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 |