Economics: Principles, Problems, and Policies, 16/e
Campbell R McConnell,
University of Nebraska Stanley L Brue,
Pacific Lutheran University
ISBN: 0072819359 Copyright year: 2005
Table of Contents
PART 1: AN INTRODUCTION TO ECONOMICS AND THE ECONOMY To the Student 1 The Nature and Method of Economics The Economic Perspective
Scarcity and Choice - Rational Behavior - Marginalism: Benefits and Costs
Why Study Economics?
Economics for Citizenship - Professional and Personal Applications
Economics Methodology
Theoretical Economics - Policy Economics
Macroeconomics and Microeconomics
Macroeconomics - Microeconomics - Positive and Normative Economics
Pitfalls to Objective Thinking
Biases - Loaded Terminology - Definitions - Fallacy of Composition - Causation
Fallacies
A Look Ahead
LAST WORD: Fast Food Lines: An Economic Perspective Appendix to Chapter 1: Graphs and Their Meaning - Construction
of a Graph - Direct and Inverse Relationships - Dependent and Independent Variables
- Other Things Equal - Slope of a Line - Vertical Intercept - Equation of a
Linear Relationship - Slope of a Nonlinear Curve
2 The Economizing Problem The Foundation of Economics
Unlimited Wants - Scarce Resources
Economics: Employment and Efficiency
Full Employment: Using Available Resources - Full Production: Using Resources
Efficiently - Production Possibilities Table - Production Possibilities Curve
- Law of Increasing Opportunity Cost - Allocative Efficiency Revisited
Unemployment Growth and the Future
Unemployment and Productive Inefficiency - A Growing Economy - A Qualification:
International Trade - Examples and Applications
Economic Systems
The Market System - The Command System
The Circular Flow Model
LAST WORD: Women and Expanded Production Possibilities
3 Individual Markets: Demand and Supply Markets
Demand
Law of Demand - Demand Curve - Market Demand - Change in Demand - Changes in
Quantity Demanded
Supply
Law of Supply - The Supply Curve - Determinants of Supply - Changes in Supply
- Changes in Quantity Supplied
Supply and Demand: Market Equilibrium
Surpluses - Shortages - Equilibrium Price and Quantity - Rationing Function
of Prices - Changes in Supply, Demand, and Equilibrium - A Reminder: "Other
Things Equal" - Application: Pink Salmon
LAST WORD: Ticket Scalping: A Bum Rap
3Web Applications and Extensions of Supply and Demand Analysis Characteristics of the Market System
Lettuce - America Flags - Pink Salmon - Gasoline - Sushi
Preset Prices
Olympic Figure Skating Finals - Olympic Curl Preliminaries Nonpriced Goods: The American Bison
Consumer and Producer Surplus Consumer Surplus - Producer Surplus - Efficiency Revisited - Efficiency
Losses
LAST WORD: Efficiency Gains from Generic Drugs
4 The Market System Characteristics of the Market System
Private Property - Freedom of Enterprise and Choice - Self-Interest - Competition
- Markets and Prices - Reliance on Technology and Capital Goods - Specialization
- Use of Money - Active, but Limited Government
The Market System at Work
What Will Be Produced? - How Will the Goods and Services Be Produced? - Who
Will Get the Goods and Services? - How Will the System Accommodate Change?
