Economics: principles & policy
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| Main Authors: | , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
[Mason, Ohio]
South-Western Cengage Learning
2012
|
| Edition: | 12th ed., internat. ed. |
| Subjects: | |
| Links: | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=024453341&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
| Physical Description: | XXXI, 851 S. Ill., graph. Darst. |
| ISBN: | 9780538453691 0538453699 |
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| 245 | 1 | 0 | |a Economics |b principles & policy |c William J. Baumol ; Alan S. Blinder |
| 250 | |a 12th ed., internat. ed. | ||
| 264 | 1 | |a [Mason, Ohio] |b South-Western Cengage Learning |c 2012 | |
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| adam_text |
Table of
Contents
Preface
xxvi
About the Authors
xxxi
Part
1
Getting Acquainted with Economics
1
Chapter
і
What Is Economics?
з
IDEAS FOR BEYOND THE FINAL EXAM
3
Idea
1:
How Much Does It Really Cost?
4
Idea
2:
Attempts to Repeal the Laws of Supply and Demand
—
The Market Strikes Back
4
Idea
3:
The Surprising Principle of Comparative Advantage
5
Idea
4:
Trade Is a Win-Win Situation
5
Idea
5:
The Importance of Thinking at the Margin
6
Idea
6:
Externalities
—
A Shortcoming of the Market Cured by Market Methods
6
Idea
7:
The Trade-Off between Efficiency and Equality
6
Idea
8:
Government Policies Can Limit Economic Fluctuations
—
But Don't Always Succeed
7
Idea
9:
The Short-Run Trade-Off between Inflation and Unemployment
7
Idea
10:
Productivity Growth Is (Almost) Everything in the Long Run
8
Epilogue
8
INSIDE THE ECONOMIST'S TOOL KIT
8
Economics as a Discipline
8
The Need for Abstraction
8
The Role of Economic Theory
11
What Is an Economic Model?
12
Reasons for Disagreements: Imperfect Information and Value Judgments
12
Summary
13
Key Terms
14
Discussion Questions
14
Chapter
2
The Economy: Myth and Reality is
THE AMERICAN ECONOMY: A THUMBNAIL SKETCH
16
A Private-Enterprise Economy
17
A Relatively "Closed" Economy
17
A Growing Economy
. 18
But with Bumps along the Growth Path
18
THE INPUTS: LABOR AND CAPITAL
20
The American Workforce: Who Is in It?
21
The American Workforce: What Does It Do?
22
The American Workforce: What Does It Earn?
23
Capital and Its Earnings
24
THE OUTPUTS: WHAT DOES AMERICA PRODUCE?
24
THE CENTRAL ROLE OF BUSINESS FIRMS
25
WHAT'S MISSING FROM THE PICTURE? GOVERNMENT
26
The Government as Referee
27
The Government as Business Regulator
27
Government Expenditures
28
Taxes in America
29
The Government as
Redistributor
29
CONCLUSION: IT'S A MIXED ECONOMY
30
Summary
30
Key Terms
30
Discussion Questions
31
СнАРТЕВз
The Fundamental
Egonomig
Problem: Scarcity and Choice
зз
ISSUE: What to Do about the Budget Deficit?
33
SCARCITY, CHOICE, AND OPPORTUNITY COST
34
Opportunity Cost and Money Cost
35
Optimal Choice: Not Just Any Choice
36
SCARCITY AND CHOICE FOR A SINGLE FIRM
36
The Production Possibilities Frontier
37
The Principle of Increasing Costs
38
SCARCITY AND CHOICE FOR THE ENTIRE SOCIETY
39
Scarcity and Choice Elsewhere in the Economy
39
ISSUE REVISITED: Coping with the Budget Deficit
40
THE CONCEPT OF EFFICIENCY
40
THE THREE COORDINATION TASKS OF ANY ECONOMY
41
TASK
1.
HOW THE MARKET FOSTERS EFFICIENT RESOURCE ALLOCATION
42
The Wonders of the Division of Labor
42
The Amazing Principle of Comparative Advantage
42
TASK
2.
MARKET EXCHANGE AND DECIDING HOW MUCH OF EACH GOOD TO PRODUCE
43
TASK
3.
HOW TO DISTRIBUTE THE ECONOMY'S OUTPUTS AMONG CONSUMERS
44
Summary
46
Key Terms
46
Test Yourself
47
Discussion Questions
47
Chapter
4
Supply and Demand: An Initial Look
49
PUZZLE: What Happened to Oil Prices?
49
THE INVISIBLE HAND
50
DEMAND AND QUANTITY DEMANDED SO
The Demand Schedule
52
The Demand Curve
52
Shifts of the Demand Curve
52
SUPPLY AND QUANTITY SUPPLIED
55
The Supply Schedule and the Supply Curve
55
Shifts of the Supply Curve
56
SUPPLY AND DEMAND EQUILIBRIUM
58
The Law of Supply and Demand
60
EFFECTS OF DEMAND SHIFTS ON SUPPLY-DEMAND EQUILIBRIUM
60
SUPPLY SHIFTS AND SUPPLY-DEMAND EQUILIBRIUM
61
PUZZLE RESOLVED: Those Leaping Oil Prices
62
Application: Who Really Pays That Tax?
63
BATTLING THE INVISIBLE HAND: THE MARKET FIGHTS BACK
64
Restraining the Market Mechanism: Price Ceilings
65
POLICY DEBATE Economic Aspects of the War on Drugs
65
Case Study: Rent Controls in New York City
66
Restraining the Market Mechanism: Price Floors
67
Case Study: Farm Price Supports and the Case of Sugar Prices
67
A Can of Worms
68
A SIMPLE BUT POWERFUL LESSON
70
Summary
70
Key Terms
71
Test Yourself
71
Discussion Questions
72
Ш
Part
2
The Building Blocks of Demand and Supply
75
Chapter
5
Consumer Choice-.
Individualand
Market Demand
77
PUZZLE: Why Shouldn't Water Be Worth More Than Diamonds?
77
SCARCITY AND DEMAND
78
UTILITY: A TOOL TO ANALYZE PURCHASE DECISIONS
79
The Purpose of Utility Analysis: Analyzing How People Behave, Not What They Think
79
Total versus Marginal Utility
80
The "Law" of Diminishing Marginal Utility
80
Using Marginal Utility: The Optimal Purchase Rule
81
From Diminishing Marginal Utility to Downward-Sloping Demand Curves
84
BEHAVIORAL ECONOMICS: ARE ECONOMIC DECISIONS REALLY MADE "RATIONALLY"?
86
CONSUMER CHOICE AS A TRADE-OFF: OPPORTUNITY COST
88
Consumer's Surplus: The Net Gain from a Purchase
88
PUZZLE: Resolving the Diamond-Water Puzzle
90
Income and Quantity Demanded
90
FROM INDIVIDUAL DEMAND CURVES TO MARKET DEMAND CURVES
91
Market Demand Curves as a Horizontal Sum of the Demand Curves of Individual Buyers
91
The "Law" of Demand
92
Exceptions to the "Law" of Demand
93
Summary
93
Key Terms
94
Test Yourself
94
Discussion Questions
94
Chapter
6
Demand and Elasticity
95
ISSUE: Will Taxing Cigarettes Make Teenagers Stop Smoking?
