Principles of Economics

Contents
Preface
Chapter 1 Welcome to Economics!
Introduction
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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Chapter 2 Choice in a World of Scarcity
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 3 Demand and Supply
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 4 Labor and Financial Markets
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 5 Elasticity
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 6 Consumer Choices
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 7 Production, Costs, and Industry Structure
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 8 Perfect Competition
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 9 Monopoly
Introduction to a Monopoly
9.1 How Monopolies Form: Barriers to Entry
9.2 How a Profit-Maximizing Monopoly Chooses Output and Price
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 10 Monopolistic Competition and Oligopoly
Introduction to Monopolistic Competition and Oligopoly
10.1 Monopolistic Competition
10.2 Oligopoly
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 11 Monopoly and Antitrust Policy
Introduction to Monopoly and Antitrust Policy
11.1 Corporate Mergers
11.2 Regulating Anticompetitive Behavior
11.3 Regulating Natural Monopolies
11.4 The Great Deregulation Experiment
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 12 Environmental Protection and Negative Externalities
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 13 Positive Externalities and Public Goods
Introduction to Positive Externalities and Public Goods
13.1 Investments in Innovation
13.2 How Governments Can Encourage Innovation
13.3 Public Goods
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 14 Labor Markets and Income
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Chapter 15 Poverty and Economic Inequality
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 16 Information, Risk, and Insurance
Introduction to Information, Risk, and Insurance
16.1 The Problem of Imperfect Information and Asymmetric Information
16.2 Insurance and Imperfect Information
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 17 Financial Markets
Introduction to Financial Markets
17.1 How Businesses Raise Financial Capital
17.2 How Households Supply Financial Capital
17.3 How to Accumulate Personal Wealth
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 18 Public Economy
Introduction to Public Economy
18.1 Voter Participation and Costs of Elections
18.2 Special Interest Politics
18.3 Flaws in the Democratic System of Government
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 19 The Macroeconomic Perspective
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 20 Economic Growth
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 21 Unemployment
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 22 Inflation
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 23 The International Trade and Capital Flows
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 24 The Aggregate Demand/Aggregate Supply Model
Introduction to the Aggregate Supply–Aggregate Demand 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 25 The Keynesian Perspective
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Chapter 26 The Neoclassical Perspective
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 27 Money and Banking
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 28 Monetary Policy and Bank Regulation
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 29 Exchange Rates and International Capital Flows
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 30 Government Budgets and Fiscal Policy
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 31 The Impacts of Government Borrowing
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 32 Macroeconomic Policy Around the World
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 33 International Trade
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Chapter 34 Globalization and Protectionism
Introduction to 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
Key Terms
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
Problems
Appendix A The Use of Mathematics in Principles of Economics
Algebraic Models
Growth Rates
Displaying Data Graphically and Interpreting the Graph
Key Concepts and Summary
Review Questions
Appendix B Indifference Curves
What Is an Indifference Curve?
Utility-Maximizing with Indifference Curves
Changes in Income
Responses to Price Changes: Substitution and Income Effects
Indifference Curves with Labor-Leisure and Intertemporal Choices
Sketching Substitution and Income Effects
Key Concepts and Summary
Review Questions
Appendix C Present Discounted Value
Applying Present Discounted Value to a Stock
Applying Present Discounted Value to a Bond
Other Applications
Appendix D The Expenditure-Output Model
The Axes of the Expenditure-Output Diagram
Building the Aggregate Expenditure Schedule
Equilibrium in the Keynesian Cross Model
The Multiplier Effect
Key Concepts and Summary
Self-Check Questions
Review Questions
Critical Thinking Questions
References
Answer Key
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
Welcome to Economics!
Choice in a World of Scarcity
Demand and Supply
Labor and Financial Markets
Elasticity
Consumer Choices
Production, Costs, and Industry Structure
Perfect Competition
Monopoly
Monopolistic Competition and Oligopoly
Monopoly and Antitrust Policy
Environmental Protection and Negative Externalities
Positive Externalities and Public Goods
Labor Markets and Income
Poverty and Economic Inequality
Information, Risk, and Insurance
Financial Markets
Public Economy
The Macroeconomic Perspective
Economic Growth
Unemployment
Inflation
The International Trade and Capital Flows
The Aggregate Demand/Aggregate Supply Model
The Keynesian Perspective
The Neoclassical Perspective
Money and Banking
Monetary Policy and Bank Regulation
Exchange Rates and International Capital Flows
Government Budgets and Fiscal Policy
The Impacts of Government Borrowing
Macroeconomic Policy Around the World
International Trade
Globalization and Protectionism
Index
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