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Contemporary Economics With Infotrac: An Applications Approach

ISBN: 9780324260120 | 0324260121
Edition: 3rd
Format: Paperback
Publisher: Cengage Learning
Pub. Date: 1/30/2004

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SummaryTable of Contents
Like the author's best-selling, highly regarded International Economics text, this book integrates a clear and concise presentation of economic theory with an abundance of real-world cases and applications. Rather than discussing economic theory in the abstract, and then including real-world applications in separate sections, the text weaves applications into all theoretical discussions. There is no other Survey text that emphasizes real-world applications to this degree.
part one INTRODUCTION
1(30)
Scarcity and Choice
2(29)
What Is Economics?
... MORE(1)
Microeconomics
3(1)
Macroeconomics
4(1)
The Economic Way of Thinking
4(3)
Every Choice Has a Cost
4(1)
People Make Better Choices by Thinking at the Margin
5(1)
Rational Self-Interest
6(1)
Economic Models
6(1)
Positive Versus Normative Economics
6(1)
Scarcity
7(2)
Scarcity and Opportunity Cost
9(1)
Opportunity Costs and Choices
10(1)
The Production Possibilities Curve and Opportunity Cost
11(3)
Economic Inefficiency
12(1)
Law of Increasing Opportunity Cost
13(1)
Economic Growth
14(2)
Economic Decline
16(1)
Economic Growth: Trade-Offs Between Current and Future Consumption
17(3)
Production Possibilities Applications
20(3)
Opportunity Cost of National Security
20(1)
Economic Sanctions and Economic Decline
21(2)
A Primer on Tables and Graphs
23(4)
Movements Along Study Time-Grade Line
25(1)
Slope of the Study Time--Grade Line
25(1)
Shifts in the Study Time--Grade Line
26(1)
Chapter Summary
27(1)
Key Terms and Concepts
28(1)
Self-Test: Multiple-Choice Questions
28(1)
Study Questions and Problems
29(1)
NetLinks
30(1)
part two THE MICROECONOMY
31(216)
Market Transactions: Demand and Supply Analysis
32(27)
Markets
33(1)
Demand
33(7)
The Demand Curve and the Law of Demand
34(1)
What Explains the Law of Demand?
35(1)
Changes in Demand: Demand Shifters
36(4)
Supply
40(4)
The Supply Curve and the Law of Supply
40(1)
Oil Firms Squeeze More Crude from Wells
41(1)
Changes in Supply: Supply Shifters
42(2)
Demand, Supply, and Equilibrium
44(2)
Shifts in Demand and Supply
46(3)
Contemporary Applications of Supply and Demand
49(2)
U.S. Steelmakers Slash Prices Amid Surging Imports
49(1)
Subsidies Fuel Extraction of Gasoline from Corn
49(2)
It's Your Turn to Apply Supply and Demand to Contemporary Issues
51(3)
Consumers Fume as Gasoline Prices Heat Up
51(2)
Nurse Shortage: A Bitter Pill for Patients
53(1)
Chapter Summary
54(1)
Key Terms and Concepts
55(1)
Self-Test: Multiple-Choice Questions
55(1)
Study Questions and Problems
56(2)
NetLinks
58(1)
Demand and Supply Applications
59(34)
Price Elasticity of Demand
60(1)
Determinants of Price Elasticity of Demand
61(2)
Availability of Substitutes
61(2)
Proportion of Income
63(1)
Time
63(1)
Airlines Fail to Pass On Full 10-Percent Ticket Tax to Passengers
63(2)
Price Elasticity of Demand and Total Revenue
65(1)
Applications of Price Elasticity of Demand and Total Revenue
66(4)
Colleges Hike Tuition to Offset Cutback in State Aid to Higher Education
66(2)
U.S. Postal Service
68(2)
Price Elasticity of Supply
70(1)
Health Care: Why Is It so Expensive?