95
ELASTICITY: THE MEASURE OF RESPONSIVENESS
96
Price Elasticity of Demand and the Shapes of Demand Curves
99
PRICE ELASTICITY OF DEMAND: ITS EFFECT ON TOTAL REVENUE AND TOTAL
EXPENDITURE
101
ISSUE REVISITED: Will a Cigarette Tax Decrease Teenage Smoking Significantly?
102
WHAT DETERMINES DEMAND ELASTICITY?
103
ELASTICITY AS A GENERAL, CONCEPT
104
1.
Income Elasticity
104
2.
Price Elasticity of Supply
104
3.
Cross Elasticity of Demand
104
THE TIME PERIOD OF THE DEMAND CURVE AND ECONOMIC DECISION MAKING
106
REAL-WORLD APPLICATION: POLAROID VERSUS KODAK
107
IN CONCLUSION
108
Summary
108
Key Terms
109
Test Yourself
109
Discussion Questions
109
Chapter
ч
Production, Inputs, and Cost: Building Blocks for Supply Analysis
m
PUZZLE: How Can We Tell If Large Firms Are More Efficient? 11
2
SHORT-RUN VERSUS LONG-RUN COSTS: WHAT MAKES AN INPUT VARIABLE?
113
The Economic Short Run versus the Economic Long Run
113
Fixed Costs and Variable Costs
114
PRODUCTION, INPUT CHOICE, AND COST WITH ONE VARIABLE INPUT
114
Total, Average, and Marginal Physical Products
114
Marginal Physical Product and the "Law" of Diminishing Marginal Returns
115
The Optimal Quantity of an Input and Diminishing Returns
116
MULTIPLE INPUT
DECISIONS:
THE CHOICE OF OPTIMAL INPUT COMBINATIONS
118
Substitutability: The Choice of Input Proportions
118
The Marginal Rule for Optimal Input Proportions
119
Changes in Input Prices and Optimal Input Proportions
120
COST AND ITS DEPENDENCE ON OUTPUT
121
Input Quantities and Total, Average, and Marginal Cost Curves
121
The Law of Diminishing Marginal Productivity and the U-Shaped Average Cost Curve
124
The Average Cost Curve in the Short and Long Run
125
ECONOMIES OF SCALE
126
The "Law" of Diminishing Returns and Returns to Scale
127
Historical Costs versus Analytical Cost Curves
128
PUZZLE: Resolving the Economies of Scale Puzzle
! 29
Cost Minimization in Theory and Practice
130
POLICY DEBATE Should Offshore Oil Drilling Be Subsidized by iix U. S, Ovwrnmcni?
1.3
1
Summary
131
Key Terms
132
Test Yourself
132
Discussion Questions
133
Chapter
8
Output, Price, and Profit: The Importance of Marginal Analysis
і35
PUZZLE: Can a Company Make a Profit by Selling Below Its Costs? 1
36
PRICE AND QUANTITY: ONE DECISION, NOT TWO
137
TOTAL PROFIT: KEEP YOUR EYE ON THE GOAL
138
ECONOMIC PROFIT AND OPTIMAL DECISION MAKING
139
Total, Average, and Marginal Revenue
139
Total, Average, and Marginal Cost
140
Maximization of Total Profit
141
Profit Maximization: A Graphical Interpretation
142
MARGINAL ANALYSIS AND MAXIMIZATION OF TOTAL PROFIT
143
Marginal Revenue and Marginal Cost: Guides to Optimization
145
Finding the Optimal Price from Optimal Output
146
POLICY DEBATE Profit and the New Market Economies
146
GENERALIZATION: THE LOGIC OF MARGINAL ANALYSIS AND MAXIMIZATION
148
Application: Fixed Cost and the Profit-Maximizing Price
148
PUZZLE RESOLVED: Using Marginal Analysis to Unravel the Case of the "Unprofitable"
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CONCLUSION: THE FUNDAMENTAL ROLE OF MARCH
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THE THEORY AND REALITY: A WORD OF
CAUTI
01
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Summary
152
Key Terms
152
Test Yourself
152
Discussion Question
152
Chapter
9
Securities,
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PUZZLE: The Stock
Market's Unpredictability
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CORPORATIONS
AND THEIR
UNIQUE
CHAP
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Financing Corporate Activity: Stocks and Bonds
155
Plowback, or Retained Earnings
158
What Determines Stock Prices? The Role of Expected Company Earnings
158
STOCK EXCHANGES AND THEIR FUNCTIONS
159
Regulation of the Stock Market
159
Stock Exchanges and Corporate Capital Needs
160
SPECULATION
162
BETTING ON SECURITIES: RISKS TO THE ENTIRE ECONOMY
163
Investments and Their Risks
163
Derivatives and Other Complex Security Investments: An Invitation to Gamble?
163
Leverage: Raising the Stakes
164
Herd Behavior, the Securities Markets, and the Path to Recession
165
Irresponsible Lending: Another Booby Trap
165
PUZZLE RESOLVED: Unpredictable Stock Prices as "Random Walks" 1
66
Summary
168
Key Terms
169
Test Yourself
169
Discussion Questions
169
Part
3
Markets and the Price System
171
Chapter
io
The Firm and the Industry under Perfect Competition
ітз
PUZZLE: Pollution Reduction Incentives That Actually Increase Pollution 1
73
PERFECT COMPETITION DEFINED
174
THE PERFECTLY COMPETITIVE FIRM
175
The Firm's Demand Curve under Perfect Competition
175
Short-Run Equilibrium for the Perfectly Competitive Firm
176
Short-Run Profit: Graphic Representation
177
The Case of Short-Term Losses
178
Shutdown and Break-Even Analysis
178
The Perfectly Competitive Firm's Short-Run Supply Curve
180
THE PERFECTLY COMPETITIVE INDUSTRY
181
The Perfectly Competitive Industry's Short-Run Supply Curve
181
Industry Equilibrium in the Short Run
182
Industry and Firm Equilibrium in the Long Run
183
Zero Economic Profit: The Opportunity Cost of Capital
185
The Long-Run Industry Supply Curve
186
POLICY DEBATE Should Government Regulators Use Perfect Competition as a Guide?
187
PERFECT COMPETITION AND ECONOMIC EFFICIENCY
188
PUZZLE RESOLVED: Which More Effectively Cuts Pollution—The Carrot or the Stick? 1
89
Summary
190
Key Terms
190
Test Yourself
190
Discussion Questions
191
Chapter
її
Monopoly
193
PUZZLE: What Happened to AT&T's "Natural Monopoly" in Telephone Service? 1
93
MONOPOLY DEFINED
194
Sources of Monopoly: Barriers to Entry and Cost Advantages
194
Natural Monopoly
195
THE MONOPOLIST'S SUPPLY DECISION
196
Determining the Profit-Maximizing Output
198
Comparing Monopoly and Perfect Competition
199
Monopoly Is Likely to Shift Demand
201
Monopoly Is Likely to Shift Cost Curves
201
CAN ANYTHING GOOD BE SAID ABOUT MONOPOLY?
