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• Title Page
• Copyright Page
• Brief Contents
• About the Authors
• Contents
• Preface
• Reviewers
• Part 1 Introduction
• Chapter 1 Getting Started
• Chapter Checklist
• 1.1 Definition and Questions
• Scarcity
• Economics Defined
• What, How, and For Whom?
• Can the Pursuit of Self-Interest Be In the Social Interest?
• Checkpoint 1.1
• 1.2 The Economic Way of Thinking
• A Choice Is a Tradeoff
• Cost: What You Must Give Up
• Benefit: What You Gain
• Rational Choice
• How Much? Choosing at the Margin
• Choices Respond to Incentives
• Checkpoint 1.2
• 1.3 Economics as a Life Skill
• Economics as a Decision Tool
• Economics as a Social Science
• Economics as an Aid To Critical Thinking
• Checkpoint 1.3
• Chapter Summary
• Chapter Checkpoint
• Appendix: Making and Using Graphs
• Basic Idea
• Interpreting Data Graphs
• Interpreting Graphs Used In Economic Models
• The Slope of a Relationship
• Relationships Among More Than Two Variables
• Appendix Checkpoint
• Eye on the Benefit and Cost of School
• Did You Make the Right Decision?
• Eye on Your Life
• Your Time Allocation
• Eye on the Past
• Adam Smith and the Birth of Economics as a Social Science
• Chapter 2 The U.S. and Global Economies
• Chapter Checklist
• 2.1 What, How, and for Whom?
• What Do We Produce?
• How Do We Produce?
• For Whom Do We Produce?
• Checkpoint 2.1
• 2.2 The Global Economy
• The People
• The Economies
• What In The Global Economy
• How In The Global Economy
• For Whom in the Global Economy
• Checkpoint 2.2
• 2.3 The Circular Flows
• Households and Firms
• Markets
• Real Flows and Money Flows
• Governments
• Governments in the Circular Flow
• Circular Flows In the Global Economy
• Checkpoint 2.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• What We Produce
• Eye on the Past
• Changes in What We Produce
• Eye on the U.S. Economy
• Changes in How We Produce in the Information Economy
• Eye on the Dreamliner
• Who Makes The Dreamliner?
• Eye on the Global Economy
• Differences in How We Produce
• Eye on your Life
• The U.S. and Global Economies in Your Life
• Eye on the Past
• Growing Government
• Eye on the Global Economy
• The Ups and Downs in International Trade
• Chapter 3 The Economic Problem
• Chapter Checklist
• 3.1 Production Possibilities
• Production Possibilities Frontier
• How the PPF Illustrates Scarcity and Its Consequences
• Checkpoint 3.1
• 3.2 Opportunity Cost
• The Opportunity Cost of a Smartphone
• Opportunity Cost and the Slope of the PPF
• Opportunity Cost Is a Ratio
• Increasing Opportunity Costs are Everywhere
• Your Increasing Opportunity Cost
• Checkpoint 3.2
• 3.3 Economic Growth
• Checkpoint 3.3
• 3.4 Specialization and Trade
• Absolute Advantage and Comparative Advantage
• Comparative Advantage: A Model
• Achieving Gains from Trade
• The Economy’s Production Possibilities Frontier
• Checkpoint 3.4
• Chapter Summary
• Chapter Checkpoint
• Eye on Your Life
• Your Production Possibilities Frontier
• Eye on the Environment
• Is Wind Power Free?
• Eye on the U.S. Economy
• Expanding Our Production Possibilities
• Eye on the Global Economy
• Hong Kong’s Rapid Economic Growth
• Eye on the U.S. Economy
• No One Knows How to Make a Pencil
• Eye on Your Life
• Your Comparative Advantage
• Chapter 4 Demand and Supply
• Chapter Checklist
• Competitive Markets
• 4.1 Demand
• The Law of Demand
• Demand Schedule and Demand Curve
• Individual Demand and Market Demand
• Changes in Demand
• Change in Quantity Demanded Versus Change in Demand
• Checkpoint 4.1
• 4.2 Supply
• The Law of Supply
• Supply Schedule and Supply Curve
• Individual Supply and Market Supply
• Changes in Supply
• Change in Quantity Supplied Versus Change in Supply
• Checkpoint 4.2
• 4.3 Market Equilibrium
• Price: A Market’s Automatic Regulator
• Predicting Price Changes: Three Questions
• Effects of Changes in Demand
• Effects of Changes in Supply
• Effects of Changes in Both Demand and Supply
• Checkpoint 4.3
• Chapter Summary
• Chapter Checkpoint
• Eye on Your Life
• Understanding and Using Demand and Supply
• Eye on the Global Economy
• The Markets for Cocoa and Chocolate
• Eye on the Price of Coffee
• Why Did the Price of Coffee Rise in 2014?