71(6)
Demand for Health Care Services
72(3)
Supply of Health Care Services
75(1)
Containing the Cost of Health Care
76(1)
Price Ceilings and Price Floors
77(10)
Rent Controls
77(2)
Usury Laws
79(3)
Credit Card Interest-Rate Ceilings
82(1)
Gasoline Price Ceilings
82(3)
Agricultural Price Floors and Subsidies
85(2)
Chapter Summary
87(1)
Key Terms and Concepts
87(1)
Self-Test: Multiple-Choice Questions
87(2)
Study Questions and Problems
89(2)
NetLinks
91(2)
Production and the Costs of Production
93(30)
Short Run Versus Long Run
94(1)
Production Function
95(1)
Short-Run Production
95(2)
Productivity Improvements
97(2)
Wendy's Beefs Up Efficiency at Drive-Through Window
99(2)
Short-Run Production Costs
101(4)
Total Fixed, Total Variable, and Total Costs
101(1)
Average Costs
102(1)
Marginal Cost
103(1)
The Relation of Marginal Cost to ATC and AVC
104(1)
Long-Run Production Costs
105(2)
Prescription Drugs and Decreasing Long-Run Average Cost
107(1)
Organizing Production: Bigger May Not Be Better
108(2)
Ford Motor Company
108(1)
AT&T
109(1)
Shifts in Cost Curves
110(2)
Foreign Competition Forces Cost Adjustments in Autos and Steel
112(2)
Autos
112(1)
Steel
113(1)
Costs and Profit
114(2)
Explicit Costs and Implicit Costs
114(1)
Accounting Profit and Economic Profit
115(1)
Chapter Summary
116(1)
Key Terms and Concepts
117(1)
Self-Test: Multiple-Choice Questions
118(1)
Study Questions and Problems
119(2)
NetLinks
121(2)
Competition and Monopoly: Virtues and Vices
123(36)
Perfect Competition
124(2)
The Perfectly Competitive Firm as a Price Taker
125(1)
Perfect Competition: Profit Maximization and Loss Minimization in the Short Run
126(5)
Marginal Revenue Equals Marginal Cost Rule
126(1)
Profit Maximization
127(1)
Loss Minimization
128(1)
Continental Airlines and Marginal Analysis
129(2)
Perfect Competition: Long-Run Adjustments and Economic Efficiency
131(4)
Examples of Long-Run Adjustments in Competitive Industries
133(2)
Monopoly
135(1)
Barriers to Entry
136(3)
Legal Barriers
136(1)
Control over Essential Inputs
137(1)
Economies of Scale
137(1)
Barriers to Entry in the Airline Industry
138(1)
Cable Television: Why Rates Are So High
139(3)
Barriers to Entry
140(1)
Cable Companies Slash Rates
141(1)
De Beers: The ``Gift of Love''
142(1)
Profit Maximization for a Monopoly
143(4)
Price and Marginal Revenue
143(2)
Maximizing Profits
145(1)
Minimizing Short-Run Losses
146(1)
Continuing Monopoly Profits
147(1)
The Case Against Monopoly
147(2)
Legal Monopoly Examples
149(4)
Central Office Supply System
149(1)
Should the U.S. Postal Service Compete?
150(3)
Chapter Summary
153(1)
Key Terms and Concepts
153(1)
Self-Test: Multiple-Choice Questions
153(2)
Study Questions and Problems
155(3)
NetLinks
158(1)
Imperfect Competition
159(28)
Concentration Ratios
160(1)
Monopolistic Competition
161(3)
Profit Maximization in the Short Run
162(1)
The Long Run: Normal Profit and Excess Capacity
163(1)
Monopolistic Competition Applications
164(2)
Hollywood Video Shoves Aside Local Retail Outlets
164(2)
Despite Competition from Starbucks, Most Independent Coffeehouses Survive
166(1)
Advertising
166(3)
Effect on Demand
167(1)
Effect on Average Total Cost
167(1)
Informative Advertising
168(1)
Price Discrimination
169(2)
How Much Did You Pay for Your Airline Ticket?
170(1)
Can You Use a College Scholarship?