Competition and the "Invisible Hand"
LAST WORD: Shuffling the Deck: How the Market System Arranges the World's
Individual Resources
5 The U.S. Economy: Private and Public Sectors Households as Income Receivers
The Functional Distribution of Income - The Personal Distribution of Income
Households as Spenders
Personal Taxes - Personal Saving - Personal Consumption Expenditure
The Business Population
Legal Forms of Business
Advantages and Disadvantages - The Principal-Agent Problem
The Public Sector: Government's Role
Providing the Legal Structure
Maintaining Competition
Redistributing Income
Reallocating Resources
Spillovers or Externalities - Public Goods and Services - Quasipublic Goods
- The Reallocation Process
Promoting Stability
The Circular Flow Revisited
Government Finance
Government Purchases and Transfers
Federal Finance
Federal Expenditures - Federal Tax Revenues
State and Local Finance
State Finances - Local Finances - Fiscal Federalism
LAST WORD: The Financing of Corporate Operations
6 The United States in the Global Economy International Linkages
U.S. and World Trade
Volume and Pattern - Rapid Trade Growth - Participants in International Trade Specialization and Comparative Advantage
Basic Principle - Comparative Costs - Terms of Trade - Gains from Specialization
and Trade The Foreign Exchange Market
Government and Trade
Trade Impediments and Subsidies - Why Government Trade Interventions? - Costs
to Society Multilateral Trade Agreements and Free-Trade Zones
Reciprocal Trade Agreements Act - General Agreements on Tariffs and Trade (GATT)
- World Trade Organization (WTO) - The European Union (EU) - North American
Free Trade Agreement (NAFTA) Increased Global Competition LAST WORD: Buy American: the Global Refrigerator
PART 2: NATIONAL INCOME, EMPLOYMENT, AND FISCAL POLICY
7 Measuring Domestic Output, National Income, and the Price Level Assessing the Economy's Performance
Gross Domestic Product
A Monetary Measure - Avoiding Multiple Counting - GDP Excludes Nonproduction
Transactions - Two Ways of Looking at GDP: Spending and Income
The Expenditures Approach
Personal Consumption Expenditures ;copy; - Gross Private Domestic Investment
(Ig ) - Government Purchases (G) - Net Exports (Xn ) -
Putting It All Together: GDP = C + Ig + G + Xn Income Approach
Compensation of Employees - Rents - Interest - Proprietor's Income - Corporate
Profits - Adding Up National Income Other National Accounts
Net Domestic Product (NDP) - National Income (NI) - Personal Income (PI) - Disposable
Income (DI) - The Circular Flow Revisited Nominal GDP versus Real GDP
Adjustment Process in a One-Product Economy - An Alternative Method - Real-World
Consideration and Data The Consumer Price Index (CPI)
Shortcomings of GDP
Nonmarket Transactions - Leisure - Improved Product Quality - The Underground
Economy - GDP and the Environment - Composition and Distribution of Output -
Per Capita Output - Noneconomic Sources of Well-Being LAST WORD: Feeding the GDP Accounts: Where Does the BEA Get the Data
It Compiles?
8 Introduction to Economic Growth and Instability Economic Growth
Growth as a Goal - Growth in the United States - Relative Growth Rates The Business Cycle
Phases of the Business Cycle - Causation: A First Glance - Cyclical Impact:
Durables and Nondurables Unemployment
Measurement of Unemployment - Types of Unemployment - Definition of "Full Employment"
- Economic Cost of Unemployment - Noneconomic Costs - International Comparisons Inflation
Meaning of Inflation - Facts of Inflation - Types of Inflation - Demand-Pull
Inflation - Complexities Redistribution Effects of Inflation
Who is Hurt by Inflation - Who is Unaffected or Helped by Inflation - Anticipated
Inflation - Addenda Effects of Inflation on Output
Cost-Push Inflation and Real Output - Demand-Pull Inflation and Real Output LAST WORD: The Stock Market and the Economy
9 Building the Aggregate Expenditures Model Simplifications
Tools of the Aggregate Expenditures Model Consumption and Saving
Income-Consumption and Income-Saving Relationships - The Consumption Schedule
- The Saving Schedule - Average and Marginal Propensities - Nonincome Determinants
of Consumption and Saving - Terminology, Shifts, and Stability Investment
Expected Rate of Return - The Real Interest Rate - Investment Demand Curve -
Shifts in the Investment Demand Curve - Investment Schedule - Instability of
Investment Equilibrium GDP
Tabular Analysis - Graphical Analysis Other Features of Equilibrium GDP
Saving Equals Planned Investment - No Unplanned Changes in Inventories LAST WORD: Say's Law, The Great Depression, And Keynes
10 Aggregate Expenditures: The Multiplier, Net Exports, and Government Changes in Equilibrium GDP and the Multiplier
