9780131484153

Preface
Introduction
Introduction to Economics	p. 1
The Scope and Method of Economics	p. 1
Why Study Economics?	p. 2
The Scope of Economics	p. 6
The Methods of Economics	p. 8
The Economic Problem: Scarcity and Choice	p. 25
Scarcity, Choice, and Opportunity Cost	p. 26
Economic Systems	p. 36
Demand, Supply, and Market Equilibrium	p. 45
Firms and Households: The Basic Decision-Making Units	p. 46
Input Markets and Output Markets: The Circular Flow	p. 46
Demand in Product/Output Markets	p. 48
Supply in Product/Output Markets	p. 57
Market Equilibrium	p. 62
Demand and Supply in Product Markets: A Review	p. 68
Looking Ahead: Markets and the Allocation of Resources	p. 68
The Price System and Demand and Supply	p. 75
The Price System: Rationing and Allocating Resources	p. 75
Supply and Demand Analysis: An Oil Import Fee	p. 82
Macroeconomics
Concepts and Problems in Macroeconomics	p. 89
Introduction to Macroeconomics	p. 89
The Roots of Macroeconomics	p. 90
Macroeconomic Concerns	p. 92
Government in the Macroeconomy	p. 94
The Components of the Macroeconomy	p. 95
The Methodology of Macroeconomics	p. 98
The U.S. Economy in the Twentieth Century: Trends and Cycles	p. 100
Measuring National Output and National Income	p. 107
Gross Domestic Product	p. 107
Calculating Gdp	p. 110
The Income Approach	p. 114
From Gdp to Disposable Personal Income	p. 116
Nominal Versus Real Gdp	p. 118
Limitations of the Gdp Concept	p. 121
Long-Run and Short-Run Concerns: Growth, Productivity, Unemployment, and Inflation	p. 127
Long-Run Output and Productivity Growth	p. 127
Recessions, Depressions, and Unemployment	p. 130
Inflation	p. 138
The Goods and Money Markets	p. 145
Aggregate Expenditure and Equilibrium Output	p. 145
Aggregate Output and Aggregate Income (Y)	p. 146
Equilibrium Aggregate Output (Income)	p. 154
The Multiplier	p. 159
The Government and Fiscal Policy	p. 169
Government in the Economy	p. 170
Fiscal Policy at Work: Multiplier Effects	p. 175
Adding the International Sector	p. 180
The Federal Budget	p. 180
The Economy's Influence on the Government Budget	p. 185
The Money Supply and the Federal Reserve System	p. 193
An Overview of Money	p. 193
How Banks Create Money	p. 197
The Federal Reserve System	p. 203
How The Federal Reserve Controls the Money Supply	p. 208
Money Demand, the Equilibrium Interest Rate, and Monetary Policy	p. 219
The Demand for Money	p. 220
The Equilibrium Interest Rate	p. 227
Looking Ahead: The Federal Reserve and Monetary Policy	p. 230
Macroeconomic Analysis	p. 237
Money, the Interest Rate, and Output: Analysis and Policy	p. 237
The Links Between the Goods Market and the Money Market	p. 238
Combining the Goods Market and the Money Market	p. 242
Other Determinants of Planned Investment	p. 248
Aggregate Demand, Aggregate Supply, and Inflation	p. 255
The Aggregate Demand Curve	p. 255
The Aggregate Supply Curve	p. 261
The Equilibrium Price Level	p. 266
The Long-Run Aggregate Supply Curve	p. 267
Aggregate Demand, Aggregate Supply, and Monetary and Fiscal Policy	p. 268
Causes of Inflation	p. 271
The Labor Market, Unemployment, and Inflation	p. 281
The Labor Market: Basic Concepts	p. 281
The Classical View of the Labor Market	p. 282
Explaining the Existence of Unemployment	p. 285
The Short-Run Relationship Between the Unemployment Rate and Inflation	p. 287
The Long-Run Aggregate Supply Curve, Potential GDP, and the Natural Rate of Unemployment	p. 293
Macroeconomic Issues and Policy	p. 301
The Effects of the Stock Market on the Economy	p. 301
The Federal Reserve's Respoinse to the State of the Economy	p. 303
Lags in the Economy's Response to Monetary and Fiscal Policy	p. 306
Government Budget Policy	p. 310
Business Cycles in other Countries	p. 314
Household and Firm Behavior in the Macroeconomy: A Further Look	p. 319
Households: Consumption and Labor Supply Decisions	p. 320
Firms: Investment and Employment Decisions	p. 330
Productivity and the Business Cycle	p. 337
The Relationship Between Output and Unemployment	p. 338
The Size of the Multiplier	p. 339
Long-Run Growth	p. 345
The Growth Process: From Agriculture to Industry	p. 345
The Sources of Economic Growth	p. 347
Growth and Productivity in the United States	p. 351
Economic Growth and Public Policy	p. 354
The Pros and Cons of Growth	p. 358
Debates in Macroeconomics: Monetarism, New Classical Theory, and Supply-Side Economics	p. 365
Keynesian Economics	p. 365
Monetarism	p. 366
New Classical Macroeconomics	p. 371
Supply-Side Economics	p. 375
Testing Alternative Macroeconomic Models	p. 377
International Economics
The World Economy	p. 381
International Trade, Comparative Advantage, and Protectionism	p. 381
Trade Surpluses and Deficits	p. 382
The Economic Basis for Trade: Comparative Advantage	p. 383
The Sources of Comparative Advantage	p. 391
Trade Barriers: Tariffs, Export Subsidies, and Quotas	p. 392
Free Trade or Protection?	p. 395
An Economic Consensus	p. 400
Open-Economy Macroeconomics: The Balance of Payments and Exchange Rates	p. 405
The Balance of Payments	p. 407
Equilibrium Output (Income) in an Open Economy	p. 410
The Open Economy with Flexible Exchange Rates	p. 414
An Interdependent World Economy	p. 424
Economic Growth in Developing and Transitional Economies	p. 433
Life in the Developing Nations: Population and Poverty	p. 434
Economic Development: Sources and Strategies	p. 436
Issues in Economic Development	p. 443
Economies in Transition	p. 447
The End of the Soviet Union	p. 449
The Transition to a Market Economy	p. 451
Glossary	p. 1
Solutions to Even-Numbered Problems	p. 1
Index	p. 1
Photo Credits	p. 1
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