Principles Of Macroeconomics

by GOTTHEIL

• ISBN13: 9780324260199
• ISBN10: 0324260199
• Edition: 4th
• Format: Paperback
• Copyright: 2004-03-10
• Publisher: Custom Publishing

Summary

This newly updated edition of a highly regarded the principles of macroeconomics text provides your students with the most up-to-date information available. Cases, tables, data, and more were updated to reflect 2003 data. The text also has a four-color internal and full supplement package that complements the text?s superb conversational style, which engages students like none other. Principles of Macroeconomics, 4e represents the results Fred Gottheil?s career as an outstanding professor and author. This edition is maintains the proven structure and style of previous editions while updating content to make it even more valuable to professors and students alike. The author continues to use familiar stories, illustrations, scenarios, and a direct-to-student writing style to appeal to students' interests. The narrative is built around questions, which cut the distance between the student and the unfamiliar concepts of economics. Instead of covering hundreds of topics superficially, the book presents basic concepts in depth and develops economic analysis step-by-step. The result?learning economics becomes relative, interactive and appealing versus mere passive course participation.

Table of Contents

PART 1 THE BASICS OF ECONOMIC ANALYSIS	1	(72)
Introduction	2	(22)
No One Ever Made an Ounce of Earth	3	(3)
Are We Running Out of Natural Resources?	3	(1)
Renewable and Nonrenewable Natural Resources	3	(1)
Historical Perspective: Coal . . . Then (1865) and Now (2004)	4	(1)
How Do You Satisfy Insatiable Wants?	5	(1)
Theoretical Perspective: If Not the Depletion of Coal, Then Perhaps Oil	5	(1)
Scarcity Forces Us to Make Choices	6	(1)
What Is Economics?	6	(6)
Economics Is Part of Social Science	6	(1)
Using Economic Models	7	(1)
Ceteris Paribus	8	(1)
The Circular Flow Model of Goods and Money	8	(2)
Microeconomics and Macroeconomics	10	(1)
Theoretical Perspective: Consumer Sovereignty and Adam Smith's ``Invisible Hand''	11	(1)
Positive and Normative Economics	12	(1)
What Do Economists Know?	12	(5)
Chapter Review	13	(1)
Key Terms	14	(1)
Questions	14	(1)
Practice Problem	15	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	15	(1)
Practice Test	16	(1)
Appendix
On Reading Graphs	17	(1)
The Only Thing We Have to Fear Is Fear Itself	17	(3)
A Graphic Language	17	(1)
Know Your Point of Reference	17	(1)
Measuring Distances on Graphs	18	(1)
Graphing Relationships	18	(1)
Connecting Points to Form Curves	19	(1)
The Slope of a Curve	20	(4)
U-Shaped and Hill-Shaped Curves	22	(1)
Vertical and Horizontal Curves	22	(1)
Measuring the Slope of a Point on a Curve	23	(1)
Key Terms	23	(1)
Production Possibilities and Opportunity Costs	24	(20)
Factors of Production	25	(1)
Labor	25	(1)
Capital	25	(1)
Land	26	(1)
Entrepreneurship	26	(1)
Robinson Crusoe's Production Possibilities	26	(7)
Opportunity Cost	27	(1)
The Law of Increasing Costs	28	(1)
Applied Perspective: Did You Ever Find a Penny on a Sidewalk?	29	(1)
Theoretical Perspective: Guns and Butter	30	(2)
Once Rich, It's Easy to Get Richer	32	(1)
Once Poor, It's Easy to Stay Poor	32	(1)
The Productive Power of Advanced Technology	33	(1)
The Indestructible Nature of Ideas	34	(1)
Possibilities, Impossibilities, and Less Than Possibilities	34	(2)
Historical Perspective: The Destruction and Reconstruction of Rotterdam	35	(1)
Production Possibilities and Economic Specialization	36	(3)