The Multiplier Effect International Trade and Equilibrium Output
Net Exports and Aggregate Expenditures - The Net Export Schedule - Net Exports
and Equilibrium GDP - International Economic Linkages Adding the Public Sector
Simplifying Assumptions - Government Purchases and Equilibrium GDP - Taxation
and Equilibrium GDP - Balanced-Budget Multiplier Equilibrium versus Full-Employment GDP
Recessionary Gap - Inflationary Gap Application of the Model
The Great Depression in the United States - Vietnam War Inflation - The End
of the Japanese Growth "Miracle" LAST WORD: Squaring the Economic Circle
11 Aggregate Demand and Aggregate Supply Aggregate Demand
Aggregate Demand Curve - Derivation of the Aggregate Demand Curve from the Aggregate
Expenditures Model - Determinants of Aggregate Demand - Aggregate Demand Shifts
and the Aggregate Expenditures Model Aggregate Supply
Aggregate Supply Curve - Determinants of Aggregate Supply Equilibrium: Real Output and the Price Level
Changes in Equilibrium
Increases in AD: Demand-Pull Inflation - Multiplier with Price-Level Changes
- Decreases in AD: Recession and Cyclical Unemployment - Decreases in AS: Cost-Push
Inflation - Increases in AS: Full Employment with Price-Level Stability LAST WORD: Why Is Unemployment So High?
12 Fiscal Policy
Legislative Mandates
Fiscal Policy and the AD/AS Model
Expansionary Fiscal Policy - Contractionary Fiscal Policy - Policy Options:
G or T? Built in Stability
Automatic or Built-In Stabilizers Evaluating Fiscal Policy
Full-Employment Budget Problems, Criticisms, and Complications
Problems of Timing - A Political Business Cycle? - Offsetting State and Local
Finance - Crowding-Out Effect - Fiscal Policy, Aggregate Supply, and Inflation
- Fiscal Policy in the Open Economy - Supply-Side Fiscal Policy LAST WORD: The Leading Indicators
PART 3: MONEY, BANKING, AND MONETARY POLICY
13 Money and Banking The Functions of Money
The Supply of Money
Money Definition M1 - Money Definition M2 - Money Definition M3 What "Backs"; the Money Supply
Money as Debt - Value of Money - Money and Prices - Stabilization of Money's
Value The Demand for Money
Transaction Demand, Dt - Asset Demand, Da
- Total Money Demand, Dm The Money Market
Adjustment to a Decline in the Money Supply - Adjustment to an Increase in the
Money Supply The Federal Reserve and the Banking System
Historical Background - Board of Governors - Assistance and Advice - The Twelve
Federal Reserve Banks - Commercial Banks and Thrifts - Fed Functions and the
Money Supply - Federal Reserve Independence Recent Developments in Money and Banking
The Relative Decline of Banks and Thrifts - Consolidation among Banks and Thrifts
- Convergence of Services Provided by Financial Institutions - Globalization
of Financial Markets - Electronic Transactions LAST WORD: The Global Greenback
14 How Banks and Thrifts Create Money The Balance Sheet of a Commercial Bank
Prologue: The Goldsmiths
Single Commercial Bank
Formations of a Commercial Bank - Money-Creating Transactions of a Commercial
Bank -Profits, Liquidity, and the Federal Funds Market The Banking System: Multiple-Deposit Expansion
The Banking System's Lending Potential - The Monetary Multiplier - Some Modifications
- Need for Monetary Control LAST WORD: The Bank Panics of 1930 and 1933
15 Monetary Policy Consolidated Balance Sheet of the Federal Reserve Banks
Assets - Liabilities Tools of Monetary Policy
Open-Market Operations - The Reserve Ratio - The Discount Rate - Easy Money
and Tight Money - Relative Importance Monetary Policy, Real GDP, and the Price Level
Cause-Effect Chain - Effects of an Easy Money Policy - Effects of a Tight Money
Policy - Monetary Policy and Aggregate Supply Effectiveness of Monetary Policy
Strengths of Monetary Policy - Shortcomings and Problems - Targeting the Federal
Funds Rate - Monetary Policy and the International Community The "Big Picture" LAST WORD: For the Fed, Life Is a Metaphor
PART 4: LONG-RUN PERSPECTIVES AND MACROECONOMIC DEBATES
16 Extending the Analysis of Aggregate Supply Short-Run and Long-Run Aggregate Supply
Short-Run Aggregate Supply - Long-Run Aggregate Supply - Equilibrium in the
Extended AD-AS Model Applying the Extended AD-AS Model
Demand-Pull Inflation in the Extended AD-AS Model - Cost-Push Inflation in the
Extended AD-AS Model - Recession and the Extended AD-AS Model The Inflation-Unemployment Relationship
The Phillips Curve - Aggregate Supply Shocks and the Phillips Curve The Long-Run Vertical Phillips Curve
Long-Run Vertical Phillips Curve - Disinflation Taxation and Aggregate Supply
Taxes and Incentives to Work - Incentives to Save and Invest - The Laffer Curve
- Criticisms of the Laffer Curve LAST WORD: Has the Impact of Oil Prices Diminished?