202
Monopoly May Aid Innovation
202
Natural Monopoly: Where Single-Firm Production Is Cheapest
202
PRICE DISCRIMINATION UNDER MONOPOLY
202
Is Price Discrimination Always Undesirable?
205
PUZZLE RESOLVED: Competition in Telephone Service
206
Summary
206
Key Terms
207
Test Yourself
207
Discussion Questions
207
Chapter
12
Between Competition and Monopoly
209
PUZZLE: Three Puzzling Observations
210
PUZZLE I
:
Why Are There So Many Retailers?
2
1
0
PUZZLE
2:
Why Do Oligopolists Advertise More Than "More Competitive" Firms?
2
1
0
PUZZLE
3:
Why Do Oligopolists Seem to Change Their Prices So Infrequently?
210
MONOPOLISTIC COMPETITION
210
Characteristics of Monopolistic Competition
211
Price and Output Determination under Monopolistic Competition
212
The Excess Capacity Theorem and Resource Allocation
213
IST PUZZLE RESOLVED: Explaining the Abundance of Retailers
2
1
4
OLIGOPOLY
214
2ND
PUZZLE RESOLVED: Why Oligopolists Advertise but Perfectly Competitive Firms Generally Do Not
2
1
5
Why Oligopolistic Behavior Is So Difficult to Analyze
215
A Shopping List
216
POLICY DEBATE Acting on Recognized Interdependence versus "Tacit Collusion'
219
Sales Maximization: An Oligopoly Model with Interdependence Ignored
219
3RD
PUZZLE RESOLVED: The Kinked Demand Curve Model
221
The Game Theory Approach
223
Games with Dominant Strategies
223
Games without Dominant Strategies
225
Other Strategies: The Nash Equilibrium
226
Zero-Sum Gamers
226
Repeated Games
227
MONOPOLISTIC COMPETITION, OLIGOPOLY, AND PUBLIC WELFARE
229
A GLANCE BACKWARD: COMPARING THE FOUR MARKET FORMS
230
Summary
231
Key Terms
232
Test Yourself
232
Discussion Questions
232
Chapter
із
Limiting Market Power: Regulation and Antitrust
235
THE PUBLIC INTEREST ISSUE: MONOPOLY POWER VERSUS MERE SIZE
235
PART
1
ANTITRUST LAWS AND POLICIES
237
MEASURING MARKET POWER: CONCENTRATION
238
Concentration: Definition and Measurement
—
The Herfindahl-Hirschman Index
238
The Evidence of Concentration in Reality
240
A CRUCIAL PROBLEM FOR ANTITRUST: THE RESEMBLANCE OF MONOPOLIZATION
AND VIGOROUS COMPETITION
241
ANTICOMPETITIVE PRACTICES AND ANTITRUST
242
Predatory Pricing
242
The Microsoft Case: Bottlenecks, Bundling, and Network Externalities
242
USE OF ANTITRUST LAWS TO PREVENT COMPETITION
243
PART
2
REGULATION
245
WHAT IS REGULATION?
245
PUZZLE: Why Do Regulators Often Raise Prices?
245
SOME OBJECTIVES OF REGULATION
246
Control of Market Power Resulting from Economies of Scale and Scope
246
Universal Service and Rate Averaging
247
TWO KEY ISSUES THAT FACE REGULATORS
247
Setting Prices to Protect Consumers' Interests and Allow Regulated Firms to Cover Their Costs
247
Marginal versus Average Cost Pricing
248
Preventing Monopoly Profit but Keeping Incentives for Efficiency and Innovation
249
THE PROS AND CONS OF "BIGNESS"
250
Economies of Large Size
250
Required Scale for Innovation
251
DEREGULATION
251
The Effects of Deregulation
251
PUZZLE RESOLVED: Why Regulators Often Push Prices Upward
254
CONCLUDING OBSERVATIONS
254
Summary
255
Key Terms
255
Discussion Questions
255
Part
4
The Virtues and Limitations of Markets
257
Chapter i4 The Case foe Free Markets: The Price System
259
PUZZLE: Crossing the San Francisco-Oakland Bay Bridge: Is the Price Right?
260
EFFICIENT RESOURCE ALLOCATION AND PRICING
260
Pricing to Promote Efficiency: An Example
261
Can Price Increases Ever Serve the Public Interest?
262
SCARCITY AND THE NEED TO COORDINATE ECONOMIC DECISIONS
264
Three Coordination Tasks in the Economy
264
Input-Output Analysis: The Near Impossibility of Perfect Central Planning
268
Which Buyers and Which Sellers Get Priority?
270
HOW PERFECT COMPETITION ACHIEVES EFFICIENCY: A GRAPHIC ANALYSIS
271
HOW PERFECT COMPETITION ACHIEVES OPTIMAL OUTPUT: MARGINAL ANALYSIS
274
The Invisible Hand at Work
275
Other Roles of Prices: Income Distribution and Fairness
276
Yet Another Free-Market Achievement: Growth versus Efficiency
277
POLICY DEBATE User Charges for Public Facilities
2 78
PUZZLE RESOLVED: San Francisco Bridge Pricing Revisited
278
TOWARD ASSESSMENT OF THE PRICE MECHANISM
279
Summary
279
Key Terms
280
Test Yourself
280
Discussion Questions
280
Chapter is The Shortcomings of Free Markets 281
PUZZLE: Why Are Health-Care Costs in Canada Rising?
282
WHAT DOES THE MARKET DO POORLY?
282
EFFICIENT RESOURCE ALLOCATION: A REVIEW
283
EXTERNALITIES: GETTING THE PRICES WRONG
284
Externalities and Inefficiency
284
Externalities Are Everywhere
286
Government Policy and Externalities
287
PROVISION OF PUBLIC GOODS
288
ALLOCATION OF RESOURCES BETWEEN PRESENT AND FUTURE
290
The Role of the Interest Rate
290
How Does It Work in Practice?
291
SOME OTHER SOURCES OF MARKET FAILURE
292
Imperfect Information: "Caveat Emptor"
292
Rent Seeking
292
Moral Hazard
292
Principals, Agents, and Recent Stock Option Scandals
293
MARKET FAILURE AND GOVERNMENT FAILURE
295
THE COST DISEASE OF SOME VITAL SERVICES: INVITATION TO GOVERNMENT FAILURE
296
Deteriorating Personal Services
297
Personal Services Are Getting More Expensive
297
Why Are These "In-Person" Services Costing So Much More?
299
A Future of More Goods but Fewer Services: Is It Inevitable?
299
Government May Make the Problem Worse
301
PUZZLE RESOLVED: Explaining the Rising Costs of Canadian Health Care
30
1
THE MARKET SYSTEM ON BALANCE
302
EPILOGUE: THE UNFORGIVING MARKET, ITS GIFT OF ABUNDANCE, AND ITS DANGEROUS
FRIENDS
302
Summary
303
Key Terms
304
Test Yourself
304
Discussion Questions
304
Chapter
16
The Market's Prime Achievement: Innovation and Growth
зоѕ
PUZZLE: How Did the Market Achieve Its Unprecedented Growth?