Specialization on the Island	37	(1)
International Specialization	37	(1)
The Principle of Comparative Advantage	37	(2)
The Universality of the Production Possibilities Model	39	(5)
Chapter Review	39	(1)
Key Terms	40	(1)
Questions	40	(1)
Practice Problems	41	(1)
What's Wrong with This Graph?	42	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	42	(1)
Practice Test	43	(1)
Demand and Supply	44	(29)
Measuring Consumer Willingness	45	(1)
Measuring Consumer Demand	45	(2)
Measuring Individual Demand	45	(1)
Measuring Market Demand	46	(1)
Measuring Supply	47	(1)
Market-Day Supply	47	(1)
Determining Equilibrium Price	48	(2)
Suppose the Price Is $8	48	(1)
Suppose the Price Is $4	49	(1)
Price Always Tends Toward Equilibrium	50	(1)
Market-Day, Short-Run, and Long-Run Supply	50	(3)
Theoretical Perspective: How Long Does It Take to Get to the Long Run?	52	(1)
Changes in Demand	53	(4)
Changes in Income	54	(1)
Changes in Taste	54	(1)
Applied Perspective: Our Changing Tastes: The Galloping Demand for Bottled Water	55	(1)
Changes in the Prices of Other Goods	55	(1)
Changes in Expectations About Future Prices	56	(1)
Changes in Population Size	56	(1)
A Change in Demand or a Change in Quantity Demanded?	56	(1)
Changes in Supply	57	(1)
Changes in Technology	57	(1)
Changes in Resource Prices	58	(1)
Changes in the Prices of Other Goods	58	(1)
Changes in the Number of Suppliers	58	(1)
Why the Price of an Orange Is 30 Cents at the Supermarket	58	(2)
Postscript: Price as a Rationing Mechanism	60	(7)
Chapter Review	62	(1)
Key Terms	63	(1)
Questions	63	(1)
Practice Problems	64	(1)
What's Wrong with This Graph?	65	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	65	(1)
Practice Test	66	(1)
Appendix
Applications of Supply and Demand	67	(1)
How Much Is That Doggie in the Window?	67	(1)
The Case of the Guide Dog	67	(2)
From Dogs to Human Beings	69	(2)
The Market for Organ Transplants	69	(2)
Scalping Tickets at a Yankee Game	71	(2)
Questions	72	(1)
Practice Problems	72	(1)
PART 2 EMPLOYMENT, INFLATION, AND FISCAL POLICY	73	(148)
Aggregate Demand and Aggregate Supply	75	(25)
Why Recession? Why Prosperity?	76	(1)
The Business Cycle	76	(1)
Economic Growth	77	(1)
Measuring the National Economy	77	(5)
Interdisciplinary Perspective: The Phenomenon of Cyclical Activity	78	(1)
Adjusting for Prices	79	(1)
From Nominal to Real GDP	80	(1)
Applied Perspective: What's in the 2002 CPI Basket?	81	(1)
Deriving Equilibrium GDP in the Aggregate Demand and Supply Model	82	(7)
Explaining Aggregate Supply	83	(2)
Explaining Aggregate Demand	85	(1)
Global Perspective: Economic Success? Depends on What You Measure	86	(1)
Shifts in the Aggregate Demand and Aggregate Supply Curves	87	(2)
Macroeconomic Equilibrium	89	(1)
Time Line on Equilibrium, Inflation, and Unemployment	90	(3)
The Depression of the 1930s	90	(1)
Demand-Pull Inflation: The Vietnam War	91	(1)
Cost-Push Inflation: The OPEC Legacy	92	(1)
The Recession of 1990-91	92	(1)
The Longest Prosperity Phase: 1992--2000	93	(1)
The 2001--02 Recession and 9/11	94	(1)
Can We Avoid Unemployment and Inflation?	94	(6)
Chapter Review	96	(1)
Key Terms	96	(1)
Questions	96	(1)
Practice Problems	97	(1)
What's Wrong with This Graph?	98	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	98	(1)
Practice Test	99	(1)
Gross Domestic Product Accounting	100	(22)
Two Approaches to Calculating GDP	101	(1)
The Expenditure Approach	101	(7)
Counting Final Goods and Services	101	(2)
The Four Expenditure Categories of GDP	103	(2)
Historical Perspective: The Wealth of Nations	105	(1)
Theoretical Perspective: An Expanded Circular Flow	106	(2)