17 Economic Growth and the New Economy Ingredients of Growth
Efficiency Factor Production Possibilities Analysis
Labor and Productivity - Growth in AD-AS Model U.S. Economic Growth Rates
Accounting for Growth
Inputs versus Productivity - Quantity of Labor - Technological Advance - Quantity
of Capital - Education and Training - Resource Allocation and Economies of Scale
- Other Factors Productivity Growth and the New Economy
Characteristics of the New Economy - Macroeconomic Implications - Skepticism
about the New Economy Is Growth Desirable and Sustainable?
The Antigrowth View - In Defense of Economic Growth LAST WORD: Some Pleasant Side Effects of the New Economy
18 Deficits, Surpluses and the Public Debt
Deficits, Surpluses, and Debt: Definitions
Budget Philosophies
Annually Balanced Budget - Cyclically Balanced Budget - Functional Finance The Public Debt: Facts and Figures
Causes - Quantitative Aspects - Social Security Considerations False Concerns
Bankruptcy - Burdening Future Generations Substantive Issues
Income Distribution - Incentives - Foreign-Owned Public Debt - Crowding Out
and the Stock of Capital Deficits and Surpluses: 1990-2010
Options for the Surpluses
Pay Down the Public Debt - Reduce Taxes - Increase Government Expenditures -
Bolster the Social Security Trust Fund - Combination of Policies LAST WORD: Debt Reduction and the U.S. Trade Deficit
19 Disputes Over Macro Theory and Policy
Some History: Classical Economics and Keynes
The Classical View - The Keynesian View What Causes Macro Instability?
Mainstream View - Monetarist View - Real-Business-Cycle View - Coordination
Failures Does the Economy "Self-Correct"?
New Classical View of Self Correction - Mainstream View of Self-Correction Rules or Discretion?
In Support of Policy Rules - In Defense of Discretionary Stabilization Policy
- Increased Macro Stability Summary of Alternative Views LAST WORD: The Taylor Rule: Could a Robot Replace Alan Greenspan?
