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Cover Page<br/>Title Page<br/>Copyright Page<br/>Dedication<br/>Preface<br/>About the Authors<br/><br/>PART 1. GETTING ACQUAINTED WITH ECONOMICS<br/><br/>1. What Is Economics?<br/>1-1. Ideas for Beyond the Final Exam<br/>1-2. Inside the Economist’s Tool Kit<br/>2. The Economy: Myth and Reality<br/>2-1. The American Economy: A Thumbnail Sketch<br/>2-2. The Inputs: Labor and Capital<br/>2-3. The Outputs: What Does America Produce?<br/>2-4. The Central Role of Business Firms<br/>2-5. What’s Missing from the Picture? Government<br/>2-6. Conclusion: It’s a Mixed Economy<br/><br/>3. The Fundamental Economic Problem: Scarcity and Choice<br/>3-1. Scarcity, Choice, and Opportunity Cost<br/>3-2. Scarcity and Choice for a Single Firm<br/>3-3. Scarcity and Choice for The Entire Society<br/>3-4. The Three Coordination Tasks of Any Economy<br/>3-5. The Concept of Efficiency<br/>3-6. Task 1. How the Market Fosters Efficient Resource Allocation<br/>3-7. Task 2. Market Exchange and Deciding How Much of Each Good to Produce<br/>3-8. Task 3. How to Distribute the Economy’s Outputs among Consumers<br/>3-9. Looking Ahead<br/><br/>4. Supply and Demand: An Initial Look<br/>4-1. The Invisible Hand<br/>4-2. Demand and Quantity Demanded<br/>4-3. Supply and Quantity Supplied<br/>4-4. Supply and Demand Equilibrium<br/>4-5. Effects of Demand Shifts on Supply-Demand Equilibrium<br/>4-6. Supply Shifts and Supply-Demand Equilibrium<br/>4-7. Battling the Invisible Hand: The Market Fights Back<br/>4-8. A Simple But Powerful Lesson<br/><br/>PART 2. THE BUILDING BLOCKS OF DEMAND AND SUPPLY<br/><br/>5. Consumer Choice: Individual and Market Demand<br/>5-1. Scarcity and Demand<br/>5-2. Utility: A Tool to Analyze Purchase Decisions<br/>5-3. Behavioral Economics: Are Economic Decisions Really Made “Rationally”?<br/>5-4. Consumer Choice as a Trade-Off: Opportunity Cost<br/>5-5. From Individual Demand Curves to Market Demand Curves<br/><br/>6. Demand and Elasticity<br/>6-1. Elasticity: The Measure of Responsiveness<br/>6-2. What Determines Price Elasticities of Demand?<br/>6-3. Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure<br/>6-4. Elasticity as a General Concept<br/>6-5. The Time Period of the Demand Curve and Economic Decision Making<br/>6-6. Real-World Application: AOL’s Flat Rate Internet Pricing<br/>6-7. In Conclusion<br/><br/>7. Production, Inputs, and Cost: Building Blocks for Supply Analysis<br/>7-1. The Economic Short Run Versus the Economic Long Run<br/>7-2. Production, Input Choice, and Cost with One Variable Input<br/>7-3. Multiple Input Decisions: The Choice of Optimal Input Combinations <br/>7-4. Cost and Its Dependence on Output<br/>7-5. Economies of Scale<br/><br/>8. Output, Price, and Profit: The Importance of Marginal Analysis<br/>8-1. Price and Quantity: One Decision, Not Two<br/>8-2. Total Profit: Keep your Eye on the Goal<br/>8-3. Economic Profit and Optimal Decision Making<br/>8-4. Marginal Analysis and Maximization of Total Profit<br/>8-5. Generalization: The Logic of Marginal Analysis and Maximization<br/>8-6. Conclusion: The Fundamental Role of Marginal Analysis<br/>8-7. The Theory and Reality: A Word of Caution<br/><br/>9. The Financial Markets and the Economy: The Tail that Wags the Dog?