305
THE MARKET ECONOMY'S INCREDIBLE GROWTH RECORD
306
INNOVATION, NOT INVENTION, IS THE UNIQUE FREE-MARKET ACCOMPLISHMENT
310
SOURCES OF FREE-MARKET INNOVATION: THE ROLE OF THE ENTREPRENEUR
311
Breakthrough Invention and the Entrepreneurial Firm
312
MICROECONOMIC
ANALYSIS OF THE INNOVATIVE OLIGOPOLY FIRM.
313
The Large Enterprises and Their Innovation "Assembly Lines"
313
The Profits of Innovation: Schumpeter's Model
316
Financing the Innovation "Arms Race": High R&D Costs and "Monopoly Profits"
317
How Much Will a Profit-Maximizing Firm Spend on Innovation?
318
A Kinked Revenue Curve Model of Spending on Innovation
319
Innovation as a Public Good
320
Effects of Process Research on Outputs and Prices
321
DO FREE MARKETS SPEND ENOUGH ON R&D ACTIVITIES?
321
Innovation as a Beneficial Externality
322
Why the Shortfall in Innovation Spending May Not Be So Big After All
323
THE MARKET ECONOMY AND THE SPEEDY DISSEMINATION OF NEW
TECHNOLOGY
323
CONCLUSION: THE MARKET ECONOMY AND ITS INNOVATION ASSEMBLY LINE
326
TOWARD SOLUTION OF THE PUZZLE: How the Market Achieved Its Unprecedented Growth
326
Summary
327
Key Terms
327
Discussion Questions
327
Chapter
η
Externalities, the Environment, and Natural Resources
з?,9
PUZZLE: Those Resilient Natural Resource Supplies
329
PART
1
THE ECONOMICS OF ENVIRONMENTAL PROTECTION
330
REVIEW—EXTERNALITIES: A CRITICAL SHORTCOMING OF THE MARKET MECHANISM
330
The Facts: Is the World Really Getting Steadily More Polluted?
331
The Role of Individuals and Governments in Environmental Damage
334
Pollution and the Law of Conservation of Matter and Energy
336
BASIC APPROACHES TO ENVIRONMENTAL POLICY
337
Emissions Taxes versus Direct Controls
338
Another Financial Device to Protect the Environment: Emissions Permits
340
TWO CHEERS FOR THE MARKET
341
PART
2
THE ECONOMICS OF NATURAL RESOURCES
342
ECONOMIC ANALYSIS: THE FREE MARKET AND PRICING OF DEPLETABLE RESOURCES
343
Scarcity and Rising Prices
343
Supply-Demand Analysis and Consumption
343
ACTUAL RESOURCE PRICES IN THE TWENTIETH CENTURY
345
Interferences with Price Patterns
346
Is Price Interference Justified?
349
On the Virtues of Rising Prices
349
PUZZLE
RESOLVED: Growing Reserves of Exhaustible Natural Resources
349
Summary
350
Key Terms
350
Test Yourself
350
Discussion Questions
351
Chapter ie Taxation and Resource Allocation
зѕз
ISSUE: Should the Bush Tax Cuts Be (Partly) Repealed?
354
THE LEVEL AND TYPES OF TAXATION
354
Progressive, Proportional, and Regressive Taxes
355
Direct versus Indirect Taxes
355
THE FEDERAL TAX SYSTEM
356
The Federal Personal Income Tax
356
The Payroll Tax
357
The Corporate Income Tax
357
Excise Taxes
357
The Payroll Tax and the Social Security System
358
THE STATE AND LOCAL TAX SYSTEM
359
Sales and Excise Taxes
359
Property Taxes
359
Fiscal Federalism
359
THE CONCEPT OF EQUITY IN TAXATION
360
Horizontal Equity
360
Vertical Equity
360
The Benefits Principle
361
THE CONCEPT OF EFFICIENCY IN TAXATION
361
Tax Loopholes and Excess Burden
362
SHIFTING THE TAX BURDEN: TAX INCIDENCE
363
The Incidence of Excise Taxes
365
The Incidence of the Payroll Tax
365
WHEN TAXATION CAN IMPROVE EFFICIENCY
366
EQUITY, EFFICIENCY, AND THE OPTIMAL TAX
367
ISSUE REVISITED: The Pros and Cons of Repealing the Bush Tax Cuts
368
Summary
368
Key Terms
369
Test Yourself
369
Discussion Questions
370
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he
.iJisíľio'UiiO'i
of
hu-ome
J'/.l
Chapter
19
Pricing the Factors of Production
з?з
PUZZLE: Why Does a Higher Return to Savings Reduce the Amounts Some People Save?
373
THE PRINCIPLE OF MARGINAL PRODUCTIVITY
374
INPUTS AND THEIR DERIVED DEMAND CURVES
375
INVESTMENT, CAPITAL, AND INTEREST
376
The Demand for Funds
378
The Downward-Sloping Demand Curve for Funds
379
PUZZLE RESOLVED: The Supply of Funds
380
The Issue of Usury Laws: Are Interest Rates Too High?
380
THE DETERMINATION OF RENT
381
Land Rents: Further Analysis
382
Generalization: Economic Rent Seeking
384
Rent as a Component of an Input's Compensation
385
An Application of Rent Theory: Salaries of Professional Athletes
386
Rent Controls: The Misplaced Analogy
386
PAYMENTS TO BUSINESS OWNERS: ARE PROFITS TOO HIGH OR TOO LOW?
387
What Accounts for Profits?
388
Taxing Profits
390
CRITICISMS OF MARGINAL PRODUCTIVITY THEORY
390
Summary
391
Key Terms
392
Test Yourself
392
Discussion Questions
392
Chapter
20
Labor and
Entrepreneurship:
The Human Inputs
393
PART
1
THE MARKETS FOR LABOR
393
PUZZLE: Entrepreneurs Earn Less Than Most People Think
—
Why So Little?
394
WAGE DETERMINATION IN COMPETITIVE MARKETS
395
The Demand for Labor and the Determination of Wages
396
Influences on MRPL: Shifts in the Demand for Labor
396
Technical Change, Productivity Growth, and the Demand for Labor
397
The Service Economy and the Demand for Labor
397
THE SUPPLY OF LABOR
398
Rising Labor-Force Participation
399
An Important Labor Supply Conundrum
399
The Labor Supply Conundrum Resolved
401
WHY DO WAGES DIFFER?
402
Labor Demand in General
402
Labor Supply in General
403
Investment in Human Capital
403
Teenagers: A Disadvantaged Group in the Labor Market
403
UNIONS AND COLLECTIVE BARGAINING
404
Unions as Labor Monopolies
405
Monopsony and Bilateral Monopoly
407
Collective Bargaining and Strikes
407
PART
2
THE ENTREPRENEUR: THE OTHER HUMAN INPUT
408
ENTREPRENEURSHIP
AND GROWTH
409
The Entrepreneur's Prices and Profits
410
Fixed Costs and Public Good Attributes in Invention and
Entrepreneurship
410
Discriminatory Pricing of an Innovative Product over Its Life Cycle
411
Negative Financial Rewards for Entrepreneurial Activity?
412
PUZZLE RESOLVED: Why Are Entrepreneurial Earnings Surprisingly Low?