PART 5: MICROECONOMICS OF PRODUCT MARKETS
20 Supply and Demand: Elasticities and Government Set Prices
Price Elasticity of Demand
The Price Elasticity Coefficient and Formula - Interpretation of Ed - Refinement: Midpoint Formula - Graphical Analysis - The Total-Revenue
Test - Determinants of Price Elasticity of Demand - Applications of Price Elasticity
of Demand Price Elasticity of Supply
Price Elasticity of Supply: The Market Period Cross-Elasticity and Income of Demand
Cross-Elasticity of Demand Government-Set Prices
Price Ceilings and Shortages - Prices Floors and Surpluses LAST WORD: Luxury on $8 a Day
21 Consumer Behavior and Utility Maximization A Closer Look at the Law of Demand
Income and Substitution Effects - Law of Diminishing Marginal Utility Theory of Consumer Behavior
Consumer Choice and Budget Constraints - Utility-Maximizing Rule - Numerical
Example - Algebraic Restatement Utility Maximization and the Demand Curve
Deriving the Demand Schedule and Curve - Income and Substitution Effects Revisited Applications and Extensions
The Compact Disc Takeover - The Diamond-Water Paradox - The Value of Time -
Medical Care Purchases - Cash and Noncash Gifts LAST WORD: Criminal Behavior Appendix to Chapter 21: Indifference Curve Analysis - The Budget
Line: What Is Attainable - Indifference Curves; What is Preferred - The Indifference
Map - Equilibrium at Tangency - The Measurement of Utility - The Derivation
of the Demand Curve
22 The Costs of Production Economic Costs
Explicit and Implicit Costs - Normal Profit as a Cost - Economic Profit (or
Pure Profit) - Short Run and Long Run Short-Run Production Relationships
Law of Diminishing Returns Short-Run Production Costs
Fixed, Variable, and Total Cost - Per-Unit, or Average, Costs - Marginal Cost
- Shifts of the Cost Curves Long Run Production Costs
Firm Size and Costs - The Long-Run Cost Curve - Economies and Diseconomies of
Scale - Applications and Illustrations - Minimum Efficient Scale and Industry
Structure LAST WORD: Irrelevancy of Sunk costs
23 Pure Competition Four Market Models
Pure Competition: Characteristics
Relevance of Pure Competition Demand as Seen by a Purely Competitive Seller
Perfectly Elastic Demand - Average, Total, and Marginal Revenue - Graphic Portrayal Profit-Maximation in the Short Run
Total Revenue - Total Cost Approach: Profit-Maximization Case - Marginal Revenue
- Marginal-Cost Approach Marginal Cost and Short-Run Supply
Generalized Depiction - Diminishing Returns, Production Costs, and Product Supply
- Changes in Supply - Firm and Industry: Equilibrium Price Profit Maximization in the Long Run
Assumptions - Goal of Our Analysis - Long-Run Equilibrium - Long-Run Supply
for a Constant-Cost Industry - Long-Run Supply for an Increasing-Cost Industry
- Long-Run Supply for a Decreasing-Cost Industry Pure Competition and Efficiency
Productive Efficiency: P = Minimum ATC - Allocative Efficiency: P
= MC LAST WORD: Pure Competition and Consumer Surplus
24 Pure Monopoly Pure Monopoly
Examples of Monopoly Barriers to Entry
Economies of Scale - Legal Barriers to Entry: Patents and Licenses - Ownership
or Control of Essential Resources - Pricing and Other Strategic Barriers to
Entry Monopoly Demand
Marginal Revenue is Less Than Price - The Monopolist Is a Price Maker - The
Monopolist Sets Prices in the Elastic Region of Demand Output and Price Determination
Cost Data - MR = MC Rule - No Monopoly Supply Curve - Misconceptions Concerning
Monopoly Pricing - Possibility of Losses by Monopolist Economic Effects of Monopoly
Income Transfer - Cost Complications - Assessment and Policy Options Price Discrimination
Conditions - Examples of Price Discrimination - Consequences of Price Discimination Regulated Monopoly
Socially Optimal Price: P = MC - Fair-Return Price: P = ATC -
Dilemma of Regulation LAST WORD: De Beers' Diamonds: Are Monopolies Forever?