<br/>9-1. Corporations and their Unique Characteristics<br/>9-2. Stock Exchanges and their Functions<br/>9-3. Betting on Securities: Risks to the Entire Economy<br/><br/>PART 3. THE VIRTUES OF THE FREE MARKET<br/><br/>10. The Firm and the Industry Under Perfect Competition<br/>10-1. Perfect Competition Defined<br/>10-2. The Perfectly Competitive Firm<br/>10-3. The Perfectly Competitive Industry<br/>10-4. Perfect Competition and Productive Efficiency<br/><br/>11. The Case for Free Markets: The Price System<br/>11-1. Efficient Resource Allocation and Pricing<br/>11-2. Scarcity and the Need to Coordinate Economic Decisions<br/>11-3. How Perfect Competition Achieves Efficiency: A Graphic Analysis<br/>11-4. How Perfect Competition Achieves Efficient Output: Marginal Analysis<br/>11-5. Toward Assessment of the Price Mechanism<br/><br/>PART 4. THE LIMITATIONS OF FREE MARKETS<br/><br/>12. Monopoly<br/>12-1. Monopoly Defined<br/>12-2. The Monopolist’s Supply Decision<br/>12-3. Can Anything Good be Said about Monopoly?<br/>12-4. Price Discrimination Under Monopoly<br/>12-5. Monopsony: The Case of a Single Buyer<br/><br/>13. Between Competition and Monopoly<br/>13-1. Monopolistic Competition<br/>13-2. Oligopoly<br/>13-3. The Game Theory Approach<br/>13-4. Contestable Markets<br/>13-5. A Glance Backward: Comparing the Four Market Structures<br/>13-6. Monopolistic Competition, Oligopoly, and Public Welfare<br/><br/>14. Limiting Market Power: Antitrust and Regulation<br/>14-1. The Public Interest Issue: Monopoly Power Versus Mere Size<br/>14-2. Antitrust Laws and Policies<br/>14-3. Anticompetitive Behavior and Antitrust<br/>14-4. Concentration<br/>14-5. What Is Price Regulation?<br/>14-6. The Logic behind Price Regulation<br/>14-7. Difficulties with Price Regulation<br/>14-8. The Deregulation Experience<br/>15. The Shortcomings of Free Markets<br/>15-1. What Does the Market Do Poorly?<br/>15-2. Efficient Resource Allocation: A Review<br/>15-3. Externalities: Getting the Prices Wrong<br/>15-4. Provision of Public Goods<br/>15-5. Allocation of Resources Between Present and Future<br/>15-6. Imperfect Information<br/>15-7. Market Failure and Government Failure<br/>15-8. The Cost Disease of Personal Services<br/>15-9. The Market System on Balance<br/>15-10. Epilogue: The Unforgiving Market, Its Gift of Abundance, and Its Dangerous Friends<br/><br/>16. The Economics of the Environment and Natural Resources<br/>16-1. The Economics of Environmental Protection<br/>16-2. Review—Externalities: A Critical Shortcoming of the Market Mechanism<br/>16-3. Basic Approaches to Environmental Policy<br/>16-4. Two Cheers for the Market<br/>16-5. The Economics of Natural Resources<br/>16-6. The Free Market and Pricing of Natural Resources<br/>16-7. Exhaustible Resources, Scarcity, and Rising Prices<br/>16-8. The Bioeconomics of Renewable Resources<br/>17. Taxation and Resource Allocation<br/>17-1. Basic Tax Concepts<br/>17-2. The Federal Tax System<br/>17-3. The State and Local Tax System<br/>17-4. The Concept of Equity in Taxation<br/>17-5. The Concept of Efficiency in Taxation<br/>17-6. Shifting the Tax Burden: Tax Incidence<br/>17-7. When Taxation Can Improve Efficiency<br/>17-8. Equity, Efficiency, and the Optimal Tax<br/><br/>PART 5. THE DISTRIBUTION OF INCOME<br/><br/>18. Pricing the Factors of Production<br/>18-1. The Principle of Marginal Productivity<br/>18-2. Inputs and Their Derived Demand Curves<br/>18-3. Investment, Capital, and Interest<br/>18-4. The Determination of Rent<br/>18-5. Payments to Business Owners: Are Profits Too High or Too Low?