• Part 2 Monitoring the Macroeconomy
• Chapter 5 Gdp: A Measure of Total Production And Income
• Chapter Checklist
• 5.1 GDP, Income, and Expenditure
• GDP Defined
• Circular Flows in the U.S. Economy
• Expenditure Equals Income
• Checkpoint 5.1
• 5.2 Measuring U.S. GDP
• The Expenditure Approach
• The Income Approach
• GDP and Related Measures of Production and Income
• Real GDP and Nominal GDP
• Calculating Real GDP
• Using the Real GDP Numbers
• Checkpoint 5.2
• 5.3 The Uses and Limitations of Real GDP
• The Standard of Living Over Time
• Tracking the Course of the Business Cycle
• The Standard of Living Among Countries
• Goods and Services Omitted from GDP
• Other Influences on the Standard of Living
• Checkpoint 5.3
• Chapter Summary
• Chapter Checkpoint
• Appendix: Measuring Real GDP
• The Problem With Base Year Prices
• Value Production in the Prices of Adjacent Years
• Appendix Checkpoint
• Eye on the U.S. Economy
• Is a Computer Program an Intermediate Good or a Final Good?
• Eye on Booms and Busts
• How Do We Track Economic Booms and Busts?
• Eye on your Life
• Making GDP Personal
• Eye on the Global Economy
• Which Country Has the Highest Standard of Living?
• Chapter 6 Jobs and Unemployment
• Chapter Checklist
• 6.1 Labor Market Indicators
• Current Population Survey
• Population Survey Criteria
• Three Labor Market Indicators
• Alternative Measures of Unemployment
• Checkpoint 6.1
• 6.2 Labor Market Trends and Fluctuations
• Unemployment Rate
• The Participation Rate
• Alternative Measures of Unemployment
• Checkpoint 6.2
• 6.3 Unemployment and Full Employment
• Frictional Unemployment
• Structural Unemployment
• Cyclical Unemployment
• “Natural” Unemployment
• Unemployment and Real GDP
• Checkpoint 6.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• The Current Population Survey
• Eye on the Global Economy
• Unemployment and Labor Force Participation
• Eye on the U.S. Economy
• How Long Does it Take to Find a Job?
• Eye on Full Employment
• Are We Back at Full Employment?
• Eye on your Life
• Your Labor Market Status and Activity
• Chapter 7 The CPI and the Cost of Living
• Chapter Checklist
• 7.1 The Consumer Price Index
• Reading the CPI Numbers
• Constructing the CPI
• The CPI Market Basket
• The Monthly Price Survey
• Calculating the CPI
• Measuring Inflation and Deflation
• The Price Level, Inflation, and Deflation in the United States
• Checkpoint 7.1
• 7.2 The CPI and Other Price Level Measures
• Sources of Bias in the CPI
• The Magnitude of the Bias
• Two Consequences of the CPI Bias
• Alternative Consumer Price Indexes
• Checkpoint 7.2
• 7.3 Nominal and Real Values
• Dollars and Cents at Different Dates
• Nominal and Real Values in Macroeconomics
• Nominal GDP and Real GDP
• Nominal Wage Rate and Real Wage Rate
• Nominal Interest Rate and Real Interest Rate
• Checkpoint 7.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the Past
• 700 Years of Inflation and Deflation
• Eye on the U.S. Economy
• Measuring and Forecasting Inflation: The Sticky-Price CPI
• Eye on the U.S. Economy
• Deflating the GDP Balloon
• Eye on the Past
• The Nominal and Real Wage Rates of Presidents of the United States
• Eye on Box Office Hits
• Which Movie Really Was the Biggest Box Office Hit?
• Eye on your Life
• A Student’s CPI
• Part 3 The Real Economy
• Chapter 8 Potential GDP and the Natural Unemployment Rate
• Chapter Checklist
• Macroeconomic Approaches and Pathways
• The Three Main Schools of Thought
• Today’s Consensus
• The Road Ahead
• 8.1 Potential GDP
• The Production Function
• The Labor Market
• Checkpoint 8.1
• 8.2 The Natural Unemployment Rate
• Job Search
• Job Rationing
• Checkpoint 8.2
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• The Lucas Wedge and the Okun Gap
• Eye on the Global Economy
• Potential GDP in the United States and the European Union
• Eye on Potential GDP
• Why Do Americans Earn More and Produce More Than Europeans?