25 Monopolistic Competition and Oligopoly Monopolistic Competition
Relatively Large Number of Sellers - Differentiated Products - Easy Entry and
Exit - Advertising - Monopolistically Competitive Industries Price and Output in Monopolistic Competition
The Firm's Demand Curve - The Short Run: Profit or Loss - The Long Run: Only
a Normal Profit - Monopolistic Competition and Efficiency - Neither Productive
nor Allocative Efficiency - Excess Capacity Product Variety
Benefits of Product Variety - Further Complexity Oligopoly
A Few Large Producers - Homogenous or Differentiated Products - Control Over
Price, but Mutual Interdependence - Entry Barriers - Mergers - Measures of Industry
Concentration Oligopoly Behavior: A Game Theory Overview
Mutual Interdependence Revisited - Collusive Tendencies - Incentive to Cheat Three Oligopoly Models
Kinked-Demand Theory: Noncollusive Oligopoly Price Leadership Model
Oligopoly and Advertising
Positive Effects of Advertising - Potential Negative Effects of Advertising Oligopoly and Efficiency
Productive and Allocative Efficiency - Qualifications LAST WORD: Oligopoly in the Beer Industry
26 Technology, R ;amp; D, and Efficiency Technological Advance: Invention, Innovation, and Diffusion
Invention - Innovation - Diffusion - R ;amp; D Expenditures - Modern View of
Technological Advance Role of Entrepreneurs and Other Innovators
Forming Start-Ups - Innovation within Existing Firms - Anticipating the Future
- Exploiting University and Government Scientific Research A Firm's Optimal Amount of R ;amp; D
Interest-Rate Cost of Funds - Expected Rate of Return - Optimal R ;amp; D Expenditures Increased Profit via Innovation
Increased Revenue via Product Innovation - Reduced Cost via Process Innovation Imitation and R ;amp; D Incentives
Benefits of Being First Role of Market Structure
Market Structure and Technological Advance - Inverted-U Theory - Market Structure
and Technological Advance: The Evidence Technological Advance and Efficiency
Productive Efficiency - Allocative Efficiency - Creative Destruction LAST WORD: On the Path to the Personal Computer and the Internet
PART 6: MICROECONOMICS OF RESOURCE MARKETS
27 The Demand for Resources Significance of Resource Pricing
Marginal Productivity Theory of Resource Demand
Resource Demand as a Derived Demand - Marginal Revenue Product (MRP) - Rule
for Employing Resources: MRP = MRC - MRP as Resource Demand Schedule - Resource
Demand Under Imperfect Product Market Competition - Market Demand for a Resource Changes in Product Demand
Changes in Productivity - Changes in the Prices of Other Resources - Occupational
Employment Trends Elasticity of Resource Demand
Optimal Combination of resources
The Least Cost Rule - The Profit-Maximizing Rule - Numerical Illustration LAST WORD: Input Substitution: The Case of ATMs
28 Wage Determination Labor, Wages, and Earnings
General Level of Wages
Role of Productivity - Real Wages and Productivity - Secular Growth of Real
Wages A Purely Competitive Labor Market
Market Demand for Labor - Market Supply for Labor - Labor Market Equilibrium Monopsony Model
Upward-Sloping Labor Supply to Firm - MRC Higher than the Wage Rate - Equilibrium
Wage and Employment - Examples of Monopsony Power Three Union Models
Demand-Enhancement Model - Exclusive or Craft Union Model - Inclusive or Industrial
Union Model - Wage Increases and Unemployment Bilateral Monopoly Model
Indeterminate Outcome of Bilateral Monopoly - Desirability of Bilateral Monopoly The Minimum Wage Controversy
Case against the Minimum Wage - Case for the Minimum Wage - Evidence and Conclusions Wage Differentials
Marginal Revenue Productivity - Noncompeting Groups - Compensating Differences
- Market Imperfections Pay for Performance
The Principal-Agent Problem Revisited - Addenda: Negative Side Effects of Pay
for Performance LAST WORD: On African-Style Hairbraiders and Stodgy Economists
29 Rent, Interest, and Profit Economic Rent
Perfectly Inelastic Supply - Changes in Demand - Land Rent: A Surplus Payment
- Application: A Single Tax on Land - Productivity Differences and Rent Differences
- Alternative Uses of Land Interest
Loanable Funds Theory of Interest Extending the Model
Range of Interest Rates - Pure Rate of Interest - Role of the Interest Rate
- Application: Usury Laws Economics Profit
Role of the Entrepreneur - Sources of Economic Profit - Risk and Profit - Innovation
and Profit - Functions of Profit Income Shares LAST WORD: Determining the Price of Credit
PART 7: MICROECONOMICS OF GOVERNMENT
30 Government and Market Failure Public Goods
