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Economics : A Tool for Critically Understanding Society

ISBN: 9780321241139 | 0321241134
Edition: 7th
Format: Paperback
Publisher: Addison Wesley
Pub. Date: 1/1/2005

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SummaryTable of Contents
The Seventh Edition of Economics: A Tool for Critically Understanding Society develops fundamental economic analysis tools in clear, simple, and understandable terms. This one-semester text introduces students to economic theories and ideas, and how those theories and ideas have changed over time. The overarching goal of this text is to encourage critical thinking and to challenge students to examine preconceived ideas and beliefs. It explores various and contending schools of economic thought and successfully gives students perspective on the historical changes in the material conditions, economic institutions, and social relations of human society. By providing students with an opportunity to use economic concepts to solve real-world problems, Economics: A Tool for Critically Understanding Society creates a foundation for future and continued learning.
Forewordxviii
The Seventh Edition
xx
Acknowledgments
xxi
... MORE
Dedication
xxii
Preface to the Instructorxxiii
Suggested One-Semester Course Outline
xxiv
Suggested One-Semester Micro Course Outline
xxv
Suggested One-Semester Macro Course Outline
xxv
Supplements
xxv
Preface to the Studentxxvi
Economics: What's in It for You?
xxvi
Objectives, or What We Have Designed This Book to Accomplish
xxvii
PART 1 Economics as a Tool for Critical Thinking in a Changing Global Economy1(48)
CHAPTER 1 Economics as a Social Science
3(14)
Introduction
3(1)
Definitions in This Book
3(1)
What Is Economics?
4(5)
One Method for Economic Theory
6(1)
Economics and Economists
7(2)
Paradigms and Ideologies
9(2)
The Realm of Theory
9(2)
The Realm of the Economist
11(1)
Conservative, Liberal, and Radical Economics
11(5)
Conservatives, Liberals, and Radicals on Poverty
15(1)
Conclusion
16(1)
Review Questions
16(1)
CHAPTER 2 Exploring the Emerging Global Economy
17(32)
Introduction
17(1)
Globalization: Making a Big World Smaller
18(1)
The World Economy
19(9)
Global Investment Trends
20(6)
Globalization's Winners and Losers
26(2)
Why Nations Trade
28(4)
The Theory of Comparative Advantage
28(1)
Free Trade versus Protectionism
29(1)
Trade Liberalization and the North American Free Trade Agreement (NAFTA)
30(2)
Financing International Trade
32(2)
Exchange Rates
33(1)
Technological Change and Competitiveness
34(2)
The New Global Economy and Competitiveness
35(1)
The Rise of Toyota and World-Class Manufacturing
35(1)
Multinational Corporations: The Global Firm
36(2)
Energy and the Environment
38(2)
Energy
38(1)
The Environment
39(1)
Conclusion
40(2)
Review Questions
40(2)
Thinking Critically: Economic Paradigms and Globalization: What Are Sweatshops For?