• Eye on the Past
• The Natural Unemployment Rate Over Seven Decades
• Eye on the Global Economy
• Unemployment Benefits and the Natural Unemployment Rate
• Eye on the U.S. Economy
• The Federal Minimum Wage
• Eye on your Life
• Natural Unemployment
• Chapter 9 Economic Growth
• Chapter Checklist
• 9.1 The Basics of Economic Growth
• Calculating Growth Rates
• The Magic of Sustained Growth
• Checkpoint 9.1
• 9.2 Labor Productivity Growth
• Labor Productivity
• Saving and Investment in Physical Capital
• Expansion of Human Capital and Discovery of New Technologies
• Combined Influences Bring Labor Productivity Growth
• Checkpoint 9.2
• 9.3 Causes and Effects of Economic Growth
• Old Growth Theory
• New Growth Theory
• Economic Growth and the Distribution of Income
• Checkpoint 9.3
• 9.4 Achieving Faster Growth
• Preconditions for Economic Growth
• Policies to Achieve Faster Growth
• How Much Difference Can Policy Make?
• Checkpoint 9.4
• Chapter Summary
• Chapter Checkpoint
• Eye on the Past
• How Fast Has Real GDP per Person Grown?
• Eye on the U.S. Economy
• U.S. Growth Is Slowing
• Eye on the U.S. Economy
• U.S. Labor Productivity Growth Since 1960
• Eye on the U.S. Economy
• The Changing Shares in the Gains from Economic Growth
• Eye on your Life
• How You Influence and Are Influenced by Economic Growth
• Eye on Rich and Poor Nations
• Why Are Some Nations Rich and Others Poor?
• Chapter 10 Finance, Saving, and Investment
• Chapter Checklist
• 10.1 Financial Institutions and Financial Markets
• Some Finance Definitions
• Markets for Financial Capital
• Financial Institutions
• Insolvency and Illiquidity
• Interest Rates and Asset Prices
• Checkpoint 10.1
• 10.2 The Loanable Funds Market
• Flows in the Loanable Funds Market
• The Demand for Loanable Funds
• The Supply of Loanable Funds
• Equilibrium in the Loanable Funds Market
• Changes in Demand and Supply
• Checkpoint 10.2
• 10.3 Government in Loanable Funds Market
• A Government Budget Surplus
• A Government Budget Deficit
• Checkpoint 10.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• Interest Rate Patterns
• Eye on the U.S. Economy
• The Loanable Funds Market in a Financial Crisis
• Eye on your Life
• Your Participation in the Loanable Funds Market
• Eye on Financial Markets
• Why Have Interest Rates Been So Low?
• Part 4 The Money Economy
• Chapter 11 The Monetary System
• Chapter Checklist
• 11.1 What is Money?
• Definition of Money
• The Functions of Money
• Money Today
• Official Measures of Money: M1 and M2
• Checks, Credit Cards, Debit Cards, and Mobile Wallets
• An Embryonic New Money: E-cash
• Checkpoint 11.1
• 11.2 The Banking System
• Commercial Banks
• Thrift Institutions
• Money Market Funds
• Checkpoint 11.2
• 11.3 The Federal Reserve System
• The Structure of the Federal Reserve
• The Fed’s Policy Tools
• How the Fed’s Policy Tools Work
• Checkpoint 11.3
• 11.4 Regulating the Quantity of Money
• Creating Deposits by Making Loans
• How Open Market Operations Change the Monetary Base
• The Multiplier Effect of an Open Market Operation
• The Money Multiplier
• Checkpoint 11.4
• Chapter Summary
• Chapter Checkpoint
• Eye on the Past
• The “Invention” of Banking
• Eye on the U.S. Economy
• Commercial Banks Under Stress in the Financial Crisis
• Eye on your Life
• Money and Your Role in Its Creation
• Eye on Creating Money
• How Does the Fed Create Money and Regulate Its Quantity?