Demand for Public Goods - Supply of Public Goods - Optimal Quantity of a Public
Good - Cost-Benefit Analysis Externalities Revisited
Spillover Costs - Spillover Benefits - Individual Bargaining: Coase Theorem
- Liability Rules and Lawsuits - Government Intervention - A Market-Based Approach
to Spillover Costs - Society's Optimal Amount of Externality Reduction - Solid-Waste
Disposal and Recycling - Global Warming Information Failures
Inadequate Information Involving Sellers - Inadequate Information Involving
Buyers - Qualifications LAST WORD: Lojack: A Case of Positive Externalities
31 Public Choice Theory and the Economics of Taxation Revealing Preferences through Majority Voting
Inefficient Voting Outcomes - Paradox of Voting - Median-Voter Model Government Failure
Special Interests and Rent Seeking - Clear Benefits, Hidden Costs - Limited
and Bundled Choice - Bureaucracy and Inefficiency - Imperfect Institutions Apportioning the Tax Burden
Benefits Received versus Ability to Pay - Progressive, Proportional, and Regressive
Taxes Tax Incidence and Efficiency Loss
Elasticity and Tax Incidence - Efficiency of a Tax Loss - Probable Incidence
of U.S. Taxes - The U.S. Tax Structure The Issue of Freedom
The Conservative Position - The Liberal Position LAST WORD: "Government Failure" in the News
PART 8: MICROECONOMICS ISSUES AND POLICIES
32 Antitrust Policy and Regulation The Antitrust Laws
Historical Background - Sherman Act of 1890 - Clayton Act of 1914 - Federal
Trade Commission Act of 1914 - Celler-Kefauver Act of 1950 Antitrust Policy: Issues and Impacts
Issues of Interpretation - Issues of Enforcement: Tradeoffs among Goals - Effectiveness
of Antitrust Laws Industrial Regulation
Natural Monopoly - Problems with Industrial Regulation - Legal Cartel Theory Deregulation
Controversy - Outcomes of Deregulation Social Regulation
Distinguishing Features - The Optimal Level of Social Regulation - In Support
of Social Regulation - Criticisms of Social Regulations - Two Reminders LAST WORD: The Microsoft Antitrust Case
33 Agriculture: Economics and Policy Economics of Agriculture
Short-Run Problem: Price and Income Instability Economics of Farm Policy
Rationale for Farm Subsidies - Background: The Parity Concept - Economics of
Price Supports - Reduction of Surpluses Criticism, Politics, and Reform
Criticisms - The Politics of Farm Policy - Recent Reform: Freedom to Farm LAST WORD: The Sugar Program: A Sweet Deal
34 Income Inequality and Poverty Facts about Income Inequality
Distribution of Personal Income by Income Category - Distribution of Personal
Income by Quintiles (Fifths) - The Lorenz Curve Income Mobility: The Time Dimension
Effect of Government Redistribution Causes of Income Inequality
Ability - Education and Training - Discrimination - Preferences and Risks -
Unequal Distribution of Wealth - Market Power - Luck, Connections, and Misfortune Trends in Income Inequality
Causes of Growing Inequality Equality versus Efficiency
The Case for Equality: Maximizing Total Utility - The Case for Inequality: Incentives
and Efficiency - The Equality-Efficiency Tradeoff The Economics of Poverty
Definition of Poverty - Incidence of Poverty - Poverty Trends - The "Invisible"
Poor The Income-Maintenance System
Social Insurance Programs - Public Assistance Programs Welfare: Goals and Conflicts
Common Features - Conflicts among Goals Welfare Reform
Temporary Assistance to Needy Families (TANF) - Assessment of TANF LAST WORD: Some Facts on U.S. Wealth and Its Distribution
35 Labor Market Issues: Unionism, Discrimination, AND Immigration Unionism in America
Business Unionism - Union Membership - The Decline of Unionism Collective Bargaining
The Bargaining Process Economic Effects of Unions
The Union Wage Advantage - Efficiency and Productivity Labor Market Discrimination
Types of Discrimination - Costs of Discrimination Economic Analysis of Discrimination
Taste-for-Discrimination Model - Statistical Discrimination - Occupational Segregation:
The Crowding Model Antidiscrimination Policies and Issues
The Affirmative Action Controversy - Recent Developments Immigration
Number of Immigrants - Economics of Immigration - Complications and Modifications
- Immigration: Two Views LAST WORD: Orchestrating Impartiality
36 The Economics of Health Care The Health Care Industry
Twin Problems: Costs and Access
High and Rising Health Care costs
Health Care Spending - Quality of Health Care: Are We Healthier? - Economic
Implications of Rising Costs - The Basic Problem
Limited Access
Why the Rapid Rise in Costs?