42(8)
Low-Wage Costa Ricans Make Baseballs for Millionaires
44(5)
PART 2 Economic History and the Development of Modem Economic Thought49(72)
CHAPTER 3 The Evolution of Economic Systems
50(24)
Introduction
50(1)
Economic Development
51(1)
From Feudalism to Capitalism
52(8)
Precursors of Feudalism
53(1)
Feudalism
54(2)
Feudalism
54(2)
The Breakdown of Feudalism
56(4)
Emergent Capitalism
60(3)
Mercantilism
61(1)
The Rise of Classical Liberalism and the Industrial Revolution
61(2)
The Development of Capitalism in the United States
63(9)
Sources of U.S. Development
64(1)
Negative Aspects of U.S. Development
65(2)
The Post-World War II Experience
67(1)
The Last Decades of the Twentieth Century
68(4)
Conclusion
72(2)
Review Questions
72(2)
CHAPTER 4 Property, Adam Smith, and the Division of Labor
74(12)
Introduction
74(1)
The Development of Property in England
74(4)
The Significance of Property
76(1)
Those without Property-The Peasants
76(1)
Property and Economic Thought
77(1)
Adam Smith and the Division of Labor
78(4)
Side Effects of the Division of Labor
81(1)
The Distribution of Income
82(2)
Conclusion
84(2)
Review Questions
84(2)
CHAPTER 5 The Rise and Fall of Laissez-Faire
86(14)
Introduction
86(1)
The Flow of Economic Activity
87(1)
J.B. Say and Gluts
87(2)
Laissez-Faire
89(1)
The Socialist Critique of Laissez-Faire
90(3)
The Flowering of Laissez-Faire
93(1)
The Situation in the United States and Veblen's Critique
94(3)
The Keynesian Critique of Laissez-Faire
97(2)
Schumpeter, Laissez-Faire, and Creative Destruction
98(1)
Conclusion
99(1)
Review Questions
99(1)
CHAPTER 6 The Marxian Critique of Capitalism
100(21)
Introduction
100(1)
Karl Marx: Political Economist and Revolutionary
101(1)
Marx's General System of Thought
101(4)
Dialectics
102(1)
Materialism
103(1)
The Materialist Conception of History: Historical Materialism
103(2)
The Marxian Analysis of Capitalism
105(4)
Social Revolution
109(2)
An Assessment of Marxism
111(2)
Conclusion
113(1)
Review Questions
113(1)
Thinking Critically: Technological Innovation, the New Economy, and the Future
114(9)
Catch the Wave
116(5)
PART 3 Microeconomics121(198)
CHAPTER 7 Scarcity: "You Can't Always Get What You Want"
123(13)
Introduction
123(1)
Scarcity: A Fundamental Economic Fact of Modern Life
124(1)
The Production Possibilities Curve
125(4)
Economic Growth and the Production Possibilities Curve
128(1)
Military versus Civilian Priorities
129(4)
Applying the Concept of Choice to Personal Decisions
133(1)
Conclusion
134(2)
Review Questions
134(2)
CHAPTER 8 The Theory of Markets
136(30)
Introduction
136(1)
Markets and Price Determination: Supply-and-Demand Analysis
136(17)
Demand
139(2)
Ceteris Paribus and the Demand Curve
141(3)
Supply
144(2)
Ceteris Paribus and the Supply Curve
146(1)
The Market and the Equilibrium Price
147(2)
A Tinge of Reality: It's Not a Ceteris Paribas World
149(4)
A Word of Caution
153(1)
Applying Supply and Demand
153(5)
Gasoline Prices
154(1)
Supply and Demand and the Value of the Dollar
155(3)
Elasticity
158(6)
Price Elasticity of Demand
158(5)
Price Elasticity of Supply
163(1)
Income Elasticity
163(1)
Conclusion
164(2)
Review Questions
164(2)
CHAPTER 9 Perfect Competition and Efficiency
166(32)
Introduction
166(1)
Profit Maximization and the Competitive Firm
166(2)
Specialization, Diminishing Returns, and Short-Run Costs
168(6)
Fixed Costs
169(1)
Variable Costs
169(4)
Average Cost
