Principles of Economics

Principles of Economics 2e
Preface
1. About OpenStax
2. About OpenStax resources
3. About Principles of Economics 2e
4. Additional resources
5. About the authors
Chapter 1. Welcome to Economics!
1.1. What Is Economics, and Why Is It Important?*
1.2. Microeconomics and Macroeconomics*
1.3. How Economists Use Theories and Models to Understand Economic Issues*
1.4. How To Organize Economies: An Overview of Economic Systems*
Glossary
Chapter 2. Choice in a World of Scarcity
2.1. How Individuals Make Choices Based on Their Budget Constraint*
2.2. The Production Possibilities Frontier and Social Choices*
2.3. Confronting Objections to the Economic Approach*
Glossary
Chapter 3. Demand and Supply
3.1. Demand, Supply, and Equilibrium in Markets for Goods and Services*
3.2. Shifts in Demand and Supply for Goods and Services*
3.3. Changes in Equilibrium Price and Quantity: The Four-Step Process*
3.4. Price Ceilings and Price Floors*
3.5. Demand, Supply, and Efficiency*
Glossary
Chapter 4. Labor and Financial Markets
4.1. Demand and Supply at Work in Labor Markets*
4.2. Demand and Supply in Financial Markets*
4.3. The Market System as an Efficient Mechanism for Information*
Glossary
Chapter 5. Elasticity
5.1. Price Elasticity of Demand and Price Elasticity of Supply*
5.2. Polar Cases of Elasticity and Constant Elasticity*
5.3. Elasticity and Pricing*
5.4. Elasticity in Areas Other Than Price*
Glossary
Chapter 6. Consumer Choices
6.1. Consumption Choices*
6.2. How Changes in Income and Prices Affect Consumption Choices*
6.3. Behavioral Economics: An Alternative Framework for Consumer Choice*
Glossary
Chapter 7. Production, Costs, and Industry Structure
7.1. Explicit and Implicit Costs, and Accounting and Economic Profit*
7.2. Production in the Short Run*
7.3. Costs in the Short Run*
7.4. Production in the Long Run*
7.5. Costs in the Long Run*
Glossary
Chapter 8. Perfect Competition
8.1. Perfect Competition and Why It Matters*
8.2. How Perfectly Competitive Firms Make Output Decisions*
8.3. Entry and Exit Decisions in the Long Run*
8.4. Efficiency in Perfectly Competitive Markets*
Glossary
Chapter 9. Monopoly
9.1. How Monopolies Form: Barriers to Entry*
9.2. How a Profit-Maximizing Monopoly Chooses Output and Price*
Glossary
Chapter 10. Monopolistic Competition and Oligopoly
10.1. Monopolistic Competition*
10.2. Oligopoly*
Glossary
Chapter 11. Monopoly and Antitrust Policy
11.1. Corporate Mergers*
11.2. Regulating Anticompetitive Behavior*
11.3. Regulating Natural Monopolies*
11.4. The Great Deregulation Experiment*
Glossary
Chapter 12. Environmental Protection and Negative Externalities
12.1. The Economics of Pollution*
12.2. Command-and-Control Regulation*
12.3. Market-Oriented Environmental Tools*
12.4. The Benefits and Costs of U.S. Environmental Laws*
12.5. International Environmental Issues*
12.6. The Tradeoff between Economic Output and Environmental Protection*
Glossary
Chapter 13. Positive Externalities and Public Goods
13.1. Why the Private Sector Underinvests in Innovation*
13.2. How Governments Can Encourage Innovation*
13.3. Public Goods*
Glossary
Chapter 14. Labor Markets and Income
14.1. The Theory of Labor Markets*
14.2. Wages and Employment in an Imperfectly Competitive Labor Market*
14.3. Market Power on the Supply Side of Labor Markets: Unions*
14.4. Bilateral Monopoly*
14.5. Employment Discrimination*
14.6. Immigration*
Glossary
Chapter 15. Poverty and Economic Inequality
15.1. Drawing the Poverty Line*
15.2. The Poverty Trap*
15.3. The Safety Net*
15.4. Income Inequality: Measurement and Causes*
15.5. Government Policies to Reduce Income Inequality*
Glossary
Chapter 16. Information, Risk, and Insurance
16.1. The Problem of Imperfect Information and Asymmetric Information*
16.2. Insurance and Imperfect Information*
Glossary
Chapter 17. Financial Markets
17.1. How Businesses Raise Financial Capital*
17.2. How Households Supply Financial Capital*
17.3. How to Accumulate Personal Wealth*
Glossary
Chapter 18. Public Economy
18.1. Voter Participation and Costs of Elections*
18.2. Special Interest Politics*
18.3. Flaws in the Democratic System of Government*
Glossary
Chapter 19. The Macroeconomic Perspective
19.1. Measuring the Size of the Economy: Gross Domestic Product*
19.2. Adjusting Nominal Values to Real Values*
19.3. Tracking Real GDP over Time*
19.4. Comparing GDP among Countries*
19.5. How Well GDP Measures the Well-Being of Society*
Glossary
Chapter 20. Economic Growth
20.1. The Relatively Recent Arrival of Economic Growth*
20.2. Labor Productivity and Economic Growth*
20.3. Components of Economic Growth*
20.4. Economic Convergence*
Glossary
Chapter 21. Unemployment
21.1. How Economists Define and Compute Unemployment Rate*
21.2. Patterns of Unemployment*
21.3. What Causes Changes in Unemployment over the Short Run*
21.4. What Causes Changes in Unemployment over the Long Run*
Glossary
Chapter 22. Inflation
22.1. Tracking Inflation*
22.2. How to Measure Changes in the Cost of Living*