170(1)
Oligopoly
171(1)
Rivalry in the Soft Drink Industry
172(1)
Game Theory and Oligopoly Behavior
173(3)
Competitive Oligopoly and Low Prices
174(1)
Cooperative Behavior and Cheating
175(1)
Collusion and Cartels
176(2)
Maximizing Cartel Profits
177(1)
Obstacles Confronting Cartels
177(1)
Mergers and Oligopoly
178(2)
Potential Competition and Contestable Markets
180(2)
Chapter Summary
182(1)
Key Terms and Concepts
182(1)
Self-Test: Multiple-Choice Questions
183(1)
Study Questions and Problems
184(2)
NetLinks
186(1)
Government and Markets
187(32)
Market Failure
188(1)
Monopoly Power
189(1)
Antitrust Policy
189(4)
Antitrust Laws
190(1)
Music Industry Pays Millions for Price Fixing
191(1)
American Airlines' Predatory Pricing Alleged to Be Un-American
191(2)
Economic Regulation and Deregulation
193(1)
Public Utility Regulation
193(2)
Partial Deregulation of Electricity Shocks Californians
195(2)
Peak-Load Pricing: Buying Power by the Hour
197(2)
Spillover Effects
199(3)
Spillover Costs
199(1)
Spillover Benefits
200(2)
Should Government Subsidize Public TV?
202(1)
Should Government Subsidize Professional Sports?
203(2)
Social Regulation
205(1)
Environmental Regulation
206(4)
U.S.--Mexican Competitiveness
207(1)
Environmental Regulations and NAFTA
208(1)
WTO Rulings on Tuna Outrage Environmentalists
209(1)
Public Goods
210(1)
Inadequate Information
210(2)
Inadequate Information About Sellers
211(1)
Inadequate Information About Buyers
211(1)
Economic Inequality
212(2)
Chapter Summary
214(1)
Key Terms and Concepts
214(1)
Self-Test: Multiple-Choice Questions
215(1)
Study Questions and Problems
216(1)
NetLinks
217(2)
Labor Markets
219(28)
Labor Market Equilibrium
220(6)
A Firm's Hiring Decision
222(2)
Who Prevents U.S. Jobs from Moving to Mexico?
224(1)
Changes in the Market Supply and the Market Demand of Labor
224(2)
The Minimum Wage
226(2)
Popeyes' Restaurants Fret over How to Handle a Minimum-Pay Rise
228(4)
Popeyes' Concerns
229(1)
Sequel
230(2)
Labor Unions
232(5)
Increasing Union Wages
233(2)
What Gives a Union Strength?
235(1)
Nonunionized Workers at Japanese Transplants Threaten the UAW
236(1)
Are International Trade and Immigration an Opportunity or Threat to Workers?
237(4)
Import Competition
237(1)
Immigration
238(3)
Chapter Summary
241(1)
Key Terms and Concepts
242(1)
Self-Test: Multiple-Choice Questions
242(2)
Study Questions and Problems
244(1)
NetLinks
245(2)
part three THE MACROECONOMY
247(218)
The Mixed Economy of the United States
248(31)
Households as Income Receivers
249(2)
Households as Spenders
251(2)
The Business Sector
253(1)
Government in the Mixed Economy
254(2)
Social Security and Medicare
256(4)
Can the Stock Market Save Social Security?
259(1)
Government Finance
260(3)
Principles of Taxation
263(1)
Benefits-Received Principle
263(1)
Ability-to-Pay Principle
264(1)
Progressive, Regressive, and Proportional Taxes
264(2)
The U.S. Tax Structure
266(3)
Federal Personal Income Tax
266(1)
Federal Corporate Income Tax
266(1)
Social Security Tax
266(2)
Sales, Excise, and Property Taxes
268(1)
Overall U.S. Tax System
268(1)
Reforming the U.S. Tax System
269(5)
Flat-Rate Income Tax
271(2)
Value-Added Tax
273(1)
Chapter Summary
274(1)
Key Terms and Concepts
275(1)
Self-Test: Multiple-Choice Questions
275(2)
Study Questions and Problems
277(1)
NetLinks
278(1)
Gross Domestic Product and Economic Growth
279(32)
Measuring an Economy's Output
280(1)
Gross Domestic Product
281(1)
The Components of GDP
282(2)
A Formula for GDP
283(1)
What GDP Does Not Measure
284(1)
Read GDP Versus Nominal GDP
285(2)
Long-Run Economic Growth
287(1)
Rate of Economic Growth
287(1)
What Determines Economic Growth?