173(1)
The Firm's Revenues
174(1)
Profit Maximization
175(13)
An Example of Profit Maximization in the Short Run
176(8)
The Firm in the Long Run
184(4)
Competitive Markets in the Long Run
188(7)
Competition and Efficiency
190(2)
The "Invisible Hand" and Consumer Sovereignty
192(3)
Conclusion
195(3)
Review Questions
196(2)
CHAPTER 10 Noncompetitive Markets and Inefficiency
198(28)
Introduction
198(1)
Noncompetitive Market Structures
198(1)
Monopoly
199(8)
Short-Run Equilibrium for the Monopolist
200(3)
Long-Run Equilibrium for the Monopolist
203(1)
Monopoly and Inefficiency
204(3)
Disrupting Regulated Monopolies
206(1)
Monopolistic Competition and Oligopoly
207(13)
Monopolistic Competition
207(6)
Monopolistic Competition in Fast Foods
212(1)
Oligopoly
213(11)
Game Theory
217(3)
Movie Rental Oligopoly
220(1)
The Importance of Noncompetitive Markets in the U.S. Economy
220(3)
Sources of Concentration in the Economy
223(1)
Conclusion
224(2)
Review Questions
225(1)
CHAPTER 11 Resource Markets and the Distribution of Income
226(26)
Introduction
226(1)
The Economics of Resource Markets
226(5)
Demand for a Resource
227(3)
Supply of a Resource
230(1)
The Economics of the Minimum Wage
231(4)
The Distribution of Income
235(16)
The Size Distribution of Income
235(5)
The Influence of Property
240(1)
The Influence of Labor Incomes
241(3)
Transfer Income
244(1)
The Influence of Race and Gender
245(4)
Income Distribution and Child Poverty
249(2)
Conclusion
251(1)
Review Questions
251(1)
CHAPTER 12 Corporations and Labor Unions
252(24)
Introduction
252(1)
Kinds of Firms
252(2)
The Corporation
254(1)
The Role of Profits in the Corporate System
255(1)
U.S. Corporations Go Global
256(3)
Free Enterprise versus Regulation
259(3)
The Corporate Climate Today
260(2)
Labor Unions in the United States
262(4)
The History of U.S, Labor Unions
262(4)
The Economic Effects of Labor Unions
266(7)
The Future of Labor Unions
270(4)
Labor-Centered Principles
271(2)
Corporations and Labor: The Twenty-first Century
273(1)
Conclusion
274(2)
Review Questions
275(1)
CHAPTER 13 The Economic Role of Government
276(43)
Introduction
276(1)
The Role of Government in the Economy
277(3)
The Growth of Government's Role
280(8)
Market Failure, Public Goods, and Externalities
288(8)
Public Goods
289(1)
External Benefits
290(2)
External Costs
292(4)
The Tragedy of the Commons: Property Rights and Atlantic Fishing
295(1)
Regulation of Economic Concentration
296(6)
Regulating Monopolies
296(3)
Antitrust and Economic Concentration
299(7)
The Microsoft Monopoly Case
300(2)
Poverty and Income Redistribution
302(3)
The Limits of Government's Role
305(1)
Conclusion
306(2)
Review Questions
307(1)
Thinking Critically: Explorations in Microeconomics Affirmative Action
308(13)
Acme and Affirmative Action
311(8)
PART 4 Macroeconomics319(172)
CHAPTER 14 Macroeconomics: Issues and Problems
321(25)
Introduction
321(1)
Macroeconomic Goals
321(9)
Economic Growth
322(1)
Full Employment
323(5)
Price Stability
328(2)
Macroeconomic Tools
330(5)
The Rise of Pax Americana: 1946 to the 1960's
330(1)
The Decline of Pax Americana: 1970's to mid-1980'
331(1)
The U.S. Economy: Late 1980's and Early 1990's
332(1)
A Rebirth of Pax Americana? 1992 and Beyond
333(2)
National Accounting Measures
335(1)
Potential Problems with the National Income Accounts
336(8)
Real versus Nominal GDP 338 Value-Added Counting
340(1)
What Is Counted in GDP?
