To the Student -- The Nature And Method of Economics The Age of the Economist -- Methodology -- Pitfalls to Objective Thinking -- The Economic Perspective -- Fast-Food Lines: An Economic Perspective -- Appendix to Chapter 1: Graphs and Their Meaning -- The Economizing Problem The Foundation of Economics -- Economics: Employment and Efficiency -- Unemployment, Growth, and the Future -- The "Isms" -- The Circular Flow Model -- The Diminishing Production Possibilities of Castro's Cuba -- Understanding Individual Markets: Demand And Supply Markets Defined -- Demand -- Supply -- Supply and Demand: Market Equilibrium -- Ticket Scalping: A Bum Rap? -- Pure Capitalism And The Market System Capitalist Ideology -- Other Characteristics -- The Competitive Market System -- The Five Fundamental Questions -- The Market System at Work -- Back to Barter -- The Mixed Economy: Private And Public Sectors Households as Income Receivers -- Households as Spenders -- The Business Population -- Legal Forms of Businesses -- Economic Functions of Government -- Legal and Social Framework -- Maintaining Competition -- Redistribution of Income -- Reallocation of Resources -- The Circular Flow Revisited -- Government Finance -- Federal Finance -- State and Local Finance -- The Financing of Corporate Activity -- The United States In The Global Economy Growth of World Trade -- Back to the Circular Flow -- Specialization and Comparative Advantage -- Foreign Exchange Market -- Government and Trade -- Multilateral Agreements and Free-Trade Zone -- Can American Firms Compete? -- Buy American: The Global Refrigerator -- National Income, Employment, and Fiscal Policy -- Measuring Domestic Output, National Income, And The Price Level Macroeconomic Measurement -- Gross Domestic Product -- Expenditures Approach -- Income Approach -- Other Social Accounts -- Measuring the Price Level -- Nominal and Real GDP -- GDP and Social Welfare -- The CPI: Does It Overstate Inflation -- Mactoeconomic Instability: Unemployment and Inflation The Business Cycle -- Unemployment -- Inflation: Defined and Measured -- Redistributive Effects of Inflation -- Output Effects of Inflation -- The Stock Market and Macroeconomic Instability -- Building the Aggregate Expenditures Model Historical Backdrop -- Simplifications -- Tools of the Aggregate -- Expenditures Theory -- Consumption and Saving -- Investment -- Equilibrium GDP: Expenditures-Output Approach -- Equilibrium GDP: Leakages-Injections Approach -- Planned versus Actual Investment -- John Maynard Keynes (1883-1946) -- Aggregate Expenditures: The Multiplier, Net Exports, and Government Changes in Equilibrium GDP and the Multiplier -- International Trade and Equilibrium Output -- Adding the Public Sector -- Equilibrium versus Full-Employment GDP -- Historical Applications -- Critique and Preview -- Squaring the Economic Circle -- Aggregate Demand and Aggregate Supply Aggregate Demand -- Aggregate Supply -- Equilibrium: Real Output and the Price Level -- Changes in Equilibrium -- Why Is Unemployment in Europe So High? -- Fiscal Policy Legislative Mandates -- Discretionary Fiscal Policy -- Nondiscretionary Fiscal Policy: Built-in Stabilizers -- Problems, Criticisms, and Complications -- The Leading Indicators -- Money, Banking, and Monetary Policy -- Money and Banking The Functions of Money -- The Supply of Money -- What "Backs" the Money Suppy? -- The Demand for Money -- The Money Market -- The United States Financial System -- Bank and Thrift Failures -- The Global Greenback -- How Banks Create Money The Balance Sheet of a Commercial Bank -- Prologue: The Goldsmiths -- A Single Commercial Bank -- The Banking System: Multiple-Deposit Expansion -- The Bank Panics of 1930-1933 -- The Federal Reserve Banks and Monetary Policy Goals of Monetary Policy -- Consolidated Balance Sheet of the Federal Reserve Banks -- Tools of Monetary Policy -- Monetary Policy, Real GDP, and the Price Level -- Effectiveness of Monetary Policy -- The "Big Picture" -- For the Fed, Life Is a Metaphor -- Problems and Controversies in Macroeconomics -- Alternative Views on Macro Theory and Policy Classics and Keynes: AD-AS -- Interpretation -- Keynesians and Monetarism -- Rational Expectations Theory -- Absorption into the Mainstream -- "Real" Business Cycle Theory -- The Inflation-Unemployment Relationship The Phillips Curve -- Stagflation: A Shifting Phillips Curve? -- Natural Rate Hypothesis -- Aggregate Supply Revisited -- Demand-Pull and Cost-Push Inflation -- Employment and Training Policy -- Wage-Price (Incomes) Policies -- Supply-Side Economics -- Recap: Alternative