The Income Approach	108	(2)
Compensation of Employees	109	(1)
Interest	109	(1)
Corporate Profit	109	(1)
Rent	110	(1)
Proprietors' Income	110	(1)
Bringing GDP and National Income into Accord	110	(3)
From GDP to GNP	110	(1)
Global Perspective: Is the Composition of GDP for the United States Unique?	111	(1)
From GDP to NDP	112	(1)
From NDP to National Income	113	(1)
GDP, GNP, NNP, and National Income for 2003	113	(1)
Personal Income and Personal Disposable Income	113	(1)
How Comprehensive Is GDP?	114	(8)
Value of Housework	114	(1)
The Underground Economy	115	(1)
Leisure	115	(1)
Applied Perspective: Underground Economy Doing Thriving Business	116	(1)
Quality of Goods and Services	117	(1)
Costs of Environmental Damage	117	(1)
Chapter Review	118	(1)
Key Terms	118	(1)
Questions	119	(1)
Practice Problems	119	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	120	(1)
Practice Test	121	(1)
Consumption and Investment	122	(25)
What Determines Consumption Spending?	123	(10)
Keynes's Absolute Income Hypothesis	123	(2)
Duesenberry's Relative Income Hypothesis	125	(2)
Historical Perspective: John Maynard Keynes: A New Macroeconomics	127	(1)
Friedman's Permanent Income Hypothesis	128	(2)
Modigliani's Life-Cycle Hypothesis	130	(1)
Autonomous Consumption Spending	130	(1)
Shifts in the Consumption Curve	130	(2)
Theoretical Perspective: The Long and Short of It: The Consumption Function in the United States	132	(1)
The Consumption Equation	133	(1)
What Determines the Level of Saving?	134	(3)
Historical Perspective: Propensity to Save	136	(1)
The Investment Function	137	(1)
What Determines Investment?	137	(3)
Determinants of Investment	138	(2)
The Volatile Nature of Investment	140	(1)
Combining Consumption Spending and Investment	140	(7)
Chapter Review	141	(1)
Key Terms	142	(1)
Questions	142	(1)
Practice Problems	143	(1)
What's Wrong with This Graph?	144	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	145	(1)
Practice Test	146	(1)
Equilibrium National Income	147	(24)
Interaction Between Consumers and Producers	148	(1)
The Economy Moves Toward Equilibrium	149	(4)
How Consumers and Producers Behave When Y = $900 Billion	149	(1)
Applied Perspective: Interview with the Author's Brother, Irving Gottheil, CEO of the Artistic Hat Company, Montreal, Canada	150	(1)
How Consumers and Producers Behave When Y = $700 Billion	151	(1)
How Consumers and Producers Behave When Y = $800 Billion	152	(1)
Equilibrium National Income	153	(2)
Changes in Investment Change National Income Equilibrium	155	(3)
Y = $950 Billion: The New Equilibrium	156	(1)
Interdisciplinary Perspective: A Fractured Version of the Exodus Story	157	(1)
An Alternative Method of Calculating Equilibrium	158	(1)
The Income Multiplier	158	(6)
Deriving the Multiplier	158	(2)
What If MPC = 0.90?	160	(1)
Global Perspective: How the Income Multiplier Can Affect Different Regions in an Economy Differently	161	(1)
The Income Multiplier Works in Either Direction	162	(1)
Aggregate Expenditure and Aggregate Demand	162	(2)
The Paradox of Thrift	164	(7)
Applied Perspective: Morocco, Coca-Cola, and Multipliers	165	(1)
Chapter Review	166	(1)
Key Terms	167	(1)
Questions	167	(1)
Practice Problems	168	(1)
What's Wrong with This Graph?	169	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	169	(1)
Practice Test	170	(1)
Fiscal Policy: Coping with Inflation and Unemployment	171	(25)
Equilibrium and Full Employment	172	(5)
Identifying Unemployment	172	(2)
Interdisciplinary Perspective: From John Steinbeck's Cannery Row	174	(1)
Calculating an Economy's Rate of Unemployment	174	(1)