• Chapter 12 Money, Interest, and Inflation
• Chapter Checklist
• Where We are and Where We’re Heading
• The Real Economy
• The Money Economy
• Real and Money Interactions and Policy
• 12.1 Money and the Interest Rate
• The Demand for Money
• Changes in the Demand for Money
• The Supply of Money
• The Nominal Interest Rate
• Changing the Interest Rate
• Checkpoint 12.1
• 12.2 Money, the Price Level, and Inflation
• The Money Market in the Long Run
• A Change in the Quantity of Money
• The Price Level in a Baby-Sitting Club
• The Quantity Theory of Money
• Inflation and the Quantity Theory of Money
• Hyperinflation
• Checkpoint 12.2
• 12.3 The Cost of Inflation
• Tax Costs
• Shoe-Leather Costs
• Confusion Costs
• Uncertainty Costs
• How Big is the Cost of Inflation?
• Checkpoint 12.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• Credit Cards and Money
• Eye on your Life
• Money Holding and Fed Watching
• Eye on Inflation
• What Causes Inflation?
• Eye on the Past
• Hyperinflation in Germany in the 1920s
• Part 5 Economic Fluctuations
• Chapter 13 Aggregate Supply and Aggregate Demand
• Chapter Checklist
• 13.1 Aggregate Supply
• Aggregate Supply Basics
• Changes in Aggregate Supply
• Checkpoint 13.1
• 13.2 Aggregate Demand
• Aggregate Demand Basics
• Changes in Aggregate Demand
• The Aggregate Demand Multiplier
• Checkpoint 13.2
• 13.3 Explaining Economic Trends and Fluctuations
• Macroeconomic Equilibrium
• Three Types of Macroeconomic Equilibrium
• Economic Growth and Inflation Trends
• The Business Cycle
• Inflation Cycles
• Deflation and the Great Depression
• Checkpoint 13.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• U.S. Economic Growth, Inflation, and the Business Cycle
• Eye on your Life
• Using the AS-AD Model
• Eye on the Business Cycle
• Why Did the U.S. Economy Go into Recession in 2008?
• Chapter 14 Aggregate Expenditure Multiplier
• Chapter Checklist
• 14.1 Expenditure Plans and Real GDP
• The Consumption Function
• Imports and Real GDP
• Checkpoint 14.1
• 14.2 Equilibrium Expenditure
• Induced Expenditure and Autonomous Expenditure
• Aggregate Planned Expenditure and Real GDP
• Equilibrium Expenditure
• Convergence to Equilibrium
• Checkpoint 14.2
• 14.3 Expenditure Multipliers
• The Basic Idea of the Multiplier
• The Size of the Multiplier
• The Multiplier and the MPC
• The Multiplier, Imports, and Income Taxes
• Business-Cycle Turning Points
• Checkpoint 14.3
• 14.4 The AD Curve and Equilibrium Expenditure
• Deriving the AD Curve from Equilibrium Expenditure
• Checkpoint 14.4
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• The U.S. Consumption Function
• Eye on the Past
• Say’s Law and Keynes’ Principle of Effective Demand
• Eye on your Life
• Looking for Multipliers
• Eye on the Multiplier
• How Big Is the Government Expenditure Multiplier?
• Chapter 15 The Short-Run Policy Tradeoff
• Chapter Checklist
• 15.1 The Short-Run Phillips Curve
• Aggregate Supply and the Short-Run Phillips Curve
• Aggregate Demand Fluctuations
• Why Bother with the Phillips Curve?
• Checkpoint 15.1
• 15.2 Short-Run and Long-Run Phillips Curves
• The Long-Run Phillips Curve
• Expected Inflation
• The Natural Rate Hypothesis
• Changes in the Natural Unemployment Rate
• Have Changes in the Natural Unemployment Rate Changed the Tradeoff?
• Checkpoint 15.2
• 15.3 Influencing Inflation and Unemployment
• Influencing the Expected Inflation Rate
• Targeting The Unemployment Rate
• Checkpoint 15.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the Global Economy
• Inflation and Unemployment
• Eye on the Past
• The U.S. Phillips Curve
• Eye on the Past
• A Live Test of the Natural Rate Hypothesis
• Eye on the Tradeoff
• Can We Have Low Unemployment and Low Inflation?