341(3)
Conclusion
344(2)
Review Questions
344(2)
CHAPTER 15 Macroeconomic Theory: Classical and Keynesian Models
346(38)
Introduction
346(1)
The Classical Model
347(1)
THE BIG PICTURE An Introduction to the Classical Model
347(4)
The Quantity Theory of Money
347(2)
The Goods and Labor Markets in Classical Economics
349(1)
Say's Law
350(1)
The Classical Credit Market
350(1)
Flaws in the Classical Model
351(1)
The Great Depression
352(2)
Enter John Maynard Keynes
354(2)
Capitalism's Savior
355(1)
THE BIG PICTURE The Keynesian Model
356(9)
The Keynesian Model: The Details
363(2)
The Keynesian Economic Model
365(15)
Consumption
365(3)
Marginal Propensity to Consume
368(2)
Saving
370(1)
Marginal Propensity to Save
370(1)
Consumption and Real GDP
371(1)
Investment and the Two-Sector Model
371(3)
Changes in Investment and the Keynesian Multiplier
374(3)
A Simple Derivation of the Multiplier
375(2)
The Three-Sector Model
377(2)
The Four-Sector Model
379(1)
THE BIG PICTURE Chapter 15 Wrap-up
380(1)
Conclusion
381(3)
Review Questions
382(2)
CHAPTER 16 Fiscal Policy: Government Spending and Taxation
384(24)
Introduction
384(1)
Fiscal Policy
385(1)
THE BIG PICTURE Fiscal Policy
386(5)
Government Spending
387(3)
Tax Policy and Income Effects
390(1)
Transfer Payments
390(1)
Problems with Fiscal Policy
391(1)
Lags and Lumps in Fiscal Measures
391(1)
Procyclical Tax and Spending Policy
392(1)
Fiscal Policy in an Open Economy
392(2)
The Federal Budget
394(9)
The Federal Budget and the Economy
394(4)
Federal Deficits and Surpluses
398(4)
Cyclical and Structural Deficits and Surpluses
402(1)
Conclusion
403(5)
Review Questions
403(6)
Note
404(4)
CHAPTER 17 Financial Markets, Money, and Monetary Policy
408(40)
Introduction
408(1)
The Uses of Money
408(1)
Demand for Money
409(3)
Changes in the Demand for Money
411(1)
Supply of Money
412(12)
The Fed
412(2)
Regulation of Financial Markets
414(4)
Banking and Thrift Instability, 1980's- and 1990's-Style
416(2)
Measures of the Money Supply
418(2)
Suppliers of Money
420(3)
The Myth and Mystique of Money
423(1)
THE BIG PICTURE Money and the Keynesian System
424(3)
Money and the Keynesian System: The Details
427(2)
The Liquidity Trap
428(1)
Monetary Policy
429(7)
Tools of the Trade
429(5)
Interest Rates, Bond Prices, and the Money Supply
431(3)
Lags in Monetary Policy
434(1)
Monetary Policy in an Open Economy
434(2)
Monetarism
436(6)
A Brief History of Monetary Policy
438(1)
Greenspan's Fed: 1987-2004
438(2)
Stock Markets in the Greenspan Era
440(2)
The Future of Monetary Policy
442(2)
Monetary and Fiscal Policy
444(2)
Shortcomings of Monetary Policy
445(1)
Coordination of Monetary and Fiscal Policy
445(1)
Conclusion
446(2)
Review Questions
446(2)
CHAPTER 18 Aggregate Demand and Aggregate Supply
448(21)
THE BIG PICTURE Introduction
448(19)
Aggregate Analysis
449(1)
Aggregate Demand
450(5)
Conditions for Goods and Money Market Equilibrium: A Review
450(3)
Shifts in the Aggregate Demand Curve
453(2)
Short-Run Aggregate Supply
455(3)
Causes of Shifts in the Short-Run Aggregate Supply Curve
456(2)
Long-Run Aggregate Supply
458(1)
Arriving at Equilibrium
458(7)
Shifts in the Long-Run Aggregate Supply Curve
460(1)
Productivity
460(3)
Aggregate Supply and Economic Growth
463(2)
Supply-Side Economic Policy
465(3)
Rationale for Supply-Side Economics
465(1)
Supply-Side Critics
466(1)
THE BIG PICTURE And, The Big Picture Concluded
467(1)
Conclusion
468(1)
Review Questions
468(1)
CHAPTER 19 Unemployment, Inflation, and Stabilization Policy in a Global Economy
469(22)
Introduction
469(1)
The Trade-Off: Unemployment and Inflation
469(4)
The Phillips Curve
470(3)
Inflation
473(3)
The Impact of Unemployment and Inflation
476(1)
Stabilization Policy: An International Perspective
477(1)
Macroeconomic Solutions: The Alternatives
478(4)
Monetarist Solutions
478(1)
Supply-Side Solutions
479(1)
New Classical Solutions
479(1)
Post-Keynesian (Managed Capitalist) Solutions
480(1)
Feminist Economists' Solutions
480(1)
Radical Solutions
481(1)
Conclusion
482(1)
Review Questions
482(1)
Thinking Critically: Spend Me to the Moon
483(10)
Forget Bush and Gore; Our Economy Needs Another Khrushchev
486(5)
PART 5 International Economics and Finance491(120)
CHAPTER 20 International Trade and Interdependence
493(27)
Introduction
493(1)
World Trade
494(5)
Increased Trade Flows: Facts and Trends
495(1)
The Impact of International Trade on the United States
496(3)
Multinational Firms and the Internationalization of Production
499(2)
The Modern Theory of International Trade
501(10)
Who Trades What, and Why?
