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Economics: Theory and Practice, 7th Edition

by: Patrick J. Welch (St. Louis Univ.); Gerry F. Welch (St. Louis Community College at Meramec )

Economics: Theory and Practice, 7th Edition

by: Patrick J. Welch (St. Louis Univ.); Gerry F. Welch (St. Louis Community College at Meramec )

ISBN 13:
9780470000281
ISBN 10:
0470000287
Edition: 7th
Format: Paperback
Copyright: 04/01/2003
Publisher: Wiley
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Summary

Newly updated, the Seventh Edition of Economics: Theory and Practice introduces students to basic economic concepts, institutions, relationships, and terminology. Covering a range of timely subjects and featuring engaging pedagogical tools, this book prepares students to use economic thinking in their classes, careers, and everyday lives. Through six editions, students have cited the text as exceptionally user-friendly and readable.

Preface

iii

PART ONE Introduction to Economics

Introduction to Economics

(32)

What Is Economics?

(4)

Economics and Scarcity

(1)

Scarcity and Choice

(3)

The Cost of Holding a Job

(1)

Efficiency and Equity

(1)

Factors of Production

(3)

Factors and Income

(1)

Scarce Resources

(1)

Why All the Grousing?

(1)

Economic Theory and Policy

(4)

Economic Theory

(2)

Economic Policy

(1)

Don't Panic

(1)

Up for Debate: Should the City Council of Webster Groves, Missouri, Change Its Ordinances to Permit the Sale of Beer in Gasoline Stations?

(1)

Tools of the Economist

(1)

Words, Graphs, and Mathematical Equations

(1)

Scarcity, Model Building, and Graphs

(4)

Modeling Scarcity

(2)

Interpreting the Model

(2)

Test Your Understanding: Production Possibilities

(1)

Macroeconomics and Microeconomics

(5)

Critical Thinking Case 1: Rethinking Medical Care

(2)

Appendix Graphing

(5)

Economic Decision Making and Economic Systems

(32)

Scarcity and Society's Basic Economic Decisions

(1)

Economic Systems and the Three Basic Economic Decisions

(1)

Traditional or Agrarian Economies

(1)

Economic Decisions in a Traditional Economy

(1)

Market Economies

(1)

Up for Debate 2.1: Is Western-Style Development Appropriate for Other Cultures?

(3)

The Operation of a Market Economy

(1)

Economic Decisions in a Market Economy

(1)

Missing the Market

(5)

Evaluating Market Economies

(2)

Government Intervention in a Market Economy: A Mixed Economy

(2)

Planned Economies

(2)

Economic Decisions in a Planned Economy

(1)

Evaluating Planned Economies

(1)

Mixed Economies

(1)

Changing Economic Systems

(1)

Test Your Understanding: Economic Decision Making and the Circular Flow

(2)

The Realities of Economic Change

(1)

Two Stories from Germany

(1)

The U.S. Economic System

(1)

The British Foundations of the U.S. Economy

(1)

Historical Highlights in the Development of the U.S. Economy

(1)

The Factory Girl's Last Day

(7)

Critical Thinking Case 2: Privatization and Pollution

(3)

Demand, Supply, and Price Determination

(40)

Demand and Supply

(4)

Demand: The Buyer's Side

(2)

Supply: The Seller's Side

(2)

Market Demand, Market Supply, and Price Setting

(1)

Market Demand and Market Supply

(1)

Markets and Price Setting

(1)

The Laws of Demand and Supply

(1)

Equilibrium Price and Equilibrium Quantity

(3)

Changes in Quantity Demanded and Quantity Supplied

(1)

Changes in Demand and Supply

(5)

Changes in Quantity Demanded or Supplied versus Changes in Demand and Supply: A Crucial Distinction

(2)

Changes in Demand

(3)

Changes in Supply

(2)

Are These Cows Mad?

(1)

Changes in Equilibrium Price and Equilibrium Quantity

(4)

Effect of an Increase in Demand

(1)

Effect of a Decrease in Demand

(1)

Effect of an Increase in Supply

(1)

Effect of a Decrease in Supply

(2)

Test Your Understanding: Changes in Demand and Supply

(2)

Effect of Changes in Both Demand and Supply

(2)

Limiting Price Movements

(2)

Price Ceilings

(1)

Price Floors

(1)

Home Free

(1)

Up for Debate: Is It a Mistake to Raise the Minimum Wage?

(1)

Price Elasticity of Demand and Supply

(3)

Price Elasticity of Demand

(2)

Price Elasticity of Supply

(1)

Supply and Demand in Practice

(6)

Critical Thinking Case 3: Health Care---Where Supply and Demand Don't Work

100

(2)

Appendix Measuring Price Elasticity

102

(3)

PART TWO The Macroeconomy

105

(182)

Goals and Problems of the Macroeconomy: Employment, Prices, and Production

107

(38)

Unemployment and Full Employment

108

(2)

Consequences of Unemployment

109

(1)

Types of Unemployment

109

(1)

What's at Stake When a Job Is Lost?

