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election of, 25, 93
demand shifts and supply-demand
principle of increasing costs, 44
fiscal policy, 228
equilibrium, 66“67
production possibilities frontier, 43“44
Reaganomics, 97
effect on exchange rates, 363“368
real world examples, 46
regulation, 34
equilibrium, 64“70
for a single firm, 42“44
supply-side economics, 229“233
farm price supports, 73“74
Scatter diagrams, 158“160
tax cuts, 307
gasoline tax analysis, 69“70
Schor, Juliet, 91
Real consumer income, 180“181
international trade, 358“360
Schultze, Charles, 231
Real GDP
invisible hand. see Invisible hand
Securities firms, 269
and aggregate demand curve, 200, 228
and labor. see Labor
Self-correcting mechanism, 208“209, 227,
definition, 23“25, 88
law of, 66
291“294, 322, 324“326
equilibrium, 212“213
in macroeconomics, 85“87
Self-employment, 29
and growth, 92
price ceilings, 70“71
September 11 terrorist attacks, 90, 226, 231,
international trade, 381
price floors, 73
292, 324, 376
Real GDP per capita, 92
quantity demanded, 57“61
Service economy, 29
Real rate of interest, 120“122, 138“139,
quantity supplied, 61“64
Service industry, 28“29
162“163
rent controls, 72“73
Shaw, George Bernard, 95, 277
Real wage rate, 117“118
supply schedule, 61“62
Shift in demand curve, 58“60, 66“67
Real wages, 146
supply shifts and supply-demand
Shortage, 65
Real-world inflation, 119
equilibrium, 67“70
Siemens, 148
Rebates, tax, 154, 163“164
Supply and demand, laws of, 5
Sierra Leone, 138
Recession
Supply curve, 61“64
Singapore, 136, 140
of 1973“1980, 96“97
Supply schedule, 61“62
Slope, definition and measurement, 14“16
of 2001, 313
Supply shock, 211“212, 216, 321“322
Slope of a curved line, 15“16
and budget deficits, 314
Supply-demand analysis, 69“70
Slope of a straight line, 14
definition, 24“25, 87, 149
Supply-demand diagrams, 64“66
Slow down (1973“1995), 143“144
Federal Reserve System, 290
Supply-demand equilibrium, 64“70
Slow down (2006“2007), 84
international trade, 380
Supply-side economics, 229“233
Smith, Adam, 48“49, 50, 56, 342, 348
Keynesian model, 330“331
Supply-side fluctuations, 214“215
Social Security System, 34, 157, 307
national debt, 312
Supply-side inflation, 214“215, 318“319,
Socialism, 35
transmission of across borders, 190
321“322
Solow, Robert M., 3
unemployment, 87, 96, 176
Supply-side tax cuts, 229“233
Soto, Hernando de, 140
Recessionary gap
Surplus, 65, 73
South Korea, 136, 148, 341, 390
adjustment to, 207“209
Swaziland, 140
Southeast Asia, 361, 373, 374
definition, 182“184, 199, 205“207
Sweden, 26, 35, 140, 363
Soviet Union, 35, 48, 70, 141
fiscal policy, 227
Switzerland, 35, 363
Spain, 341
and prices, 207“208
Specialization, 48, 50, 341, 344, 347“348
September 11 terrorist attacks, 324
T
Speculators, currency, 373
Regulation, 33“34, 242, 250“251
Spending, 30“31, 155“160, 163“165, 226, Taiwan, 136, 341
Reich, Robert, 32
229, 313 Tangent, 15
Related goods, prices and availability of,
Spending chain, 187 Tanner, Bill, 69
60“61


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Index
420



Uruguay Round (tariff reductions), 348
Tariff, 348“353, 359“360 Tuition, 134, 146“147
U.S. dollar, 362, 374“375, 376, 380, 391
Taxation Turkey, 361, 374
U.S. economy, 21“36
2008 presidential campaign, 226 Two-variable diagrams, 13“14
aggregate supply-demand model, 87,
and capital formation, 138“140
U 212“216, 229“230
and consumption schedule,
bank failures, 243
222“223, 235 Ukraine, 138
budget deficits, 40, 46
corporate income tax, 230 Unemployment
closed economy, 23“24, 384“385
criticism of, 122 African Americans, 113
federal budget, 46, 307
cuts, 98“99, 154, 222, 226, 228, 292“293, and aggregate demand, 99“100
fluctuations. see Fluctuations, economic