<br/>18-6. Criticisms of Marginal Productivity Theory<br/><br/>19. Labor and Entrepreneurship: The Human Inputs<br/>19-1. The Markets For Labor<br/>19-2. Wage Determination In Competitive Markets<br/>19-3. The Supply of Labor<br/>19-4. Why Do Wages Differ?<br/>19-5. Unions And Collective Bargaining<br/>19-6. The Entrepreneur: The Other Human Input<br/>19-7. The Market Economy’s Incredible Growth Record<br/>19-8. Sources of Free-Market Innovation: The Role of the Entrepreneur<br/>19-9. Entrepreneurship and Growth<br/>19-10. Institutions and the Supply of Innovative Entrepreneurship<br/><br/>20. Poverty, Inequality, and Discrimination<br/>20-1. The Facts: Poverty<br/>20-2. The Facts: Inequality<br/>20-3. Some Reasons for Unequal Incomes<br/>20-4. The Facts: Discrimination<br/>20-5. The Trade-Off Between Equality and Efficiency<br/>20-6. Policies to Combat Poverty<br/>20-7. Other Policies to Combat Inequality<br/>20-8. Policies to Combat Discrimination<br/>20-9. A Look Back<br/><br/>PART 6. THE MACROECONOMY: AGGREGATE SUPPLY AND DEMAND<br/><br/>21. An Introduction to Macroeconomics<br/>21-1. Drawing a Line between Macroeconomics and Microeconomics<br/>21-2. Supply and Demand in Macroeconomics<br/>21-3. Gross Domestic Product<br/>21-4. The Economy on a Roller Coaster<br/>21-5. The Problem of Macroeconomic Stabilization: A Sneak Preview<br/>22. The Goals of Macroeconomic Policy<br/>22-1. The Goal of Economic Growth<br/>22-2. The Capacity to Produce: Potential GDP and the Production Function<br/>22-3. The Growth Rate of Potential GDP<br/>22-4. The Goal of Low Unemployment<br/>22-5. The Human Costs of High Unemployment<br/>22-6. Counting the Unemployed: The Official Statistics<br/>22-7. Types of Unemployment<br/>22-8. How Much Employment Is “Full Employment”?<br/>22-9. Unemployment Insurance: The Invaluable Cushion<br/>22-10. The Goal of Low Inflation<br/>22-11. Inflation as a Redistributor of Income and Wealth<br/>22-12. Real Versus Nominal Interest Rates<br/>22-13. Inflation Distorts Measurements<br/>22-14. Other Costs of Inflation<br/>22-15. The Costs of Low Versus High Inflation<br/>22-16. Low Inflation does not Necessarily Lead to High Inflation<br/><br/>23. Economic Growth: Theory and Policy<br/>23-1. The Three Pillars of Productivity Growth<br/>23-2. Levels, Growth Rates, and the Convergence Hypothesis<br/>23-3. Growth Policy: Encouraging Capital Formation<br/>23-4. Growth Policy: Improving Education and Training<br/>23-5. Growth Policy: Spurring Technological Change<br/>23-6. Recent Productivity Performance in the United States<br/>23-7. Growth in the Developing Countries <br/>23-8. From the Long Run to the Short Run<br/><br/>24. Aggregate Demand and The Powerful Consumer<br/>24-1. Aggregate Demand, Domestic Product, and National Income<br/>24-2. The Circular Flow of Spending, Production, and Income<br/>24-3. Consumer Spending and Income: The Important Relationship<br/>24-4. The Consumption Function and the Marginal Propensity to Consume<br/>24-5. Factors That Shift the Consumption Function<br/>24-6. The Extreme Variability of Investment<br/>24-7. The Determinants of Net Exports<br/>24-8. How Predictable Is Aggregate Demand?