Macroeconomic Perspectives -- Profit Sharing: Making Wages Flexible -- Budget Deficits and the Public Debt Deficits and Debt: Definitions -- Budget Philosophies -- The Public Debt: Facts and Figures -- Economic Implications: False Issues -- Implications and Issues -- Recent Federal Deficits -- Budget Deficits and Trade Deficits -- Cut Entitlements to Reduce the Deficit? -- Economic Growth Growth Economics -- Ingredients of Growth -- Graphical Analysis -- United States Growth -- Accounting for Growth -- The Productivity Slowdown -- Doomsday Models -- Growth Policies -- Is Growth Desirable? -- Microeconomics of Product Markets -- Demand and Supply: Elasticities And Applications Price Elasticity of Demand -- Price Elasticity of Supply -- Applications: Legal Prices -- Market Forces and the Value of Education -- Consumer Behavior And Utility Maximization Two Explanations of the Law of Demand -- Theory of Consumer Behavior -- Marginal Utility and the Demand Curve -- Applications and Extentions -- The Inefficiency of Christmas Gift-Giving -- Appendix to Chapter 21: Indifference Curve Analysis -- The Costs of Production Economic Costs -- Short-Run Production Costs -- Production Costs in the Long Run -- Economies of Scale and Industrial Concentration -- Price and Output Determination: Pure Competition Four Market Models -- Pure Competition: Concept and Occurrence -- Demand to a Competitive Seller -- Profit Maximization in the Short Run: Two Approaches -- Profit Maximization in the Long Run -- Pure Competition and Efficiency -- "Creative Destruction" as a Competitive Force -- Price and Output Determination: Pure Monopoly Pure Monopoly: Introduction -- Barriers to Entry -- Monopoly Demand -- Output and Price Deterrmination -- Effects of Monopoly -- Price Discrimination -- Regulated Monopoly -- De Beers' Diamonds: Are Monopolies Forever? -- Price and Output Determination: Monopolistic Competition Monopolistic Competition: Concept and Occurrence -- Price and Output Determination -- Monopolistic Competition and Economic Inefficiency -- Nonprice Competition -- The Economics of Advertising -- Monopolistic competition and economic analysis -- The Market for Principles of Economics Textbooks -- Price and Output Determination: Oligopoly Oligopoly: Concept and Occurrence -- Oligopoly Behavior: A Game Theory Overview -- Four Oligopoly Models -- Nonprice Competition -- Oligopoly and Economic Efficiency -- Automobiles: A Case Study -- The Beer Industry: Oligopoly Brewing? -- Microeconomics of Resource Markets -- Production and the Demand for Resources Significance of Resource Pricing -- Complexities of Resource Pricing -- Marginal Productivity Theory of Resource Demand -- Determinants of Resource Demand -- Elasticity of Resource Demand -- Optimal Combination of Resources -- Marginal Productivity Theory of Income Distribution -- Input Substitution: The Case of Cabooses -- The Pricing And Employment of Resources: Wage Determination Meaning of Wages -- General Level of Wages -- Wages in Particular Labor Markets -- Wage Differentials -- Pay and Performance -- Pay and Performance in Professional Baseball -- The Pricing and Employment of Resources: Rent, Interest, and Profits Economic Rent -- Interest -- Economic Profits -- Income Shares -- Determining the Price of Credit -- Government and Current Economic Problems -- Government and Market Failure: Public Goods, the Environment, and Information Problems Public Goods: Extending the Analysis -- Externalities Revisited -- Pollution: A Closer Look -- Information Failures -- Used Cars: The Market for "Lemons" -- Public Choice Theory and Texation Revealing Preferences through Majority Voting -- Public Sector Failure -- Apportioning the Tax Burden -- Tax Incidence and Efficiency Loss -- Tax Reform -- The Issue of Freedom -- "Public Sector Failure" in the News -- Antitrust, Regulation, and Industrial Policy Industrial Concentration: Definitions -- Industrial Concentration: Beneficial or Harmful? -- The Antitrust Laws -- Antitrust: Issues and Impact -- Natural Monopolies and Their Regulation -- Deregulation -- Social Regulation -- Industrial Policy -- Deregulation of the Airlines -- Agriculture: Economics and Policy Economics of Agriculture -- Economics of Farm Policy -- Criticisms of Farm Policy -- The Politics of Farm Policy -- World Trade and Farm Policy -- Global View: Feast or Famine? -- The Sugar Program: A Sweet Deal -- Income Inequality and Poverty Income Inequality: Some Facts -- Two Adjustments -- Government and Redistribution -- Causes of Income Inequality -- Equality versus Efficiency -- The Dismal Economics of Poverty.