The Bureau of Labor Statistics Definition of Unemployment	175	(1)
The Natural Rate of Unemployment	175	(1)
Full-Employment Level	176	(1)
Understanding Inflation	177	(3)
Winners and Losers from Inflation	178	(1)
Historical Perspective: Inflation and Hyperinflation	179	(1)
Living in a World of Inflation and Unemployment	180	(2)
Identifying the Recessionary Gap	181	(1)
Identifying the Inflationary Gap	181	(1)
Closing Recessionary and Inflationary Gaps	182	(4)
Historical Perspective: J.M. Keynes and Say's Law	183	(1)
Enter Government	184	(1)
Government Spending Is Not Problem-Free	184	(1)
Applied Perspective: Are Deficit Budgets Strictly Tools of Countercyclical Fiscal Policy?	185	(1)
Closing the Inflationary Gap	185	(1)
Making Fiscal Policy	186	(10)
Choosing the Tax Option	186	(1)
Full Employment, Zero Inflation, and a Balanced Budget	186	(2)
The Balanced Budget Multiplier	188	(1)
Balancing the Budget at $80 Billion	188	(1)
How to Get to Full-Employment National Income and Balance the Budget	188	(1)
Just a Spoonful of Deficit Makes the Medicine Go Down	189	(1)
How Mixed Is the Mixed Economy?	189	(1)
Creating Surplus Budgets	190	(1)
Are Fiscal Policy Options Really That Straightforward?	190	(1)
Chapter Review	191	(1)
Key Terms	192	(1)
Questions	192	(1)
Practice Problems	192	(1)
What's Wrong with This Graph?	193	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	194	(1)
Practice Test	195	(1)
Long-Run Economic Growth and Business Cycles	196	(25)
Long-Run Economic Growth	197	(9)
Creating the Environment for Long-Run Growth	197	(2)
Interdisciplinary Perspective: Political Risk and Economic Growth	199	(1)
What Causes Economic Growth?	200	(1)
A Simple Model of Economic Growth	200	(3)
Theoretical Perspective: A View From the Past: Zero Long-Run Economic Growth	203	(1)
U.S. Economic Growth: 1947-2003	204	(1)
Global Perspective: I've Got to Admit It's Getting Better, a Little Better All the Time	205	(1)
The Business Cycle	206	(1)
Traditional Theories of the Business Cycle	207	(5)
External Theories of Cycles	207	(1)
Applied Perspective: Time Line on Economic Growth	208	(2)
Internal Cycles	210	(2)
Real Business Cycle Theory	212	(1)
Countercyclical Fiscal Policy	213	(8)
Interdisciplinary Perspective: Congressional Phase of an Administrative Lag	214	(2)
Chapter Review	216	(1)
Key Terms	216	(1)
Questions	216	(1)
Practice Problems	217	(1)
What's Wrong with This Graph?	218	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	219	(1)
Practice Test	220	(1)
PART 3 MONEY, BANKING, AND MONETARY POLICY	221	(76)
Money	223	(22)
The Invention of Money	224	(3)
Gold as Money	225	(1)
Gold-Backed Paper as Money	225	(1)
Historical Perspective: Fluffy Rabbits and Gresham's Law	226	(1)
Fiat, or Paper, Money	227	(1)
Money in a Modern Economy	227	(5)
Money and Liquidity	227	(1)
The Liquidity Character of Our Money Supply	228	(1)
Applied Perspective: Have You Written a Check Lately?	229	(1)
Money and ``Near'' Money	230	(1)
What Isn't Money?	230	(1)
Historical Perspective: Explaining the Impressive Growth of M2 Money	231	(1)
Adding Up Our Money Supply	231	(1)
The Quantity Theory of Money	232	(6)
The Velocity of Money	232	(2)
Global Perspective: Know Your Currencies?	234	(1)
The Classical View	235	(1)
Interdisciplinary Perspective: Velocity of Another Kind	236	(1)
Monetarism: A Modification of the Classical View	237	(1)
The Keynesian View	237	(1)
The Demand for Money	238	(7)
The Classical View	238	(1)
The Keynesian View	238	(3)
Chapter Review	241	(1)
Key Terms	241	(1)
Questions	241	(1)