4
1
3
INSTITUTIONS AND THE SUPPLY OF INNOVATIVE
ENTREPRENEURSHIP
414
Summary
415
Key Terms
416
Test Yourself
416
Discussion Questions
417
Chapter
21
Poverty, Inequality, and Discrimination
419
ISSUE: Were the Bush Tax Cuts Unfair?
4
1
9
THE FACTS: POVERTY
420
Counting the Poor: The Poverty Line
420
Absolute versus Relative Poverty
421
THE FACTS: INEQUALITY
422
SOME REASONS FOR UNEQUAL INCOMES
424
THE FACTS: DISCRIMINATION
426
THE TRADE-OFF BETWEEN EQUALITY AND EFFICIENCY
426
POLICIES TO COMBAT POVERTY
428
Education as a Way Out
428
The Welfare Debate and the Trade-Off
429
The Negative Income Tax
430
OTHER POLICIES TO COMBAT INEQUALITY
431
The Personal Income Tax
431
Death Duties and Other Taxes
431
POLICIES TO COMBAT DISCRIMINATION
432
POLICY DEBATE Should Affirmative Action Be Abolished?
432
A LOOK BACK
433
Summary
433
Key Terms
434
Test Yourself
434
Discussion Questions
434
Part
6
The Macroeconomy: Aggregate Supply and Demand
435
Chapter
22
An Introduction to Macroeconomics
437
ISSUE: How Did the Housing Bust Lead to the Great Recession?
437
DRAWING A LINE BETWEEN MACROECONOMICS AND MICROECONOMICS
438
Aggregation and Macroeconomics
438
The Foundations of Aggregation
438
The Line of Demarcation Revisited
439
SUPPLY AND DEMAND IN MACROECONOMICS
439
A Quick Review
439
Moving to
Macroeconomic
Aggregates
440
Inflation
440
Recession and Unemployment
440
Economic Growth
441
GROSS DOMESTIC PRODUCT
441
Money as the Measuring Rod: Real versus Nominal GDP
442
What Gets Counted in GDP?
442
Limitations of the GDP: What GDP Is Not
443
THE ECONOMY ON A ROLLER COASTER
445
Growth, but with Fluctuations
445
Inflation and Deflation
446
The Great Depression
447
From World War II to
1973 449
The Great Stagflation,
1973-1980 449
Reaganomics and Its Aftermath
450
Clintonomics: Deficit Reduction and the "New Economy"
450
Tax Cuts and the Bush Economy
451
Obamanomics and the Great Recession
451
ISSUE REVISITED: How Did the Housing Bust Lead to the Great Recession?
452
THE PROBLEM OF
MACROECONOMIC
STABILIZATION: A SNEAK PREVIEW
452
Combating Unemployment
452
Combating Inflation
453
Does It Really Work?
453
Summary
454
Key Terms
455
Test Yourself
455
Discussion Questions
455
Chapter
23
The Goals of
Macroeconomic
Policy
457
PART
1
THE GOAL OF ECONOMIC GROWTH
458
PRODUCTIVITY GROWTH: FROM LITTLE ACORNS
. 458
ISSUE: Is Faster Growth Always Better?
460
THE CAPACITY TO PRODUCE: POTENTIAL GDP AND THE PRODUCTION FUNCTION
460
THE GROWTH RATE OF POTENTIAL GDP
461
ISSUE REVISITED: Is Faster Growth Always Better?
462
PART
2
THE GOAL OF LOW UNEMPLOYMENT
463
THE HUMAN COSTS OF HIGH UNEMPLOYMENT
464
COUNTING THE UNEMPLOYED: THE OFFICIAL STATISTICS
466
TYPES OF UNEMPLOYMENT
466
POLICY DEBATE Does the Minimum Wage Cause Unemployment?
46 7
HOW MUCH EMPLOYMENT IS "FULL EMPLOYMENT"?
467
UNEMPLOYMENT INSURANCE: THE INVALUABLE CUSHION
468
PART
3
THE GOAL OF LOW INFLATION
469
INFLATION: THE MYTH AND THE REALITY
469
Inflation and Real Wages
469
Importance of Relative Prices
471
INFLATION AS
A
REDISTRIBUTOR
OF INCOME AND WEALTH
472
REAL VERSUS NOMINAL INTEREST RATES
472
INFLATION DISTORTS MEASUREMENTS
473
Confusing Real and Nominal Interest Rates
473
The Malfunctioning Tax System
474
OTHER COSTS OF INFLATION
474
THE COSTS OF LOW VERSUS HIGH INFLATION
475
LOW INFLATION DOES NOT NECESSARILY LEAD TO HIGH INFLATION
476
Summary
477
Key Terms
478
Test Yourself
478
Discussion Questions
478
Chapter
24
Economic Growth·. Theory and Policy
479
PUZZLE: Why Does College Education Keep Getting More Expensive?
479
THE THREE PILLARS OF PRODUCTIVITY GROWTH
480
Capital
480
Technology
481
Labor Quality: Education and Training
481
LEVELS, GROWTH RATES, AND THE CONVERGENCE HYPOTHESIS
482
GROWTH POLICY: ENCOURAGING CAPITAL FORMATION
484
GROWTH POLICY: IMPROVING EDUCATION AND TRAINING
487
GROWTH POLICY: SPURRING TECHNOLOGICAL CHANGE
488
THE PRODUCTIVITY SLOWDOWN AND SPEED-UP IN THE UNITED STATES
489
The Productivity Slowdown,
1973-1995 490
The Productivity Speed-up Since
1995 491
PUZZLE RESOLVED: Why the Relative Price of College Tuition Keeps Rising
492
GROWTH IN THE DEVELOPING COUNTRIES
493
The Three Pillars Revisited
493
Some Special Problems of Developing Countries
494
FROM THE LONG RUN TO THE SHORT RUN
495
Summary
495
Key Terms
496
Test Yourself
496
Discussion Questions
496
Chapter
25
Aggregate Demand and the Powerful Consumer
497
ISSUE: Demand Management and the Ornery Consumer
497
AGGREGATE DEMAND, DOMESTIC PRODUCT, AND NATIONAL INCOME
498
THE CIRCULAR FLOW OF SPENDING, PRODUCTION, AND INCOME
499
CONSUMER SPENDING AND INCOME: THE IMPORTANT RELATIONSHIP
501
THE CONSUMPTION FUNCTION AND THE MARGINAL PROPENSITY TO CONSUME
504
FACTORS THAT SHIFT THE CONSUMPTION FUNCTION
505
POLICY DEBATE Using the Tax Code to Spur Saving
507
ISSUE
REVISITED: Why Temporary Tax Cuts Have Only Modest Effects on Spending
507
THE EXTREME VARIABILITY OF INVESTMENT
508
THE DETERMINANTS OF NET EXPORTS
509
National Incomes
509
Relatíve
Prices and Exchange Rates
510
HOW PREDICTABLE IS AGGREGATE DEMAND?
510
Summary
511
Key Terms
511
Test Yourself
511
Discussion Questions
512
Chapter
26
Demand-Side Equilibrium: Unemployment or Inflation?
5із
ISSUE: Why Does the Market Permit Unemployment?