110

(2)

Employment and Unemployment: Measures and Statistics

112

(5)

The Goal of Full Employment

116

(1)

Inflation and Stable Prices

117

(10)

Consequences of Inflation

118

(3)

Causes of Inflationary Pressure

121

(2)

Measures of Inflation

123

(4)

Deflation and Disinflation

127

(1)

Deflation Disaster

127

(1)

Production

128

(6)

Full Production and Economic Growth

128

(3)

Measures of Production

131

(2)

Does GDP Tell the Whole Story?

133

(1)

Test Your Understanding: Calculating Price Indexes and GDP

134

(1)

The Ballad of Joe and Mary

135

(1)

Up for Debate: Do Economic Statistics Tell Us How We Are Doing?

136

(1)

Productivity

136

(1)

A Possible Policy Problem

137

(5)

Critical Thinking Case 4: Statistics and Decision Making

142

(3)

Foundations of the Macroeconomy

145

(32)

Changes in Macroeconomic Activity

146

(4)

Business Cycles

146

(3)

Causes of Economic Fluctuations

149

(1)

Total Spending and Macroeconomic Activity

150

(4)

The Household Sector

150

(4)

Up for Debate: Is Saving a Healthy Habit?

154

(2)

The Business Sector

154

(2)

Interest Rates and Investment Spending

156

(10)

The Government Sector

158

(3)

The Foreign Sector

161

(2)

Summary of Aggregate Spending, Leakages, and Injections

163

(2)

The Multiplier Effect

165

(1)

Economic Activity in the Headlines

166

(3)

A Word about Inflation

168

(1)

A Word about Expectations

168

(1)

Ripples through the Economy

169

(1)

Test Your Understanding: Changes in Economic Activity

170

(1)

Macroeconomic Policies

170

(4)

Critical Thinking Case 5: How Can You Tell a Recovery When You See One?

174

(3)

The Role of Government in the Macroeconomy

177

(30)

Government Expenditures and Revenues

179

(5)

Government Expenditures

179

(2)

Government Revenues

181

(2)

Progressive, Proportional, and Regressive Taxes

183

(1)

Up for Debate: Should the Federal Income Tax Be Changed to a Flat Tax?

184

(2)

Tax Reform and Issues

185

(1)

A Chronology of Federal Income Tax Policies

186

(1)

Fiscal Policy

187

(3)

The Mechanics of Fiscal Policy

187

(1)

Discretionary and Automatic Fiscal Policy

188

(2)

Government Budgets

190

(4)

Types of Budgets

190

(3)

The Budget and Fiscal Policy: Tying Them Together

193

(1)

Will America Grow Up Before It Grows Old?

194

(1)

Test Your Understanding: Government's Impact on the Macroeconomy

195

(1)

The Realities of Fiscal Policy and the Federal Budget

195

(1)

The National Debt

196

(1)

Financing the National Debt

196

(1)

U.S. Treasury Securities

197

(7)

Size of the National Debt

198

(1)

Assessing the Debt

198

(3)

Crowding Out

201

(3)

Critical Thinking Case 6: NIMBY (Not In My Back Yard)

204

(3)

Money, Financial Institutions, and the Federal Reserve

207

(26)

Money

208

(2)

The Definition and Functions of Money

208

(2)

Fixed Assets, Or: Why a Loan in Yap Is Hard to Roll Over

210

(5)

The Money Supply

211

(4)

Financial Depository Institutions

215

(3)

Commercial Banks

215

(2)

Other Financial Depository Institutions

217

(1)

Extra Protection

218

(1)

The Federal Reserve System

218

(5)

Organization of the Federal Reserve System

219

(1)

Functions of the Federal Reserve Banks

220

(3)

Test Your Understanding: Changes in a Bank's Reserve Account

223

(1)

Recent Trends in the Financial Institutions

223

(2)

Legislative Changes

223

(1)

Structural Changes

224

(1)

Up for Debate: Do We Want Banks Moving into Nonbanking Activities?

225

(2)

The Savings and Loan Crisis

226

(1)

500 Billion Dollars

227

(3)

Critical Thinking Case 7: Cigarette Money

230

(3)

Money Creation, Monetary Theory, and Monetary Policy

233

(28)

The Money Supply and the Level of Economic Activity

234

(2)

The Equation of Exchange

235

(1)

Money Creation

236

(2)

The Process of Money Creation

236

(2)

Questions and Answers about Reserves and Loans

238

(3)

The Multiple Expansion of Money

238

(3)

Excess Reserves, Interest Rates, and the Level of Spending

241

(4)

Determining Interest Rates on Loans

242

(3)

An Interest Rate Primer

245

(1)

The Federal Reserve and Monetary Policy

245

(5)

Monetary Policy Tools

246

(4)

Test Your Understanding: Financial Depository Institution Calculations

250

(1)

10 Greenspan Sentences

251

(3)

Government Deficits and Monetary Policy

251

(2)

Advantages and Disadvantages of Monetary Policy

253

(1)

Up for Debate: Should the Federal Reserve Be Placed under the Direct Control of Congress?