What's Wrong with This Graph?	242	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	243	(1)
Practice Test	244	(1)
Money Creation and the Banking System	245	(21)
How Banks Create Money	246	(6)
Attracting Depositors	246	(1)
Making Loans	247	(1)
Theoretical Perspective: Cyberspace Banking	248	(1)
The Interaction of Deposits and Loans	249	(3)
Reversing the Money Creation Process	252	(2)
Interdisciplinary Perspective: If William Shakespeare Ran the Fed	253	(1)
Why Banks Sometimes Fail	254	(1)
Theoretical Perspective: Federal Deposit Insurance and Moral Hazard	255	(1)
Safeguarding the System	255	(5)
The Federal Deposit Insurance Corporation	256	(1)
Bank Audits and Examinations	256	(1)
Still, Banks Do Go Under	256	(2)
Global Perspective: Deposit Insurance, Assurance-Depots, Tutela Dei Depositi, Proteccion Al Ahorro Bancario, Etc., Etc.	258	(2)
Controlling the Financial Institutions That Control the Money Supply	260	(6)
Chapter Review	261	(1)
Key Terms	262	(1)
Questions	262	(1)
Practice Problems	263	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	264	(1)
Practice Test	265	(1)
The Federal Reserve System and Monetary Policy	266	(31)
A Glimpse at History	267	(3)
Continental Notes	268
The Chartering of State Banks	267	(1)
The First Bank of the United States	268	(1)
The Second Bank of the United States	268	(1)
The National Bank Act	269	(1)
The Knickerbocker Trust Disaster	270	(1)
The Federal Reserve System	270	(8)
Who Owns the Fed?	270	(2)
The Fed's Purpose and Organization	272	(1)
The Fed as Money Printer	273	(1)
The Fed as the Bankers' Bank	274	(2)
Global Perspective: Canada Chooses a Zero Reserve Ratio	276	(2)
Controlling the Money Supply	278	(6)
Changing the Legal Reserve Requirement	279	(1)
Changing the Discount Rate	279	(1)
Applied Perspective: How the Interest Rate on Government Securities Is Determined	280	(2)
Engaging in Open Market Operations	282	(2)
Controlling the Interest Rate: The Fed's Alternative Target Option	284	(6)
Choosing the Money Supply Option	285	(1)
Choosing the Interest Rate Option	285	(1)
Applied Perspective: The U.S. Banking System in a Nutshell	286	(1)
Is There Really a Preferred Target Option?	287	(1)
What the Fed Ended Up Choosing	287	(1)
Ancillary Tools Available to the Fed	287	(1)
Applied Perspective: Past Fed Governor Martha Seger Describes How the FOMC Works	288	(2)
The Fed's Countercyclical Monetary Policy	290	(7)
Interdisciplinary Perspective: The Case of the Missing Currency	291	(1)
The Fed and the Government Don't Always Agree	292	(1)
Chapter Review	293	(1)
Key Terms	294	(1)
Questions	294	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	295	(1)
Practice Test	296	(1)
PART 4 GOVERNMENT AND THE MACROECONOMY	297	(72)
Can Government Really Stabilize the Economy?	298	(29)
The Nature of Economic Advice	299	(1)
Why Does the Economy Generate Inflation and Unemployment?	299	(1)
The Classical School	300	(2)
Why Unemployment?	300	(1)
Why Inflation?	301	(1)
The Keynesian School	302	(3)
Why Unemployment?	302	(2)
Why Inflation?	304	(1)
The Economics of Fine-Tuning	305	(1)
The Neo-Keynesian School	305	(6)
Phillips Curve Trade-Offs	305	(3)
The Phillips Curve and Countercyclical Policy	308	(1)
The Humphrey-Hawkins Act of 1978	308	(1)
Long-Run Phillips Curves	309	(2)
The Rational Expectations School	311	(5)
Theoretical Perspective: Finding The Right Natural Rate of Unemployment	312	(1)
Anticipating Fiscal Policy Undermines the Policy	313	(1)
Historical Perspective: Need for Stabilzation: The Historical Record	314	(1)
Anticipating Monetary Policy Undermines the Policy	315	(1)
Nairu: 1992--2003	315	(1)