513
THE MEANING OF EQUILIBRIUM GDP
514
THE MECHANICS OF INCOME DETERMINATION
515
THE AGGREGATE DEMAND CURVE
518
DEMAND-SIDE EQUILIBRIUM AND FULL EMPLOYMENT
520
THE COORDINATION OF SAVING AND INVESTMENT
521
CHANGES ON THE DEMAND SIDE: MULTIPLIER ANALYSIS
523
The Magic of the Multiplier
523
Demystifying the Multiplier: How It Works
524
Algebraic Statement of the Multiplier
526
THE MULTIPLIER IS A GENERAL CONCEPT
527
THE MULTIPLIER AND THE AGGREGATE DEMAND CURVE
529
Summary
530
Key Terms
530
Test Yourself
530
Discussion Questions
531
Chapter
27
Bringing in the Supply Side: Unemployment and Inflation?
533
PUZZLE: What Causes Stagflation?
533
THE AGGREGATE SUPPLY CURVE
534
Why the Aggregate Supply Curve Slopes Upward
534
Shifts of the Aggregate Supply Curve
535
EQUILIBRIUM OF AGGREGATE DEMAND AND SUPPLY
537
INFLATION AND THE MULTIPLIER
538
RECESSIONARY AND INFLATIONARY GAPS REVISITED
539
ADJUSTING TO A RECESSIONARY GAP: DEFLATION OR UNEMPLOYMENT? vtl
Why Nominal Wages and Prices Won't Fall (Easily)
541
Does the Economy Have a Self-Correcting Mechanism?
543
An Example from Recent History: Deflation Worries in the United States
543
ADJUSTING TO AN INFLATIONARY GAP: INFLATION
543
Demand Inflation and Stagflation
544
A U.S. Example
545
STAGFLATION FROM A SUPPLY SHOCK
546
APPLYING THE MODEL TO A GROWING ECONOMY
546
Demand-Side Fluctuations
548
Supply-Side Fluctuations
549
PUZZLE RESOLVED: Explaining Stagflation
550
A ROLE FOR STABILIZATION POLICY
550
Summary
551
Key Terms
551
Test Yourself
551
Discussion Questions
552
Table of
Contents
Part
7
Fiscal and Monetary Policy
553
Chapter
28
Managing Aggregate Demand·. Fiscal Policy
555
ISSUE: The Great Fiscal Stimulus Debate of
2009-2010 555
INCOME TAXES AND THE CONSUMPTION SCHEDULE
556
THE MULTIPLIER REVISITED
557
The Tax Multiplier
557
Income Taxes and the Multiplier
557
Automatic Stabilizers
558
Government Transfer Payments
559
ISSUE REVISITED: The
2009-2010
Stimulus Debate
559
PLANNING EXPANSIONARY FISCAL POLICY
560
PLANNING CONTRACTIONARY FISCAL POLICY
561
THE CHOICE BETWEEN SPENDING POLICY AND TAX POLICY
561
ISSUE REDUX: Democrats versus Republicans in
2009 562
SOME HARSH REALITIES
562
THE IDEA BEHIND SUPPLY-SIDE TAX CUTS
563
Some Flies in the Ointment
564
ISSUE: The Partisan Debate Once More
565
Toward an Assessment of Supply-Side Economics
566
Summary
567
Key Terms
567
Test Yourself
567
Discussion Questions
568
Chapter
29
Money and the Banking System
569
ISSUE: Why Are Banks So Heavily Regulated?
569
THE NATURE OF MONEY
570
Barter versus Monetary Exchange
571
The Conceptual Definition of Money
572
What Serves as Money?
572
HOW THE QUANTITY OF MONEY IS MEASURED
574
Ml
575
M2
575
Other Definitions of the Money Supply
575
THE BANKING SYSTEM
576
How Banking Began
576
Principles of Bank Management: Profits versus Safety
578
Bank Regulation
579
Deposit Insurance
579
Bank Supervision
579
Reserve Requirements
580
SYSTEMIC RISK AND THE "TOO BIG TO FAIL." DOCTRINE
581
THE ORIGINS OF THE MONEY SUPPLY
581
How Bankers Keep Books
582
BANKS AND MONEY CREATION
582
The Limits to Money Creation by a Single Bank
583
Multiple Money Creation by a Series of Banks
584
The Process in Reverse: Multiple Contractions of the Money Supply
586
WHY THE MONEY-CREATION FORMULA IS OVERSIMPLIFIED
587
THE NEED FOR MONETARY POLICY
588
Summary
590
Key Terms
590
Test Yourself
590
Discussion Questions
591
Chapter
зо
Monetary Policy: Conventional and Unconventional
593
ISSUE: Why Resort to "Unconventional" Monetary Policies?
593
MONEY AND INCOME: THE IMPORTANT DIFFERENCE
594
AMERICA'S CENTRAL BANK: THE FEDERAL RESERVE SYSTEM
594
Origins and Structure
595
Central Bank Independence
596
IMPLEMENTING MONETARY POLICY IN NORMAL TIMES: OPEN-MARKET OPERATIONS
597
The Market for Bank Reserves
597
The Mechanics of an Open-Market Operation
598
Open-Market Operations, Bond Prices, and Interest Rates
600
Which Interest Rate?
601
OTHER INSTRUMENTS OF MONETARY POLICY
602
Lending to Banks
602
Changing Reserve Requirements
604
Quantitative Easing
604
HOW MONETARY POLICY WORKS IN NORMAL TIMES
605
Investment and Interest Rates
606
Monetary Policy and Total Expenditure
606
MONEY AND THE PRICE LEVEL
607
APPLICATION: WHY THE AGGREGATE DEMAND CURVE SLOPES DOWNWARD
608
UNCONVENTIONAL MONETARY POLICIES
609
FROM FINANCIAL DISTRESS TO RECESSION
609
FROM MODELS TO POLICY DEBATES
610
Summary
610
Key Terms
611
Test Yourself
611
Discussion Questions
612
Chapter
зі
The Financial Crisis and the Great Recession
біз
ISSUE: Did the Fiscal Stimulus Work?
6
1
3
ROOTS OF THE CRISIS
614
LEVERAGE, PROFITS, AND RISK
615
THE HOUSE PRICE BUBBLE AND THE SUBPRIME MORTGAGE CRISIS
617
FROM THE HOUSING BUBBLE TO THE FINANCIAL CRISIS
619
FROM THE FINANCIAL CRISIS TO THE GREAT RECESSION
622
HITTING BOTTOM AND RECOVERING
626
ISSUE REVISITED: Did the Fiscal Stimulus Work?
626
LESSONS FROM THE FINANCIAL CRISIS
626
Summary
627
Key Terms
628
Test Yourself
628
Discussion Questions
628
Chapter
32
The Debate over Monetary and Fiscal Policy
629
ISSUE: Should We Forsake Stabilization Policy?
629
VELOCITY AND THE QUANTITY THEORY OF MONEY
630
Some Determinants of Velocity
631
Monetarism: The Quantity Theory Modernized
632
DEBATE: SHOULD THE FED USE UNCONVENTIONAL MONETARY POLICIES?
633
POLICY DEBATE Does Money Growth Always Cause Inflation
? 634
DEBATE: SHOULD POLICY MAKERS FIGHT ASSET PRICE BUBBLES?