254

(5)

Critical Thinking Case 8: The Fed during the Great Depression

259

(2)

Macroeconomic Viewpoints and Models

261

(26)

Macroeconomic Model Building

262

(1)

What Is ``Right'' Economics?

263

(1)

Viewpoints and Models

264

(1)

Classical Economics

264

(1)

The Academic Scribblers

265

(11)

Keynesian Economics

267

(4)

New Classical Economics

271

(3)

New Keynesian Economics

274

(1)

Monetarism

275

(1)

Supply-Side Economics

275

(1)

Up for Debate: Should Government's Role in Influencing Economic Activity Be Reduced?

276

(1)

Inflation and Unemployment

276

(3)

The Phillips Curve

277

(2)

A Final Word on Macroeconomic Viewpoints

279

(1)

Test Your Understanding: Unemployment and Inflation

280

(5)

Critical Thinking Case 9: Does Anyone Care What Economists Think?

285

(2)

PART THREE The Microeconomy

287

(184)

Households and Businesses: An Overview

289

(22)

Overview of Households

290

(5)

Household Income and Expenditures

290

(2)

Goals and Decisions of Individuals in Households

292

(3)

Can You ``Afford'' It?

295

(1)

Overview of Business

295

(1)

Second Thoughts on Having It All

296

(4)

Legal Forms of Business

296

(3)

Numbers and Sizes of Businesses

299

(1)

Business Ownership of Business

299

(1)

Test Your Understanding: The Price of Stock Shares

300

(4)

Goals and Decisions of Business Firms

303

(1)

You Better Watch Out

304

(1)

Up for Debate: Should Profitable Businesses Be Expected to Actively Participate in Improving Their Communities?

305

(3)

Critical Thinking Case 10: Time to Maximize

308

(3)

Benefits, Costs, and Maximization

311

(28)

Balancing Benefits and Costs: The Individual

312

(7)

Defining Benefits and Costs

312

(2)

Measuring Benefits and Costs

314

(3)

Maximizing Satisfaction

317

(2)

Anything Worth Doing Is Not Necessarily Worth Doing Well

319

(2)

Graphing Costs, Benefits, and Net Benefit

319

(2)

Balancing Benefits and Costs: The Business

321

(6)

Defining Benefits and Costs

321

(1)

Measuring Revenues and Costs

322

(2)

Maximizing Profit

324

(1)

Graphing Costs, Revenues, and Profit

325

(2)

Test Your Understanding: Maximizing Profit

327

(1)

Social Benefits and Costs

328

(1)

Maximizing Society's Net Benefit

328

(1)

The Cost of Smoking

328

(3)

Up for Debate: Should States try to Attract Gambling Casinos?

331

(1)

Public Choice

331

(7)

Maximizing Behaviour and the Voting Process

332

(6)

Critical Thinking Case 11: Clean Air---At Any Cost

338

(1)

Production and the Costs of Production

339

(30)

Production Basics

340

(2)

Sectors and Industries

340

(2)

Methods of Production

342

(2)

Socks Are Odd: Made in America

344

(1)

Economic Time, Production, and the Costs of Production

345

(1)

Going the Way of the Victrola

346

(7)

Short-Run Costs

347

(2)

The Pattern of Short-Run Costs

349

(3)

The Law of Diminishing Returns

352

(1)

Test Your Understanding: Calculating Costs and Averages

353

(1)

Up for Debate: Do ``Wellness'' Programs Lower Costs for Employers?

354

(5)

Long-Run Costs

355

(4)

A Distance-Ed Student Puts His Lessons to Work on a Farm

359

(10)

Critical Thinking Case 12: College Degrees and Creative Destruction

363

(1)

Appendix A Further Look at Short-Run Average and Marginal Costs

364

(5)

Competition and Market Structures

369

(42)

Defining a Market

370

(2)

Defining the Boundaries of a Market: The NCAA Case

372

(1)

The Market Structures

372

(1)

Pure Competition

373

(4)

Characteristics of Pure Competition

373

(1)

Behavior of a Firm in Pure Competition

373

(4)

Selling Corn and Beans

377

(5)

Is There Pure Competition?

380

(2)

Monopolistic Competition

382

(4)

Characteristics of Monopolistic Competition

382

(1)

Behavior of a Firm in Monopolistic Competition

383

(3)

Up for Debate: Would We Be Better Off with Less Advertising?

