development | p. 3 |
The Vicious Circle | p. 10 |
Role of Government | p. 11 |
Role of Advanced Nations | p. 12 |
Where from Here? | p. 15 |
Last Word: Famine in Africa | p. 16 |
Transition Economies: Russia and China | p. 398 |
Ideology and Institutions | p. 1 |
State Ownership and Central Planning | p. 2 |
Problems with Central Planning | p. 3 |
Collapse of the Soviet Economy | p. 5 |
The Russian Transition to a Market System | p. 6 |
Market Reforms in China | p. 10 |
Outcomes and Prospects | p. 11 |
Conclusion | p. 13 |
Last Word: Police Smash Down Smirnov's Doors | p. 14 |
Glossary | p. 1 |
Index | p. 1 |
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