502(1)
Comparative Advantage and Output
503(4)
Terms of Trade
507(1)
Problems with the Theoretical Assumptions of Free Trade
508(1)
Restrictions to Free Trade: Protectionism
508(3)
International Trade Issues
511(7)
North American Free Trade Agreement (NAFTA)
511(4)
Mexico: Was NAFTA Worth It? A Tale of What Free Trade Can and Cannot Do
512(3)
Free Trade Area of the Americas (FTAA)
515(1)
Asia-Pacific Economic Cooperation (APEC) Agreements
515(1)
The WTO and GATT
516(1)
European Integration
516(1)
Japan as a Neomercantilist Trading Partner
517(1)
Conclusion
518(2)
Review Questions
519(1)
CHAPTER 21 International Finance
520(28)
Introduction
520(1)
The Balance of Payments
520(9)
The Current Account
521(2)
Sources of the U.S. Trade Deficit
523(1)
The Capital Account
523(1)
The Financial Account
524(1)
Balancing the Accounts
524(3)
Global Capital Flows
525(2)
Trade Deficits
527(2)
Exchange Rates and the Balance of Payments
529(14)
The Dollar and the Euro
530(4)
Cheapening the Dollar
532(2)
Determinants of Exchange Rates
534(2)
The Value of the Dollar since the 1970's
536(6)
Trends in the U.S. Balance of Payments
539(3)
Exchange Rates and the Foreign Exchange Market
542(1)
Exchange Rate Systems: An Historical Perspective
543(2)
The Gold Standard
543(1)
The International Monetary Fund and the Bretton Woods System
544(1)
International Monetary Crisis
544(1)
Floating Exchange Rates
545(1)
The Future of the International Financial System
545(2)
Conclusion
547(1)
Review Questions
547(1)
CHAPTER 22 The Economics of Developing Nations
548(29)
Introduction
548(1)
Common Characteristics of Developing Nations
548(3)
Global Poverty
549(1)
Underdevelopment: The Reality and Significance
549(2)
Components of the Human Development Paradigm
551(1)
Basic Economic Problems of Developing Nations
551(10)
Economic Growth
551(1)
Population: Undermining Economic Growth
552(1)
Macroeconomic Instability
553(2)
International Trade
555(3)
International Finance
558(2)
Environmental Problems
560(1)
Explanations and Solutions for Underdevelopment
561(3)
The Neoliberal Model
561(1)
The Structuralist Model
562(1)
The Dependency Model
563(1)
Recent Economic Trends
564(11)
Why Mexico's Small Corn Farmers Go Hungry
565(2)
Mexico: A Country in Transition
567(8)
Chasing Mexico's Dreams into Squalor
568(7)
Conclusion
575(2)
Review Questions
576(1)
CHAPTER 23 Economic Systems in Transition
577(34)
Introduction
577(1)
Looking Backward
578(1)
Economic Systems Revisited: Capitalism and Socialism
579(2)
Capitalism and Socialism
580(1)
Collapse of the Soviet Union
581(4)
Early History: 1917-1979
581(1)
The Soviet Planning System
582(1)
Crisis and Change: 1980-1986
583(1)
Perestroika: 1987-1991
583(1)
The Commonwealth of Independent States
584(1)
Eastern Europe: Economic Liberalization
585(1)
The People's Republic of China
586(8)
Is the Wakening Giant a Monster?
588(6)
The Japanese Economy
594(1)
Sustainable Development and the Environmental Crisis
595(3)
Global Restructuring and the Future of Capitalism
598(1)
Conclusion
599(2)
Review Questions
600(1)
Thinking Critically: Globalization in the Twenty-first Century
601(10)
Global Capitalism: Can It Be Made to Work Better?
602(4)
Is Your Job Next?
606(5)
Glossary611(14)
Name Index625(2)
Subject Index627

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