636
DEBATE: SHOULD WE RELY ON FISCAL OR MONETARY POLICY?
637
DEBATE: THE SHAPE OF THE AGGREGATE SUPPLY CURVE
639
DEBATE: SHOULD THE GOVERNMENT INTERVENE AT ALL?
641
Lags and the Rules-versus-Discretion Debate
642
DIMENSIONS
OF THE RULES-VERSUS-DISCRETION DEBATE
643
How Fast Does the Economy's Self-Correcting Mechanism Work?
643
How Long Are the Lags in Stabilization Policy?
643
How Accurate Are Economic Forecasts?
643
The Size of Government
644
Uncertainties Caused by Government Policy
644
A Political Business Cycle?
644
ISSUE REVISITED: What Should Be Done?
646
Summary
647
Key Terms
647
Test Yourself
647
Discussion Questions
648
Chapter
зз
Budget Deficits in the Short and Long Run
649
ISSUE: Is the Federal Government Budget Deficit Too Large?
649
SHOULD THE BUDGET ALWAYS BE BALANCED? THE SHORT RUN
650
THE IMPORTANCE OF THE POLICY MIX
651
The Multiplier Formula Revisited
652
The Government Budget and Investment
652
DEFICITS AND DEBT: TERMINOLOGY AND FACTS
654
Some Facts about the National Debt
654
INTERPRETING THE BUDGET DEFICIT OR SURPLUS
656
The Structural Deficit or Surplus
656
On-Budget versus Off-Budget Surpluses
657
Conclusion: What Happened to the Deficit?
658
WHY IS THE NATIONAL DEBT CONSIDERED A BURDEN?
658
BUDGET DEFICITS AND INFLATION
660
The Monetization Issue
661
DEBT, INTEREST RATES, AND CROWDING OUT
662
The Bottom Line
663
THE MAIN BURDEN OF THE NATIONAL DEBT SLOWER GROWTH
663
ISSUE REVISITED: Is the Budget Deficit Too Large?
664
THE ECONOMICS AND POLITICS OF THE U.S. BUDGET DEFICIT
666
Summary
667
Key Terms
667
Test Yourself
667
Discussion Questions
668
Chapter
34
The Trade Off between Inflation and unemployment
669
ISSUE: Is the Trade-Off between Inflation and Unemployment a Relic of the Past?
669
DEMAND-SIDE INFLATION VERSUS SUPPLY-SIDE INFLATION: A REVIEW
670
ORIGINS OF THE PHILLIPS CURVE
671
SUPPLY-SIDE INFLATION AND THE COLLAPSE OF THE PHILLIPS CURVE
673
Explaining the Fabulous
1990s 673
ISSUE REVISITED: Why Inflation and Unemployment Both Declined
674
WHAT THE PHILLIPS CURVE IS NOT
674
FIGHTING UNEMPLOYMENT WITH FISCAL AND MONETARY POLICY
676
WHY SHOULD BE DONE?
677
The Costs of Inflation and Unemployment
677
The Slope of the Short-Run Phillips Curve
677
The Efficiency of the Economy's Self-Correcting Mechanism
677
INFLATIONARY EXPECTATIONS AND THE PHILLIPS CURVE
678
THE THEORY OF RATIONAL EXPECTATIONS
680
What Are Rational Expectations?
680
Rational Expectations and the Trade-Off
681
An Evaluation
682
WHY ECONOMISTS (AND POLITICIANS) DISAGREE
682
THE DILEMMA OF DEMAND MANAGEMENT
683
ATTEMPTS TO REDUCE THE NATURAL RATE OF UNEMPLOYMENT
683
Summary
685
Key Terms
686
Test Yourself
686
Discussion Questions
686
Part
8
The United States in the World Economy
687
Chapter
35
Intebnational Trade and Comparative Advantage
689
ISSUE: How Can Americans Compete with "Cheap Foreign Labor"?
689
WHY TRADE?
690
Mutual Gains from Trade
691
INTERNATIONAL VERSUS
INTRANATIONAL
TRADE
692
Political Factors in International Trade
692
The Many Currencies Involved in International Trade
692
Impediments to Mobility of Labor and Capital
692
THE LAW OF COMPARATIVE ADVANTAGE
693
THE ARITHMETIC OF COMPARATIVE ADVANTAGE
693
The Graphics of Comparative Advantage
694
Must Specialization Be Complete?
697
ISSUE REVISITED: Comparative Advantage Exposes the "Cheap Foreign Labor" Fallacy
697
TARIFFS, QUOTAS, AND OTHER INTERFERENCES WITH TRADE
698
Tariffs versus Quotas
699
WHY INHIBIT TRADE?
700
Gaining a Price Advantage for Domestic Firms
700
Protecting Particular Industries
700
National Defense and Other Noneconomic Considerations
701
The Infant-Industry Argument
702
Strategic Trade Policy
702
CAN CHEAP IMPORTS HURT A COUNTRY?
703
ISSUE: Last Look at the "Cheap Foreign Labor" Argument
704
Summary
705
Key Terms
706
Test Yourself
706
Discussion Questions
706
Chapter
зб
The International Monetary System: Order or Disorder? ?09
PUZZLE: Why Has the Dollar Sagged?
709
WHAT ARE EXCHANGE RATES?
710
EXCHANGE RATE DETERMINATION IN A FREE MARKET
/11
Interest Rates and Exchange Rates: The Short Run
713
Economic Activity and Exchange Rates: The Medium Run
714
The Purchasing-Power Parity Theory: The Long Run
715
Market Determination of Exchange Rates: Summary
716
WHEN GOVERNMENTS FIX EXCHANGE RATES: THE BALANCE OF PAYMENTS
717
A BIT OF HISTORY: THE GOLD STANDARD AND THE
BRETTON
WOODS SYSTEM
719
The Classical Gold Standard
719
The
Bretton
Woods System
719
ADJUSTMENT MECHANISMS UNDER FLXED EXCHANGE RATES
720
WHY TRY TO FIX EXCHANGE RATES?
720
THE CURRENT "NONSYSTEM"
722
The Role of the IMF
722
The Volatile Dollar
723
The Birth and Adolescence of the Euro
724
PUZZLE RESOLVED: Why the Dollar Rose, Then Fell, Then Rose
724
Summary
725
Key Terms
726
Test Yourself
726
Discussion Questions
726
Chapter
зг
Exchange Rates and the Macro-economy
729
ISSUE: Should the U.S. Government Try to Stop the Dollar from Falling?
729
INTERNATIONAL TRADE, EXCHANGE RATES, AND AGGREGATE DEMAND
730
Relative Prices, Exports, and Imports
731
The Effects of Changes in Exchange Rates
731
AGGREGATE SUPPLY IN AN OPEN ECONOMY
732
THE
MACROECONOMIC
EFFECTS OF EXCHANGE RATES
733
Interest Rates and International Capital Flows
734
FISCAL AND MONETARY POLICIES IN AN OPEN ECONOMY
734
Fiscal Policy Revisited
735
Monetary Policy Revisited
736
INTERNATIONAL ASPECTS OF DEFICIT REDUCTION
736
The Loose Link between the Budget Deficit and the Trade Deficit
737
SHOULD WE WORRY ABOUT THE TRADE DEFICIT?
