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Principles of Economics	page

Principles of Economics covers the scope and sequence for a two-semester principles of economics course. The text also includes many current examples, including; discussions on the great recession, the controversy among economists over the Affordable Care Act (Obamacare), the recent government shutdown, and the appointment of the United States’ first female Federal Reserve chair, Janet Yellen. The pedagogical choices, chapter arrangements, and learning objective fulfillment were developed and vetted with feedback from educators dedicated to the project. The outcome is a balanced approach to micro and macro economics, to both Keynesian and classical views, and to the theory and application of economics concepts. Current events are treated in a politically-balanced way, as well.

1. {: .preface} Preface

2. {: .chapter} Welcome to Economics!

   1. What Is Economics, and Why Is It Important?
   2. Microeconomics and Macroeconomics
   3. How Economists Use Theories and Models to Understand Economic Issues
   4. How Economies Can Be Organized: An Overview of Economic Systems

3. {: .chapter} Choice in a World of Scarcity

   1. How Individuals Make Choices Based on Their Budget Constraint
   2. The Production Possibilities Frontier and Social Choices
   3. Confronting Objections to the Economic Approach

4. {: .chapter} Demand and Supply

   1. Demand, Supply, and Equilibrium in Markets for Goods and Services
   2. Shifts in Demand and Supply for Goods and Services
   3. Changes in Equilibrium Price and Quantity: The Four-Step Process
   4. Price Ceilings and Price Floors
   5. Demand, Supply, and Efficiency

5. {: .chapter} Labor and Financial Markets

   1. Demand and Supply at Work in Labor Markets
   2. Demand and Supply in Financial Markets
   3. The Market System as an Efficient Mechanism for Information

6. {: .chapter} Elasticity

   1. Price Elasticity of Demand and Price Elasticity of Supply
   2. Polar Cases of Elasticity and Constant Elasticity
   3. Elasticity and Pricing
   4. Elasticity in Areas Other Than Price

7. {: .chapter} Consumer Choices

   1. Consumption Choices
   2. How Changes in Income and Prices Affect Consumption Choices
   3. Labor-Leisure Choices
   4. Intertemporal Choices in Financial Capital Markets

8. {: .chapter} Cost and Industry Structure

   1. Explicit and Implicit Costs, and Accounting and Economic Profit
   2. The Structure of Costs in the Short Run
   3. The Structure of Costs in the Long Run

9. {: .chapter} Perfect Competition

   1. Perfect Competition and Why It Matters
   2. How Perfectly Competitive Firms Make Output Decisions
   3. Entry and Exit Decisions in the Long Run
   4. Efficiency in Perfectly Competitive Markets

10. {: .chapter} Monopoly

    1. How Monopolies Form: Barriers to Entry
    2. How a Profit-Maximizing Monopoly Chooses Output and Price

11. {: .chapter} Monopolistic Competition and Oligopoly

    1. Monopolistic Competition
    2. Oligopoly

12. {: .chapter} Monopoly and Antitrust Policy

    1. Corporate Mergers
    2. Regulating Anticompetitive Behavior
    3. Regulating Natural Monopolies
    4. The Great Deregulation Experiment

13. {: .chapter} Environmental Protection and Negative Externalities

    1. The Economics of Pollution
    2. Command-and-Control Regulation
    3. Market-Oriented Environmental Tools
    4. The Benefits and Costs of U.S. Environmental Laws
    5. International Environmental Issues
    6. The Tradeoff between Economic Output and Environmental Protection

14. {: .chapter} Positive Externalities and Public Goods

    1. Why the Private Sector Under Invests in Innovation
    2. How Governments Can Encourage Innovation
    3. Public Goods

15. {: .chapter} Poverty and Economic Inequality

    1. Drawing the Poverty Line
    2. The Poverty Trap
    3. The Safety Net
    4. Income Inequality: Measurement and Causes
    5. Government Policies to Reduce Income Inequality

16. {: .chapter} Issues in Labor Markets: Unions, Discrimination, Immigration

    1. Unions
    2. Employment Discrimination
    3. Immigration

17. {: .chapter} Information, Risk, and Insurance

    1. The Problem of Imperfect Information and Asymmetric Information
    2. Insurance and Imperfect Information

18. {: .chapter} Financial Markets

    1. How Businesses Raise Financial Capital
    2. How Households Supply Financial Capital
    3. How to Accumulate Personal Wealth

19. {: .chapter} Public Economy

    1. Voter Participation and Costs of Elections
    2. Special Interest Politics
    3. Flaws in the Democratic System of Government