288(4)
Natural Resources
289(1)
Physical Capital
290(1)
Human Capital
290(1)
Economic Efficiency
291(1)
U.S. Productivity Trends
292(1)
Achieving Faster Growth: The Role of Government
293(2)
Industrial Policy: Subsidizing Specific Industries
295(2)
Industrial Policies Support Boeing and Airbus
296(1)
Theory of Economic Growth
297(4)
Traditional Growth Theory
298(1)
New Growth Theory and Creative Destruction
298(2)
Why Are the Forces Opposing Creativity So Strong?
300(1)
Creative Destruction and Income Inequality
301(1)
Economic Growth in the Industrial Age and Information Age
301(2)
Is Economic Growth Desirable?
303(1)
Chapter Summary
304(2)
Key Terms and Concepts
306(1)
Self-Test: Multiple-Choice Questions
306(1)
Study Questions and Problems
307(2)
NetLinks
309(2)
The Business Cycle, Unemployment, and Inflation
311(32)
Business Cycles
312(7)
Phases of the Business Cycle
312(4)
Predicting a Recession
316(1)
Theories of the Business Cycle
317(1)
Do Economic Expansions Die of Old Age?
318(1)
Unemployment
319(7)
Measuring Unemployment
319(1)
Three Kinds of Unemployment
320(1)
Mitigating the Costs of Unemployment
321(1)
Benefits of a High-Employment Economy
322(2)
What Is Full Employment?
324(1)
International Comparisons of Unemployment
324(2)
Inflation
326(4)
Measuring Inflation
327(3)
Who Benefits from and Who Is Hurt by Inflation
330(4)
Inflation and the Purchasing Power of Income
330(1)
Redistribution of Wealth from Lenders to Borrowers
331(1)
Inflation and Real Interest Rates
332(1)
Inflation and Taxpayers
333(1)
Should Investors Be Taxed for Inflation?
334(1)
Effects of Severe Inflation
334(1)
Home Ownership as a Hedge Against Inflation
335(2)
Causes of Inflation
337(1)
Chapter Summary
338(1)
Key Terms and Concepts
339(1)
Self-Test: Multiple-Choice Questions
339(1)
Study Questions and Problems
340(2)
NetLinks
342(1)
Macroeconomic Instability: Aggregate Demand and Aggregate Supply
343(26)
Stability of the Macroeconomy
344(2)
Classical View
344(1)
Keynesian View
345(1)
Aggregate Demand and Aggregate Supply
346(1)
Aggregate Demand
346(5)
Movements Along an Aggregate Demand Curve
348(1)
Shifts in an Aggregate Demand Curve
348(1)
The Wealth Effect, Consumption Spending, and Aggregate Demand
349(2)
The Multiplier Effect
351(3)
The Multiplier
352(1)
Calculating the Value of the Multiplier
352(1)
Graphical Illustration of the Multiplier Effect
353(1)
Aggregate Supply
354(4)
Movements Along an Aggregate Supply Curve
354(2)
Shifts in an Aggregate Supply Curve
356(2)
The Origins of Recession
358(2)
Decreases in Aggregate Demand
358(1)
Decreases in Aggregate Supply
359(1)
The Origins of Inflation Revisited
360(3)
Demand-Pull Inflation
360(2)
Cost-Push Inflation
362(1)
Chapter Summary
363(1)
Key Terms and Concepts
364(1)
Self-Test: Multiple-Choice Questions
364(1)
Study Questions and Problems
365(2)
NetLinks
367(2)
Fiscal Policy and the Federal Budget
369(30)
Fiscal Policy
370(1)
Fiscal Policy and Aggregate Demand
371(5)
Combating a Recession
371(4)
Combating Inflation
375(1)
Fiscal Policy in Action
376(1)
Automatic Stabilizers
377(2)
Problems of Fiscal Policy
379(3)
Timing Lags
380(1)
Irreversibility
380(1)
Crowding-Out Effect
381(1)
Foreign-Trade Effect
381(1)
Fiscal Policy and Aggregate Supply
382(4)
Supply-Side Effects of Changes in Taxes
382(2)
Do Cuts in Tax Rates Cause Tax Revenues to Rise (Fall)?