Supply-Side Economics	316	(4)
Theoretical Perspective: Crossing Ideological Boundaries	317	(1)
Lower Tax Rates	317	(1)
Less Government Regulation	318	(1)
Global Perspective: NAIRU Estimates for OECD Economies	319	(1)
Less Government Spending	319	(1)
Is There a Macro Consensus?	320	(1)
Automatic Stabilizers	321	(6)
Unemployment Insurance	321	(1)
Personal and Corporate Income Taxes	321	(1)
Chapter Review	322	(1)
Key Terms	323	(1)
Questions	323	(1)
What's Wrong with This Graph?	324	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	325	(1)
Practice Test	326	(1)
Government Spending	327	(19)
Government Spending and Public Goods	328	(1)
Government Spending and Merit Goods	329	(1)
Government Spending and Transfer Payments	329	(2)
Global Perspective: Government Spending on the Arts	330	(1)
Government Spending and the Public Debt	331	(1)
How Much Does Government Spend?	331	(9)
Security	331	(2)
Education	333	(1)
Transportation, Natural Resources, and Space	333	(1)
Agriculture and Public Assistance	334	(2)
Applied Perspective: Looking Ahead: Prescription Drug Coverage	336	(1)
Social Insurance	337	(1)
Applied Perspective: Are the Social Security and Medicare Systems in Jeopardy?	338	(2)
Interest	340	(1)
Is the Level of Government Spending Too High?	340	(2)
The Growth of Government Spending	340	(1)
Government Spending in Other Economies	341	(1)
Government Spending and Resource Allocation	342	(4)
Chapter Review	342	(1)
Key Terms	343	(1)
Questions	343	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	344	(1)
Practice Test	345	(1)
Financing Government: Taxes and Debt	346	(23)
Opportunity Costs and Taxes	347	(1)
Commandeering Resources	347	(1)
The Tax System	348	(1)
There's More Than One Way to Levy Taxes	348	(3)
The Poll (or Head) Tax	348	(1)
The Income Tax	348	(1)
The Corporate Income Tax	349	(1)
Applied Perspective: Are We Really Paying High Taxes?	350	(1)
The Property Tax	350	(1)
Excise Taxes	351	(1)
The Social Security Tax	351	(1)
Actually, Everything Is Taxable!	352	(1)
The U.S. Tax Structure	352	(1)
Federal, State, and Local Tax Revenues	353	(2)
Interdisciplinary Perspective: Don't Mess with the IRS: Al Capone's Ultimate Mistake	354	(1)
Taxes, Spending, and Deficits	355	(1)
Financing Government Spending Through Debt	355	(1)
Treasury Bonds, Bills, and Notes	356	(1)
Tracking Government Debt	356	(2)
Looking at Ratios, Not Dollars	357	(1)
Does Debt Endanger Future Generations?	358	(5)
Global Perspective: Hatred of Tax Collection Is the Way of the World	359	(2)
Are There No Problems with Incurring Debt?	361	(1)
External Debt Is a Different Matter	362	(1)
Are Deficits and Debt Inevitable?	363	(6)
Tax Reforms of the 1980s	363	(1)
Tax Reform of 2003	364	(1)
Chapter Review	365	(1)
Key Terms	365	(1)
Questions	366	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	367	(1)
Practice Test	368	(1)
PART 5 THE WORLD ECONOMY	369
International Trade	371	(29)
Intrastate Trade	372	(1)
Illinois Corn for Illinois Oil	372	(1)
Oklahoma Corn for Oklahoma Oil	373	(1)
Interstate Trade	373	(2)
The Case for Geographic Specialization	373	(2)
Nobody Loses?	375	(1)
International Trade	375	(1)
Absolute and Comparative Advantage	376	(2)
Comparative Advantage	376	(1)
How Much Is Gained from Free Trade Depends on Price	377	(1)
Calculating Terms of Trade	378	(2)
The Dilemma of the Less-Developed Countries	378	(1)
Looking at Real World Numbers	379	(1)
Who Trades with Whom? Tracking International Trade	380	(1)
The Major Leagues	381	(1)
Who Does the United States Trade With?	381	(2)
Interdisciplinary Perspective: Trade and Culture	382	(1)