Peculiarities of the Health Care Market - The Increasing Demand for Health Care
- Role of Health Insurance - Supply Factors in Rising Health Care Prices - Relative
Importance
Reform of the Health Care System
Cost Containment: Altering Incentives - Deductibles and Incentives - Medicare
and DRG - Recent Laws and Proposals
LAST WORD: A Market for Human Organs?
PART 9: INTERNATIONAL ECONOMICS AND THE WORLD ECONOMY
37 International Trade
Some Key Facts
The Economic Basis for Trade
Comparative Advantage: Graphical Analysis
Two Isolated Nations - Specializing Based on Comparative Advantage - Terms of
Trade - Gains from Trade - Trade with Increasing Costs - The Case for Free Trade
Supply and Demand Analysis of Exports and Imports
Supply and Demand in the United States - Supply and Demand in Canada - Equilibrium
World Price, Exports, and Imports
Trade Barriers
Economic Impact of Tariffs - Economic Impact of Quotas - Net Costs of Tariffs
and Quotas
The Case for Protection: A Critical Review
Military Self-Sufficiency Argument - Diversification for Stability Argument
- Infant-Industry Argument - Protection against Dumping Argument - Cheap Foreign
Labor Argument - A Summing up
The World Trade Organization
LAST WORD: Petition of the Candlemakers, 1845
38 Exchange Rates, The Balance of Payments, and Trade Deficits Financing International Trade
U.S Export Transaction - U.S Import Transaction
The Balance of Payments
Current Account - Capital Account - Official Reserves Account - Payments Deficits
and Surpluses
Flexible Exchange Rates
Depreciation and Appreciation - Determinants of Exchange Rates - Flexible Rates
and The Balance Of Payments - Disadvantages Of Flexible Exchange Rates
Fixed Exchange Rates
Use Of Reserves - Trade Policies - Exchange Controls and Rationing - Domestic
Macroeconomic Adjustments
International Exchange Rate Systems
The Gold Standard: Fixed Exchange Rates - The Bretton Woods System - The Current
System: The Managed Float
Recent U.S. Trade Deficits
Causes of the Trade Deficit - Implications of U.S. Trade Deficits
LAST WORD: Speculation in Currency Markets
39Web The Economics of Developing Countries The Rich and The Poor
Classifications - Comparisons - Growth, Decline, and Income Gaps - The Human
Realities
Obstacles to Economic Development
Natural Resources - Human Resources - Capital Accumulation - Technological Advance
- Sociocultural and Institutional Factors
The Vicious Circle
Role of Government
A Positive Role - Public Sector Problems
Role of Advanced Nations
Expanding Trade - Foreign Aid: Public Loans and Grants - Flows of Private Capital
Where from Here?
VC Policies for Promoting Growth - IAC Policies for Fostering DVC Growth
LAST WORD: Famine in Africa
40Web Transition Economies: Russia and China
Ideology and Institutions
State Ownership and Central Planning
Planning Goals and Techniques
Problems with Central Planning
The Coordination Problem - The Incentive Problem
The Collapse of the Soviet Economy
Declining Growth - Poor Product Quality - Lack of Consumer Goods - Large Military
Burden - Agricultural Drag
The Russian Transition to a Market System
Privatization - Price Reform - Promotion of Competition - Making the Ruble Fully
Convertible - Price Level Stabilization - Other Major Problems - Future Prospects
Market Reforms In China
Agricultural and Rural Reform - Reform of Urban Industries - Special Economic
Zones - Development of Supporting Institutions - Transformation of the SOEs
Outcomes and Prospects
Positive Outcomes of Reform - Problems
LAST WORD: "Police Smash Down Smirnov's Doors"
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