384(2)
Federal Deficit and Federal Debt
386(3)
Sales and Ownership of Federal Debt
388(1)
Is the Federal Debt Good or Bad?
389(2)
Benefits of Federal Debt
389(1)
Costs of Federal Debt
390(1)
Should There Be a Balanced Budget Amendment?
391(1)
What if the Federal Debt Were Reduced or Eliminated?
392(1)
Chapter Summary
393(1)
Key Terms and Concepts
394(1)
Self-Test Multiple Choice Questions
395(1)
Study Questions and Problems
396(2)
NetLinks
398(1)
Money and the Banking System
399(38)
The Meaning of Money
400(2)
Medium of Exchange
400(1)
Unit of Account
401(1)
Store of Value
401(1)
Are Credit Cards Money?
402(1)
Shopping for a Credit Card
402(4)
How Can You Lower the Rate on Your Credit Card?
404(1)
Do You Really Need a Credit Card?
405(1)
U.S. Money Supply
406(9)
Coins
407(1)
Paper Money
407(3)
Checking Accounts
410(1)
Special Types of Checks
411(1)
Check Processing and Collection
412(1)
Online Banking: A Checkless Society?
413(2)
What Backs the Money Supply?
415(1)
Measuring the Money Supply
416(2)
M1: The Basic Money Supply
416(1)
Broader Measures of the Money Supply
417(1)
The Banking System
418(1)
Commercial Banks
418(1)
Savings and Loan Associations
418(1)
Mutual Savings Banks
419(1)
Credit Unions
419(1)
How Your Money Grows over Time: Compound Interest
419(3)
Types of Savings Accounts
422(3)
Money Market Deposit Accounts
422(1)
Savings Accounts
422(1)
Time Deposits (Certificates of Deposit)
423(1)
What Type of Account Is Right for You?
424(1)
The Business of Banking
425(2)
A Bank's Balance Sheet
425(1)
Reserve Requirement
426(1)
The Process of Money Creation
427(1)
Why Are Banks Regulated?
428(1)
The Federal Deposit Insurance Corporation
429(3)
Bank Supervision
430(1)
Insurance Coverage
430(1)
When a Federally Insured Bank or S&L Fails
430(2)
Chapter Summary
432(1)
Key Terms and Concepts
433(1)
Self-Test: Multiple-Choice Questions
433(2)
Study Questions and Problems
435(1)
NetLinks
436(1)
The Federal Reserve and Monetary Policy
437(28)
The Federal Reserve System
438(4)
Structure of the Federal Reserve System
438(2)
Independence of the Fed
440(2)
Functions of the Federal Reserve System
442(1)
Monetary Policy
442(5)
Open Market Operations
443(1)
The Discount Rate
444(2)
Reserve Requirement
446(1)
Shifting Aggregate Demand
447(4)
Expansionary Policy
447(3)
Restrictive Policy
450(1)
Attack on America: How the Fed Defended the Financial System
451(1)
Monetary Policy in an International Economy
452(1)
Monetary Policy: Advantages and Disadvantages
453(2)
Advantages of Monetary Policy
453(1)
Disadvantages of Monetary Policy
454(1)
Policy Trade-Offs
454(1)
Pushing on a String
455(1)
Fixed Rules or Discretion
455(3)
Should Congress Reduce the Independence of the Federal Reserve?