Do We Need Protection Against Free Trade?	383	(3)
The National Security Argument	384	(1)
The Infant Industries Argument	384	(1)
The Cheap Foreign Labor Argument	385	(1)
The Diversity-of-Industry Argument	385	(1)
The Antidumping Argument	385	(1)
The Retaliation Argument	386	(1)
The Economics of Trade Protection	386	(3)
Tariffs	386	(1)
Quotas	387	(1)
Other Nontariff Barriers	388	(1)
Negotiating Tariff Structures	389	(3)
GATT and WTO	389	(1)
Global Perspective: U2 Can Be Irish!	390	(1)
Customs Unions	391	(1)
Free Trade Areas	392	(1)
The North American Free Trade Agreement	392	(1)
Tracking Tariffs Since 1860	392	(8)
Applied Perspective: Is NAFTA Worker Friendly?	394	(1)
Chapter Review	395	(1)
Key Terms	396	(1)
Questions	396	(1)
Practice Problems	397	(1)
What's Wrong with This Graph?	397	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	398	(1)
Practice Test	399	(1)
Exchange Rates, Balance of Payments, and International Debt	400	(25)
The Money Tower of Babel	401	(1)
The Foreign Exchange Market: The Buying and Selling of Currencies	401	(3)
The Demand Curve for Yaps	401	(1)
The Supply Curve of Yaps	402	(1)
Shifts in the Demand Curve for Yaps	402	(1)
Shifts in the Supply Curve of Yaps	403	(1)
Floating Exchange Rates	404	(5)
Depreciation and Appreciation	404	(1)
Applied Perspective: Tourists at the Mall	405	(1)
Arbitrage Creates Mutually Consistent Exchange Rates	406	(1)
Problems with Floating Exchange Rates	406	(1)
Fixing Exchange Rates	406	(2)
Global Perspective: IMF Advice to Brazil	408	(1)
What If the Government Runs Out of Foreign Exchange Reserves?	409	(1)
Balance of Payments	409	(4)
Balance on Current Account	410	(3)
Balance on Capital Account	413	(1)
What Is a Balance of Payments Problem?	413	(2)
Global Perspective: The European Union's Euro	414	(1)
Do Trade Imbalances Always Create Problems?	415	(1)
How Deficits on Current Account Develop	415	(1)
The Trouble with Being Popular	415	(1)
The High Cost of High Interest Rates	416	(1)
The High Cost of Budgetary Deficits	416	(1)
The High Cost of Low Productivity	416	(1)
International Debt	416	(1)
Will It All Work Out Right in the Long Run?	417	(8)
Applied Perspective: Forgiving LDC Debt	418	(1)
Chapter Review	419	(1)
Key Terms	420	(1)
Questions	421	(1)
Practice Problems	421	(1)
What's Wrong with This Graph?	422	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	423	(1)
Practice Test	424	(1)
The Economic Problems of Less-Developed Economies	425
Confronting National Poverty	426	(1)
The Language of National Poverty	426	(1)
There Are Important Differences Among the Less-Developed Economies	426	(1)
LDC Per Capita Incomes	427	(2)
Other Indicators of the LDCs' Lack of Economic Well-Being	429	(1)
Economic Dualism	430	(3)
Applied Perspective: China's Population Policy: One Couple, One Child	431	(2)
The Absence of Basic Prerequisites	433	(3)
Political Instability	433	(1)
Nonscientific Perceptions	433	(1)
The Absence of Infrastructure	434	(1)
Global Perspective: Internet and Infrastructure	435	(1)
Pursuing Strategies of Development	436	(5)
The Big Push	437	(1)
The Unbalanced Development Strategy	438	(2)
Applied Perspective: Tracing Linkages: The Canned Pineapple Industry in Indonesia	440	(1)
Foreign Direct Investment	441	(1)
Images from the Colonial Past	441	(1)
Foreign Economic Aid	442
Chapter Review	444	(1)
Key Terms	445	(1)
Questions	445	(1)
What's Wrong with This Graph?	446	(1)
Economic Consultants: Economic Research and Analysis by Students for Professionals	446	(1)
Practice Test	447
Photo Credits	1	(1)
Practice Test Answer Key	1	(1)
Glossary	1	(1)
Index	1