386

(1)

Oligopoly

387

(3)

Characteristics of Oligopoly

387

(1)

Behavior of a Firm in an Oligopolistic Market

388

(2)

Pricing With One Eye on Your Rival

390

(1)

Monopoly

391

(4)

Characteristics of Monopoly

391

(1)

Behavior of a Monopolist

392

(3)

Market Structures, the Consumer, and Efficiency

395

(6)

Critical Thinking Case 13: Finding the Market

401

(1)

Appendix Determining the Profit-maximizing price and output for a firm

402

(6)

Test Your Understanding: Maximizing Profit and Minimizing Loss

408

(3)

Government and the Markets

411

(28)

Antitrust Enforcement

412

(4)

The Antitrust Laws

413

(3)

Cases Involving the Sherman Act

416

(4)

Cases Involving the Clayton Act and Its Amendments

420

(1)

Price-fixing Settlement Suits Woman Just Fine

421

(1)

Government Regulation

421

(11)

The Structure of Regulation

422

(4)

Industry Regulation

426

(3)

Social Regulation

429

(3)

Test Your Understanding: Government and Business

432

(1)

Deregulation and the Performance of Regulation

433

(1)

Up for Debate: Has Our Enthusiasm for Regulation Gone Too Far?

433

(5)

Critical Thinking Case 14: Antitrust Enforcement in the Global Economy

438

(1)

Labor Markets, Unions, and the Distribution of Income

439

(32)

Labor Markets

439

(7)

The Demand for Labor

441

(3)

The Supply of Labor

444

(2)

Test Your Understanding: A Small Business Determines Its Demand for Employees

446

(2)

Changes in Labor Demand and Supply

446

(2)

For Teenagers, Fast Food Is a Snack, Not a Job

448

(1)

Last Stitches Sew Up Shroud

449

(2)

Modifications of the Labor Demand and Supply Model

451

(2)

Labor Unions

453

(4)

Types of Unions and Union Membership

453

(2)

Collective Bargaining and Strikes

455

(1)

Collective Bargaining and the Law

456

(1)

The Distribution of Income

457

(5)

Differences in Income

458

(1)

Poverty

459

(3)

Michael Dodge

462

(2)

Up for Debate: Should We Place More Demands on Those Seeking Public Assistance?

464

(5)

Critical Thinking Case 15: What Is a Fair Distribution of Income?

469

(2)

PART FOUR The International Economy

471

(46)

International Trade

473

(22)

An Overview of U.S. International Trade

474

(4)

The Size and Composition of U.S. Trade

474

(4)

Labor and Global Reality

478

(1)

Comparative Advantage and International Trade

478

(3)

Scarcity and Specialization

478

(1)

The Principle of Comparative Advantage

479

(2)

Test Your Understanding: Comparative Advantage

481

(1)

Free Trade and Protectionism

481

(5)

Trade-Restricting Policies

482

(1)

Free-Trade Arguments

483

(1)

Protectionist Arguments

484

(1)

The Real World of International Trade

485

(1)

Gloria Flunks the Professor

486

(2)

Oil Price Winners

488

(1)

Up for Debate: Should We Impose Sanctions on Products Made by Child Labor?

488

(4)

Critical Thinking Case 16: A Petition (by Frederic Bastiat, 1801--1850)

492

(3)

International Finance

495

(22)

Exchanging Currencies

496

(5)

Exchange Rates

496

(1)

The Determination of Exchange Rates

497

(3)

Understanding Foreign Exchange Markets

500

(1)

Foreign Exchange Markets

501

(1)

Was This Supposed to Happen?

502

(2)

Test Your Understanding: Changes in Exchange Rates

504

(1)

International Financial Transactions and Balances

505

(3)

The Current Account

505

(1)

The Capital Account

506

(2)

Balancing the Accounts

508

(1)

Challenges to the International Financial System

508

(2)

The External Debt Crisis

508

(2)

Mexico Feels Squeeze of Years of Austerity

510

(2)

Monetary Integration in Europe

511

(1)

Up for Debate: Euro-dreams

512

(4)

Critical Thinking Case 17: Department of Voodoo Economics

516

(1)

Glossary

517

(8)

Answers to ``Test Your Understanding''

525

(6)

Credits

531

(2)

Index

533

Amazon no longer offers textbook rentals. We do!

Economics: Theory and Practice, 7th Edition

Economics: Theory and Practice, 7th Edition

9780470000281

0470000287

Summary

Table of Contents

Supplemental Materials

Write a Review

Amazon no longer offers textbook rentals. We do!

Economics: Theory and Practice, 7th Edition

Economics: Theory and Practice, 7th Edition

9780470000281

0470000287

Summary

Table of Contents

Supplemental Materials

Write a Review

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