| Front cover | 1 |
| Chapter 1: Basic Economic Concepts | 8 |
| A. Basic Definitions of Economic Principles | 8 |
| B. The Economy | 11 |
| C. Factors of Production | 12 |
| D. Scarcity, Choice, and Opportunity Costs | 15 |
| E. Production Possibilities Curve (PPC) | 16 |
| F. Comparative Advantage, Specialization, and Exchange | 25 |
| G. Gains from Trade | 30 |
| H. Demand, Supply, and Market Equilibrium | 32 |
| Chapter 1: Review Questions | 49 |
| Review Quiz Answers | 51 |
| Chapter 2: Measurement of EconomicPerformance | 52 |
| A. Introduction to Economic Performance | 52 |
| B. National Income Accounts | 53 |
| C. Inflation Measurement and Adjustment | 64 |
| D. Unemployment | 77 |
| Chapter 2: Review Questions | 81 |
| Review Quiz Answers | 83 |
| Chapter 3: National Income and PriceDetermination | 84 |
| A. Aggregate Demand (AD) | 85 |
| B. Business Cycles and Economic Fluctuations | 89 |
| C. Multiplier and Crowding-Out Effects | 90 |
| D. Aggregate Supply (AS) | 96 |
| E. Macroeconomic Equilibrium | 103 |
| F. Self-Correction of Output Gaps | 109 |
| G. Long-Run Self-Adjustments in the AD-AS Model | 111 |
| Chapter 3: Review Questions | 115 |
| Review Quiz Answers | 117 |
| Chapter 4: Financial Sector | 118 |
| A. Definition of Financial Assets: Money, Stocks, and Bonds | 118 |
| B. Time Value of Money (Present and Future Value) | 123 |
| C. Measures of Money Supply | 124 |
| D. Financial Institutions | 126 |
| E. Banks and Creation of Money | 129 |
| F. Money Demand | 132 |
| G. Money Market | 135 |
| H. Real vs. Nominal Interest Rates | 138 |
| I. Loanable Funds Market | 140 |
| J. Central Bank and Control of the Money Supply | 146 |
| K. Tools of Central Bank Policy | 147 |
| L. Limitations of Monetary Policy | 153 |
| M. Quantity Theory of Money | 153 |
| Chapter 4: Review Questions | 155 |
| Review Quiz Answers | 157 |
| Chapter 5: Inflation, Unemployment, andStabilization Policies | 158 |
| A. Fiscal Policy | 158 |
| B. Demand-Side Effects of Fiscal Policy | 159 |
| C. Government Deficits and Debt | 162 |
| D. Crowding out | 163 |
| E. Automatic Stabilizers | 164 |
| F. The Reserve Market Model | 165 |
| G. Monetary Policy | 168 |
| H. Supply-Side Effects and Policies | 173 |
| I. Policy Mix | 176 |
| J. Inflation and Unemployment | 177 |
| K. Changes in the AD-AS and Phillips Curve Models | 182 |
| L. Role of Expectations | 186 |
| M. Economic Philosophies | 187 |
| Chapter 5: Review Questions | 190 |
| Review Quiz Answers | 192 |
| Chapter 6: Economic Growth and Productivity | 193 |
| A. Economic Growth and Real GDP per Capita | 193 |
| B. Economic Growth vs. Economic Expansion | 196 |
| C. Sources of Economic Growth | 197 |
| D. Labor Productivity | 199 |
| E. Research and Development and Technological Progress | 202 |
| F. The Aggregate Production Function | 204 |
| G. Benefits and Drawbacks of Economic Growth | 207 |
| H. Growth Policy | 208 |
| I. Additional Reading: The Trajectory of Productivity Since the 1950s | 209 |
| Chapter 6: Review Questions | 211 |
| Review Quiz Answers | 212 |
| Chapter 7: Open Economy: International Trade andFinance | 213 |
| A. Closed Economy vs. Open Economy | 213 |
| B. Balance of Payments Accounts | 215 |
| C. How and Why the BOP is Balanced | 221 |
| D. Exchange Rates | 223 |
| E. Demand for Foreign Exchange | 225 |
| F. Supply of Foreign Exchange | 228 |
| G. Exchange Rate Determination | 230 |
| H. Exchange Rate Effects on the Economy | 232 |
| I. Exchange Rate Policies | 232 |
| Chapter 7: Review Questions | 235 |
| Review Quiz Answers | 236 |
| Glossary | 237 |
| Back cover | 247 |