20. {: .chapter} The Macroeconomic Perspective

    1. Measuring the Size of the Economy: Gross Domestic Product
    2. Adjusting Nominal Values to Real Values
    3. Tracking Real GDP over Time
    4. Comparing GDP among Countries
    5. How Well GDP Measures the Well-Being of Society

21. {: .chapter} Economic Growth

    1. The Relatively Recent Arrival of Economic Growth
    2. Labor Productivity and Economic Growth
    3. Components of Economic Growth
    4. Economic Convergence

22. {: .chapter} Unemployment

    1. How the Unemployment Rate is Defined and Computed
    2. Patterns of Unemployment
    3. What Causes Changes in Unemployment over the Short Run
    4. What Causes Changes in Unemployment over the Long Run

23. {: .chapter} Inflation

    1. Tracking Inflation
    2. How Changes in the Cost of Living are Measured
    3. How the U.S. and Other Countries Experience Inflation
    4. The Confusion Over Inflation
    5. Indexing and Its Limitations

24. {: .chapter} The International Trade and Capital Flows

    1. Measuring Trade Balances
    2. Trade Balances in Historical and International Context
    3. Trade Balances and Flows of Financial Capital
    4. The National Saving and Investment Identity
    5. The Pros and Cons of Trade Deficits and Surpluses
    6. The Difference between Level of Trade and the Trade Balance

25. {: .chapter} The Aggregate Demand/Aggregate Supply Model

    1. Macroeconomic Perspectives on Demand and Supply
    2. Building a Model of Aggregate Demand and Aggregate Supply
    3. Shifts in Aggregate Supply
    4. Shifts in Aggregate Demand
    5. How the AD/AS Model Incorporates Growth, Unemployment, and Inflation
    6. Keynes’ Law and Say’s Law in the AD/AS Model

26. {: .chapter} The Keynesian Perspective

    1. Aggregate Demand in Keynesian Analysis
    2. The Building Blocks of Keynesian Analysis
    3. The Phillips Curve
    4. The Keynesian Perspective on Market Forces

27. {: .chapter} The Neoclassical Perspective

    1. The Building Blocks of Neoclassical Analysis
    2. The Policy Implications of the Neoclassical Perspective
    3. Balancing Keynesian and Neoclassical Models

28. {: .chapter} Money and Banking

    1. Defining Money by Its Functions
    2. Measuring Money: Currency, M1, and M2
    3. The Role of Banks
    4. How Banks Create Money

29. {: .chapter} Monetary Policy and Bank Regulation

    1. The Federal Reserve Banking System and Central Banks
    2. Bank Regulation
    3. How a Central Bank Executes Monetary Policy
    4. Monetary Policy and Economic Outcomes
    5. Pitfalls for Monetary Policy

30. {: .chapter} Exchange Rates and International Capital Flows

    1. How the Foreign Exchange Market Works
    2. Demand and Supply Shifts in Foreign Exchange Markets
    3. Macroeconomic Effects of Exchange Rates
    4. Exchange Rate Policies

31. {: .chapter} Government Budgets and Fiscal Policy

    1. Government Spending
    2. Taxation
    3. Federal Deficits and the National Debt
    4. Using Fiscal Policy to Fight Recession, Unemployment, and Inflation
    5. Automatic Stabilizers
    6. Practical Problems with Discretionary Fiscal Policy
    7. The Question of a Balanced Budget

32. {: .chapter} The Impacts of Government Borrowing

    1. How Government Borrowing Affects Investment and the Trade Balance
    2. Fiscal Policy, Investment, and Economic Growth
    3. How Government Borrowing Affects Private Saving
    4. Fiscal Policy and the Trade Balance

33. {: .chapter} Macroeconomic Policy Around the World

    1. The Diversity of Countries and Economies across the World
    2. Improving Countries’ Standards of Living
    3. Causes of Unemployment around the World
    4. Causes of Inflation in Various Countries and Regions
    5. Balance of Trade Concerns

34. {: .chapter} International Trade

    1. Absolute and Comparative Advantage
    2. What Happens When a Country Has an Absolute Advantage in All Goods
    3. Intra-industry Trade between Similar Economies
    4. The Benefits of Reducing Barriers to International Trade

35. {: .chapter} Globalization and Protectionism

    1. Protectionism: An Indirect Subsidy from Consumers to Producers
    2. International Trade and Its Effects on Jobs, Wages, and Working Conditions
    3. Arguments in Support of Restricting Imports
    4. How Trade Policy Is Enacted: Globally, Regionally, and Nationally
    5. The Tradeoffs of Trade Policy

36. {: .appendix} The Use of Mathematics in Principles of Economics

37. {: .appendix} Indifference Curves

38. {: .appendix} Present Discounted Value

39. {: .appendix} The Expenditure-Output Model