458(1)
Arguments for Independence
458(1)
Arguments Against Independence
459(1)
Chapter Summary
459(1)
Key Terms and Concepts
460(1)
Self-Test: Multiple-Choice Questions
460(2)
Study Questions and Problems
462(2)
NetLinks
464(1)
part four THE INTERNATIONAL ECONOMY
465(84)
The United States and the Global Economy
466(29)
The United States as an Open Economy
467(3)
Even the Boeing 777 Isn't All American: Neither Is the Airbus A330 All European
468(2)
The Advantages of Specialization and Trade
470(1)
Comparative Advantage and International Trade
471(4)
Production and Consumption Without Specialization and Trade
472(1)
Production and Consumption with Specialization and Trade
472(1)
Comparative Advantage
473(2)
Why Are Free Trade and Globalization Controversial?
475(1)
Tariffs
476(3)
Bush's Steely Pragmatism
479(2)
Sources of Distress
479(1)
Steel Tariffs Buy Time for Troubled Industry
480(1)
Quotas
481(1)
Arguments for Trade Restrictions
482(3)
Job Protection
482(1)
Protection Against Cheap Foreign Labor
482(1)
Fairness in Trade: A Level Playing Field
483(1)
Infant Industry
484(1)
National Security
484(1)
Preservation of Culture
485(1)
Pursuing Trade Liberalization
485(1)
World Trade Organization
486(1)
North American Free Trade Agreement
487(2)
Chapter Summary
489(1)
Key Terms and Concepts
489(1)
Self-Test: Multiple-Choice Questions
490(1)
Study Questions and Problems
491(2)
NetLinks
493(2)
International Finance
495(26)
The Balance of Payments
496(2)
Current Account
496(1)
Capital and Financial Account
497(1)
What Does a Current Account Deficit (Surplus) Mean?
497(1)
The U.S. Balance of Payments
498(4)
Are U.S. Current Account Deficits Bad?
500(1)
Do Current Account Deficits Cost Americans Jobs?
500(1)
Can the United States Continue to Run Current Account Deficits Year After Year?
501(1)
Foreign Exchange Market
502(1)
Foreign Exchange Quotations
503(1)
Is a Strong Dollar Good? Is a Weak Dollar Bad?
504(2)
Exchange Rate Determination
506(1)
What Makes Exchange Rates Change?
507(1)
Consumer Tastes
507(1)
Relative Incomes
507(1)
Relative Prices
507(1)
Relative Interest Rates
508(1)
Expectations of Future Exchange Rates
508(1)
Exchange Rate Systems
508(2)
Floating Exchange Rates
508(1)
Fixed Exchange Rates
509(1)
Monetary Integration for Europe and the United States
510(4)
The Euro: A Common Currency for Europe
510(2)
The Dollar: A Common Currency for the Americas?
512(2)
Chapter Summary
514(1)
Key Terms and Concepts
515(1)
Self-Test: Multiple-Choice Questions
515(1)
Study Questions and Problems
516(3)
NetLinks
519(2)
Economic Environments and the Economies of Developing Countries
521(28)
Economic Systems and the Fundamental Economic Questions
522(4)
Market Economy
523(1)
Command Economy
524(1)
Mixed Economy
524(2)
Challenges of Modern Capitalism
526(2)
What Makes Public Policy for a Free-Market Economy So Hard?
526(2)
Transition Economies
528(5)
Eastern European Countries
528(2)
China
530(3)
The Economics of Developing Countries
533(1)
Obstacles to Economic Development
534(1)
Trade Problems of the Developing Countries
535(4)
Unstable Export Markets
535(1)
Worsening Terms of Trade
535(2)
Limited Market Access
537(2)
Aid to Developing Countries
539(1)
Economic Growth Strategies: Import Substitution Versus Export-Led Growth
540(4)
Import Substitution
540(1)
Export-Led Growth
540(1)
Is Economic Growth Good for the Poor?
541(1)
Can All Developing Countries Achieve Export-Led Growth?
542(2)
Chapter Summary
544(1)
Key Terms and Concepts
545(1)
Self-Test: Multiple-Choice Questions
545(1)
Study Questions and Problems
546(1)
NetLinks
547(2)
glossary549(12)
index561

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