738
ON CURING THE TRADE DEFICIT
738
Change the Mix of Fiscal and Monetary Policy
739
More Rapid Economic Growth Abroad
739
Raise Domestic Saving or Reduce Domestic Investment
739
Protectionism
740
CONCLUSION: NO NATION IS AN ISLAND
740
ISSUE REVISITED: Should the United States Let the Dollar Fall?
741
Summary
741
Key Terms
742
Test Yourself
742
Discussion Questions
742
APPENDIX Using Graphs: A Review
743
Graphs Used in Economic Analysis
'743
'.¡.hoo-Voriable
'OiûPTûins
743
The Definition and Measurement of Slope
744
¡lays through the Origin and
45"
/.¡nes 1
46
Squeezing Three Dimensions into 'Tdo: Contour Maps
747
Summary
748
Key Terms
748
Test Yourself
748
APPENDIX Analyzing Consumer Choice Graphically: Indifference Curve Analysis
749
Geometry of Available Choices: The Budget
Une
'749
Properties of the Budget Line
750
Changes in the Budget Line
750
What the Consumer Prefers: Properties of the Indifference Curve,
751
The Slopes of Indifference Curves and Budget Lines
752
Tangency Conditions
753
Consequences of Income Changes: Inferior Goods
754
Consequences of Price Changes: Deriving the Demand Curve
754
Summary
755
Key Terms
756
Test Yourself
756
APPENDIX
How Can We Find a Legitimate Demand Curve from Historical Statistics?
757
An Illustration: Did the Advertising Program Work?
758
How Can We Find a Legitimate Demand Curve from the Statistics?
758
APPENDIX Production Indifference Curves
760
Characteristics of the Production Indifference Curves, or
Isoquants 760
The Choice of Input Combinations
761
Cost Minimization, Expansion Path, and Cost Curves
762
Summary
763
Key Terms
763
Test Yourself
764
APPENDIX The Relationships among Total, Average, and Marginal Data
765
Graphical Representation of Marginal and Average Curves
/66
Test Yourself
767
APPENDIX Buying Stocks and Bonds
768
Selecting a Portfolio: 'Diversification
768
Key Terms
769
Test Yourself
769
Discussion Question
770
APPENDIX Discounting and Present Value
771
Summary
772
Key Term
772
Test Yourself
772
APPENDIX The Economic Theory of Discrimination
773
Discrimination by Employers
773
Discrimination by Fellow Workers
773
Statistical Discrimination
774
The Roles of the Market and the Government
774
Summary
775
Key Term
775
APPENDIX How Statisticians Measure Inflation
776
Index Numbers for
Inflation '776
The Consumer Price Index
776
Using a Price Index to "De/late" Monetary Figures
7'/7
Using a Price index to Measure .Inflation
/77
The GDP Deflator
/77
Summary
778
Key Terms
778
Test Yourself
778
APPENDIX National Income Accounting
780
Defining GDP: Exceptions to the Rules
780
GDP as the Sum of Phial Goods and. Services
780
GDP as the Sum of All Factor Payments
781
GDP as the Sum of Values Added
783
Summary
784
Key Terms
784
Test Yourself
784
Discussion Questions
785
APPENDIX A
The Simple Algebra
afincóme
Determination
and the Multiplier
786
Test Yourself
786
Discussion Questions
787
APPENDIX
В
The Multiplier with Variable Imports
787
Summary
790
Test Yourself
790
Discussion Question
790
APPENDIX A Graphical Treatment of Taxes and Fiscal Policy
791
Multipliers for Tax Policy
793
Summary
793
Key Terms
793
Test Yourself
794
Discussion Questions
794
APPENDIX
В
Algebraic Treatment of Taxes and FiscalPolicy
794
Test Yourself
796
APPENDIX Supply, Demand, and Pricing in World Trade
797
How Tariffs and Quotas Work
798
Summary
799
Test Yourself
799
APPENDIX: Answers to Odd-Numbered Test Yourself Questions
801
Glossary
82
і
Index
834 |
| any_adam_object | 1 |
| author | Baumol, William J. 1922-2017 Blinder, Alan S. 1945- |
| author_GND | (DE-588)119076209 (DE-588)108825639 |
| author_facet | Baumol, William J. 1922-2017 Blinder, Alan S. 1945- |
| author_role | aut aut |
| author_sort | Baumol, William J. 1922-2017 |
| author_variant | w j b wj wjb a s b as asb |
| building | Verbundindex |
| bvnumber | BV039602490 |
| classification_rvk | QC 072 |
| classification_tum | WIR 001f |
| ctrlnum | (OCoLC)756364712 (DE-599)BVBBV039602490 |
| dewey-full | 330 |
| dewey-hundreds | 300 - Social sciences |
| dewey-ones | 330 - Economics |
| dewey-raw | 330 |
| dewey-search | 330 |
| dewey-sort | 3330 |
| dewey-tens | 330 - Economics |
| discipline | Wirtschaftswissenschaften |
| edition | 12th ed., internat. ed. |
| format | Book |
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| genre_facet | Einführung Lehrbuch |
| id | DE-604.BV039602490 |
| illustrated | Illustrated |
| indexdate | 2025-01-11T11:39:10Z |
| institution | BVB |
| isbn | 9780538453691 0538453699 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-024453341 |
| oclc_num | 756364712 |
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| physical | XXXI, 851 S. Ill., graph. Darst. |
| publishDate | 2012 |
| publishDateSearch | 2012 |
| publishDateSort | 2012 |
| publisher | South-Western Cengage Learning |
| record_format | marc |
| spellingShingle | Baumol, William J. 1922-2017 Blinder, Alan S. 1945- Economics principles & policy Wirtschaftspolitik (DE-588)4066493-4 gnd Wirtschaftstheorie (DE-588)4079351-5 gnd Volkswirtschaftslehre (DE-588)4078943-3 gnd Wirtschaftswissenschaften (DE-588)4066528-8 gnd |
| subject_GND | (DE-588)4066493-4 (DE-588)4079351-5 (DE-588)4078943-3 (DE-588)4066528-8 (DE-588)4151278-9 (DE-588)4123623-3 |
| title | Economics principles & policy |
| title_auth | Economics principles & policy |
| title_exact_search | Economics principles & policy |
| title_full | Economics principles & policy William J. Baumol ; Alan S. Blinder |
| title_fullStr | Economics principles & policy William J. Baumol ; Alan S. Blinder |
| title_full_unstemmed | Economics principles & policy William J. Baumol ; Alan S. Blinder |
| title_short | Economics |
| title_sort | economics principles policy |
| title_sub | principles & policy |
| topic | Wirtschaftspolitik (DE-588)4066493-4 gnd Wirtschaftstheorie (DE-588)4079351-5 gnd Volkswirtschaftslehre (DE-588)4078943-3 gnd Wirtschaftswissenschaften (DE-588)4066528-8 gnd |
| topic_facet | Wirtschaftspolitik Wirtschaftstheorie Volkswirtschaftslehre Wirtschaftswissenschaften Einführung Lehrbuch |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=024453341&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
| work_keys_str_mv | AT baumolwilliamj economicsprinciplespolicy AT blinderalans economicsprinciplespolicy |
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