<br/><br/>25. Demand-Side Equilibrium: Unemployment or Inflation?<br/>25-1. The Meaning of Equilibrium GDP<br/>25-2. The Mechanics of Income Determination<br/>25-3. The Aggregate Demand Curve<br/>25-4. Demand-Side Equilibrium and Full Employment<br/>25-5. The Coordination of Saving and Investment<br/>25-6. Changes on the Demand Side: Multiplier Analysis<br/>25-7. The Multiplier Is a General Concept<br/>25-8. The Multiplier and the Aggregate Demand Curve<br/><br/>26. Bringing in the Supply Side: Unemployment and Inflation?<br/>26-1. The Aggregate Supply Curve<br/>26-2. Equilibrium of Aggregate Demand and Supply<br/>26-3. Inflation and the Multiplier<br/>26-4. Recessionary and Inflationary Gaps Revisited<br/>26-5. Adjusting to a Recessionary Gap: Deflation or Unemployment?<br/>26-6. Adjusting to an Inflationary Gap: Inflation<br/>26-7. Stagflation from a Supply Shock<br/>26-8. Applying the Model to a Growing Economy<br/>26-9. A Role for Stabilization Policy<br/><br/>PART 7. FISCAL AND MONETARY POLICY<br/><br/>27. Managing Aggregate Demand: Fiscal Policy<br/>27-1. Income Taxes and the Consumption Schedule<br/>27-2. The Multiplier Revisited<br/>27-3. Planning Expansionary Fiscal Policy<br/>27-4. Planning Contractionary Fiscal Policy<br/>27-5. The Choice Between Spending Policy and Tax Policy<br/>27-6. Some Harsh Realities<br/>27-7. The Idea Behind Supply-Side Tax Cuts<br/>28. Money and the Banking System<br/>28-1. The Nature of Money<br/>28-2. How the Quantity of Money is Measured<br/>28-3. The Banking System<br/>28-4. Systemic Risk and the “Too Big to Fail” Doctrine<br/>28-5. The Origins of the Money Supply<br/>28-6. Banks and Deposit Creation<br/>28-7. Why the Deposit-Creation Formula is Oversimplified<br/>28-8. The Need for Monetary Policy<br/><br/>29. Monetary Policy: Conventional and Unconventional<br/>29-1. Money and Income: The Important Difference<br/>29-2. America’s Central Bank: The Federal Reserve System<br/>29-3. Implementing Monetary Policy in Normal Times: Open-Market Operations<br/>29-4. Other Instruments of Monetary Policy<br/>29-5. How Monetary Policy Works in Normal Times<br/>29-6. Money and the Price Level<br/>29-7. Application: Why the Aggregate Demand Curve Slopes Downward <br/>29-8. Unconventional Monetary Policies<br/>29-9. From Financial Distress to Recession<br/>29-10. From Models to Policy Debates<br/><br/>30. The Financial Crisis and the Great Recession<br/>30-1. Roots of the Crisis<br/>30-2. Leverage, Profits, and Risk<br/>30-3. The Housing Price Bubble and the Subprime Mortgage Crisis<br/>30-4. From the Housing Bubble to the Financial Crisis<br/>30-5. From the Financial Crisis to the Great Recession<br/>30-6. Hitting Bottom and Recovering<br/>30-7. Lessons from the Financial Crisis<br/><br/>31. The Debate Over Monetary and Fiscal Policy<br/>31-1. Velocity and the Quantity Theory of Money<br/>31-2. Debate: Should the Fed Use Unconventional Monetary Policies?<br/>31-3. Debate: Should Policymakers Fight Asset Price Bubbles?<br/>31-4. Debate: Should We Rely on Fiscal or Monetary Policy?