• Eye on your Life
• The Short-Run Tradeoff in Your Life
• Part 6 Macroeconomic Policy
• Chapter 16 Fiscal Policy
• Chapter Checklist
• 16.1 The Federal Budget
• The Institutions and Laws
• Budget Balance and Debt
• The Federal Budget in Fiscal 2017
• A Fiscal Policy Challenge
• Generational Accounting
• Checkpoint 16.1
• 16.2 Fiscal Stimulus
• Fiscal Policy and Aggregate Demand
• Automatic Fiscal Policy
• Cyclical and Structural Budget Balances
• Discretionary Fiscal Policy
• A Successful Fiscal Stimulus
• Limitations of Discretionary Fiscal Policy
• Checkpoint 16.2
• 16.3 The Supply Side: Potential GDP and Growth
• Full Employment and Potential GDP
• Fiscal Policy, Employment, and Potential GDP
• Fiscal Policy and Potential GDP: A Graphical Analysis
• Taxes, Deficits, and Economic Growth
• The Supply-Side Debate
• Long-run Fiscal Policy Effects
• Checkpoint 16.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the Global Economy
• The U.S. Budget in Global Perspective
• Eye on the Past
• Federal Tax Revenues, Outlays, Deficits, and Debt
• Eye on the U.S. Economy
• Fiscal and Generational Imbalances
• Eye on the U.S. Economy
• The U.S. Structural and Cyclical Budget Balances
• Eye on Fiscal Stimulus
• The U.S. Structural and Cyclical Budget Balances
• Eye on the Global Economy
• Some Real-World Tax Wedges
• Eye on your Life
• Your Views on Fiscal Policy and How Fiscal Policy Affects You
• Chapter 17 Monetary Policy
• Chapter Checklist
• 17.1 How The Fed Conducts Monetary Policy
• Monetary Policy Objectives
• Operational “Maximum Employment” Goal
• Operational “Stable Prices” Goal
• Responsibility for Monetary Policy
• Policy Instrument
• Hitting the Federal Funds Rate Target
• Restoring Financial Stability in a Financial Crisis
• Checkpoint 17.1
• 17.2 Monetary Policy Transmission
• Quick Overview
• Interest Rate Changes
• Exchange Rate Changes
• Money and Bank Loans
• The Long-Term Real Interest Rate
• Expenditure Plans
• The Fed Fights Recession
• The Fed Fights Inflation
• Loose Links and Long and Variable Lags
• A Final Reality Check
• Checkpoint 17.2
• 17.3 Alternative Monetary Policy Strategies
• An Interest Rate Rule
• A Monetary Base Rule
• Inflation Targeting
• Money Targeting Rule
• Checkpoint 17.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the Fed in a Crisis
• Did the Fed Save Us From Another Great Depression?
• Eye on the U.S. Economy
• The Fed’s Decisions Versus Two Rules
• Eye on the Global Economy
• Inflation Targeting Around the World
• Eye on your Life
• Your Views on Monetary Policy and How Monetary Policy Affects You
• Chapter 18 International Trade Policy
• Chapter Checklist
• 18.1 How Global Markets Work
• International Trade Today
• What Drives International Trade?
• Why the United States Imports T-Shirts
• Why the United States Exports Airplanes
• Winners, Losers, and Net Gains From Trade
• Checkpoint 18.1
• 18.2 International Trade Restrictions
• Tariffs
• Import Quotas
• Other Import Barriers
• Checkpoint 18.2
• 18.3 The Case Against Protection
• Three Traditional Arguments for Protection
• Four Newer Arguments for Protection
• Why Is International Trade Restricted?
• Checkpoint 18.3
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• U.S. Exports and Imports
• Eye on Globalization
• Who Wins and Who Loses from Globalization?
• Eye on the Past
• The History of U.S. Tariffs
• Eye on your Life
• International Trade
• Chapter 19 International Finance
• Chapter Checklist
• 19.1 Financing International Trade
• Balance of Payments Accounts
• Borrowers and Lenders, Debtors and Creditors
• Current Account Balance
• Checkpoint 19.1
• 19.2 The Exchange Rate
• Demand in the Foreign Exchange Market
• The Law of Demand for Foreign Exchange
• Changes in the Demand for Dollars
• Supply in the Foreign Exchange Market
• The Law of Supply of Foreign Exchange
• Changes in the Supply of Dollars
• Market Equilibrium
• Exchange Rate Expectations
• Purchasing Power Parity
• Monetary Policy and the Exchange Rate
• Pegging the Exchange Rate
• The People’s Bank Of China In The Foreign Exchange Market
• Checkpoint 19.2
• Chapter Summary
• Chapter Checkpoint
• Eye on the U.S. Economy
• The U.S. Balance of Payments
• Eye on the Global Economy
• Current Account Balances Around the World
• Eye on the Dollar
• Why Does Our Dollar Fluctuate?
• Eye on the Global Economy
• Purchasing Power Parity
• Eye on the Global Economy
• The Managed Yuan
• Eye on your Life
• Your Foreign Exchange Transactions
• Glossary
• Index
• Credits
• Back Cover