22.3. How the U.S. and Other Countries Experience Inflation*
22.4. The Confusion Over Inflation*
22.5. Indexing and Its Limitations*
Glossary
Chapter 23. The International Trade and Capital Flows
23.1. Measuring Trade Balances*
23.2. Trade Balances in Historical and International Context*
23.3. Trade Balances and Flows of Financial Capital*
23.4. The National Saving and Investment Identity*
23.5. The Pros and Cons of Trade Deficits and Surpluses*
23.6. The Difference between Level of Trade and the Trade Balance*
Glossary
Chapter 24. The Aggregate Demand/Aggregate Supply Model
24.1. Macroeconomic Perspectives on Demand and Supply*
24.2. Building a Model of Aggregate Demand and Aggregate Supply*
24.3. Shifts in Aggregate Supply*
24.4. Shifts in Aggregate Demand*
24.5. How the AD/AS Model Incorporates Growth, Unemployment, and Inflation*
24.6. Keynes’ Law and Say’s Law in the AD/AS Model*
Glossary
Chapter 25. The Keynesian Perspective
25.1. Aggregate Demand in Keynesian Analysis*
25.2. The Building Blocks of Keynesian Analysis*
25.3. The Phillips Curve*
25.4. The Keynesian Perspective on Market Forces*
Glossary
Chapter 26. The Neoclassical Perspective
26.1. The Building Blocks of Neoclassical Analysis*
26.2. The Policy Implications of the Neoclassical Perspective*
26.3. Balancing Keynesian and Neoclassical Models*
Glossary
Chapter 27. Money and Banking
27.1. Defining Money by Its Functions*
27.2. Measuring Money: Currency, M1, and M2*
27.3. The Role of Banks*
27.4. How Banks Create Money*
Glossary
Chapter 28. Monetary Policy and Bank Regulation
28.1. The Federal Reserve Banking System and Central Banks*
28.2. Bank Regulation*
28.3. How a Central Bank Executes Monetary Policy*
28.4. Monetary Policy and Economic Outcomes*
28.5. Pitfalls for Monetary Policy*
Glossary
Chapter 29. Exchange Rates and International Capital Flows
29.1. How the Foreign Exchange Market Works*
29.2. Demand and Supply Shifts in Foreign Exchange Markets*
29.3. Macroeconomic Effects of Exchange Rates*
29.4. Exchange Rate Policies*
Glossary
Chapter 30. Government Budgets and Fiscal Policy
30.1. Government Spending*
30.2. Taxation*
30.3. Federal Deficits and the National Debt*
30.4. Using Fiscal Policy to Fight Recession, Unemployment, and Inflation*
30.5. Automatic Stabilizers*
30.6. Practical Problems with Discretionary Fiscal Policy*
30.7. The Question of a Balanced Budget*
Glossary
Chapter 31. The Impacts of Government Borrowing
31.1. How Government Borrowing Affects Investment and the Trade Balance*
31.2. Fiscal Policy and the Trade Balance*
31.3. How Government Borrowing Affects Private Saving*
31.4. Fiscal Policy, Investment, and Economic Growth*
Glossary
Chapter 32. Macroeconomic Policy Around the World
32.1. The Diversity of Countries and Economies across the World*
32.2. Improving Countries’ Standards of Living*
32.3. Causes of Unemployment around the World*
32.4. Causes of Inflation in Various Countries and Regions*
32.5. Balance of Trade Concerns*
Glossary
Chapter 33. International Trade
33.1. Absolute and Comparative Advantage*
33.2. What Happens When a Country Has an Absolute Advantage in All Goods*
33.3. Intra-industry Trade between Similar Economies*
33.4. The Benefits of Reducing Barriers to International Trade*
Glossary
Chapter 34. Globalization and Protectionism
34.1. Protectionism: An Indirect Subsidy from Consumers to Producers*
34.2. International Trade and Its Effects on Jobs, Wages, and Working Conditions*
34.3. Arguments in Support of Restricting Imports*
34.4. How Governments Enact Trade Policy: Globally, Regionally, and Nationally*
34.5. The Tradeoffs of Trade Policy*
Glossary
Appendix A. The Use of Mathematics in Principles of Economics*
A.1. Algebraic Models
A.2. Growth Rates
A.3. Displaying Data Graphically and Interpreting the Graph
A.4. Key Concepts and Summary
A.5. Review Questions
Appendix B. Indifference Curves*
B.1. What Is an Indifference Curve?
B.2. Utility-Maximizing with Indifference Curves
B.3. Changes in Income
B.4. Responses to Price Changes: Substitution and Income Effects
B.5. Indifference Curves with Labor-Leisure and Intertemporal Choices
B.6. Sketching Substitution and Income Effects
B.7. Key Concepts and Summary
B.8. Review Questions
Appendix C. Present Discounted Value*
C.1. Applying Present Discounted Value to a Stock
C.2. Applying Present Discounted Value to a Bond
C.3. Other Applications
Appendix D. The Expenditure-Output Model*
D.1. The Axes of the Expenditure-Output Diagram
D.2. Building the Aggregate Expenditure Schedule
D.3. Equilibrium in the Keynesian Cross Model
D.4. The Multiplier Effect
D.5. Key Concepts and Summary
D.6. Self-Check Questions
D.7. Review Questions
D.8. Critical Thinking Questions
D.9. References
Solutions
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Chapter 25
Chapter 26
Chapter 27
Chapter 28
Chapter 29
Chapter 30
Chapter 31
Chapter 32
Chapter 33
Chapter 34
References
Index
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