<br/>31-5. Debate: The Shape of the Aggregate Supply Curve<br/>31-6. Debate: Should the Government Intervene at All?<br/>31-7. Dimensions of the Rules-Versus-Discretion Debate<br/>32. Budget Deficits in the Short and Long Run<br/>32-1. Should the Budget Always Be Balanced? The Short Run<br/>32-2. The Importance of the Policy Mix<br/>32-3. Deficits and Debt: Terminology and Facts<br/>32-4. Interpreting the Budget Deficit or Surplus<br/>32-5. Why Is the National Debt Considered a Burden?<br/>32-6. Budget Deficits and Inflation<br/>32-7. Debt, Interest Rates, and Crowding Out<br/>32-8. The Main Burden of the National Debt: Slower Growth<br/>32-9. The Economics And Politics of the U.S. Budget Deficit<br/><br/><br/>33. The Trade-Off Between Inflation and Unemployment<br/>33-1. Demand-Side Inflation Versus Supply-Side Inflation: A Review<br/>33-2. Origins of the Phillips Curve<br/>33-3. Supply-Side Inflation and the Collapse of the Phillips Curve<br/>33-4. What the Phillips Curve Is Not<br/>33-5. Fighting Unemployment with Fiscal and Monetary Policy<br/>33-6. What Should Be Done?<br/>33-7. Inflationary Expectations and the Phillips Curve<br/>33-8. The Theory of Rational Expectations<br/>33-9. Why Economists (and Politicians) Disagree<br/>33-10. The Dilemma of Demand Management<br/>33-11. Attempts to Improve the Trade-Off<br/>PART 8. THE UNITED STATES IN THE WORLD ECONOMY<br/><br/>34. International Trade and Comparative Advantage<br/>34-1. Why Trade?<br/>34-2. International Versus Intranational Trade<br/>34-3. The Principle of Comparative Advantage<br/>34-4. The Arithmetic of Comparative Advantage<br/>34-5. Tariffs, Quotas, and Other Interferences with Trade<br/>34-6. Why Inhibit Trade?<br/>34-7. Can Cheap Imports Hurt a Country?<br/><br/>35. The International Monetary System: Order or Disorder?<br/>35-1. What Are Exchange Rates?<br/>35-2. Exchange Rate Determination in a Free Market<br/>35-3. When Governments Fix Exchange Rates: The Balance of Payments<br/>35-4. A Bit of History: The Gold Standard and the Bretton Woods System<br/>35-5. Adjustment Mechanisms Under Fixed Exchange Rates<br/>35-6. Why Try to Fix Exchange Rates?<br/>35-7. The Current “Nonsystem”<br/>36. Exchange Rates and the Macroeconomy<br/>36-1. International Trade, Exchange Rates, and Aggregate Demand<br/>36-2. Aggregate Supply in an Open Economy<br/>36-3. The Macroeconomic Effects of Exchange Rates<br/>36-4. Fiscal and Monetary Policies in an Open Economy<br/>36-5. International Aspects of Deficit Reduction<br/>36-6. Should We Worry About the Trade Deficit?<br/>36-7. On Curing the Trade Deficit<br/>36-8. Conclusion: No Nation Is an Island<br/><br/>PART 9. THE ECONOMY TODAY<br/><br/>37. Contemporary Issues in the U.S. Economy<br/>37-1. Will Artificial Intelligence Leave No Work for Humans to Do?<br/>37-2. Are Uber and Airbnb the Markets of the Future?<br/>37-3. Is the “Gig” Economy the Future of Work?<br/>37-4. Is the Student Debt “Crisis” Really a Crisis?<br/>37-5. How Will We Pay for Health Insurance?<br/>37-6. Can We Grow Much Faster Than 2 Percent A Year?<br/>37-7. Who Loses from Globalization?<br/>37-8. Are Trade Wars “Good and Easy to Win”?<br/>37-9. Where Is the National Debt Headed?<br/>37-10. Has the Phillips Curve Disappeared?<br/>Appendix<br/>Glossary <br/>Index<br/> |