300, 305, 307, 313 among teenagers, 113
government intervention, 289“291
cuts and consumer spending, 163“164 as automatic stabilizer, 225
growth of. see Growth
to encourage savings, 163 combating, 99“100
inflationary gap, 210“211
fiscal policy, 235“239 compensation, 34
inputs, see Inputs
fixed taxes, 235“236 computation of, 113“114
overview, 22“25
gasoline, 69“70 as coordination failure, 185
private-enterprise economy, 23
and government size, 228, 292“293 costs of, 111, 325
stagflation, 96, 199, 200, 210“211, 216
on income, 188, 222“225, 230, 235 cyclical, 114, 207
U.S. Steel Corp., 69
and the multiplier, 223“226, 237 economic goal to keep low, 111“116
Utility analysis, 35“36, 125
negative income tax, 226 and efficiency, 47
net taxes, 157 fighting with fiscal and monetary
V
progressive, 35 policy, 99“100, 324
proportional, 35 fiscal policy, 99“100, 324 Valley Forge, 57
rebates, 154, 163“164 frictional, 114 Value added, 171“172
sales and excise tax, 235 full employment, 115, 182“183, 229 Variable taxes, 235“236
sales tax, 235 during Great Depression, 25“26, Variables, 13“14
share of under George W. Bush, 35 112“113 Velocity, 278“283
vs. spending policy, 227“228 and growth policy, 106 Vertical long-run Phillips curve, 323,
supply-and-demand analysis, 69“70 human costs of, 112“113 327“328
and supply-side cuts, 229“233 and inflation, 6, 199, 324 Vietnam War, 96
variable, 235“236 inflation trade-off, 317“333 Volatility, 60
in various nations, 35, 300“301 and the market, 176 Volcker, Paul, 97, 287
Taylor, John, 293 and minimum wage, 115 Voluntary exchange, 342
“Taylor rule,” 293 monetary policy, 324
W
Technological progress, and shifts in natural rate of, 323, 331“332
supply curve, 63 and recession, 87, 96, 176 Wage premium, for college graduates, 141
Technology and recessionary gap, 207“209 Wages, 29“30
and aggregate supply curve, 202 structural, 114 in Europe, 30
in Asia, 148 types of, 114 inflationary expectations, 326“328
and capital formation, 139, 142 in various nations, 26, 113 minimum, 115
in developing countries, 148 Unemployment insurance, 113, nominal, 118, 201“202, 207“208
and education, 142 115“116, 157 rate of change, 319
growth policy, 142“143 Unemployment rate, 25“26, 111 real wage rate, 117“118
and production capacity, 108“109 Unenforceability, 75 real wages, 146
and productivity growth, 135 Unexpected inflation, 120“121 in various nations, 340“341
spurring change, 142“143 Unit of account, 244 Wal-Mart, 28
Teenagers, 27“28, 113 United Auto Workers (UAW), 201 Washington, George, 57
Tennessee Valley Authority, 23 United Kingdom Wealth, 120, 162, 180“181
Terrorism, 98, 307. see also September 11 currency, 363 Wealth of Nations, The (Smith), 48
terrorist attacks educational attainment in, 148 Wilde, Oscar, 361
Thailand, 390 GDP of, 22 Women, 27
Theory, 9“10 inflation targeting, 293 Workers, 114
Third World. see Developing countries investor protection, 140 Workforce, American, 27“30, 136, 144
Time, market value of, 42 labor costs, 341 Workweek, length of, 91
Time inconsistency, 294 openness of economy, 24 World Bank, 133, 140, 147
Toyota, 31, 148 Phillips curve, 319“320 World Trade Organization (WTO),
Trade, see International trade. see productivity, 106“107 349, 350
Intranational trade taxes in, 35 World War II, 25“26, 95“96, 108, 312
Trade, as win-win situation, 5“6 unemployment rates, 26 WTO (World Trade Organization),
Trade adjustment assistance, 351 wages, 341 349, 350
Trade deficit, 382, 387“390. see also United States. see also specific topics
X
International trade Canada, trade with, 345
Trade protection. see Protectionism China, trade with, 346 X-intercept, 16
Trade war, 348, 350 Japan, trade with, 165“166, 343“345,
Transactions, limitation on volume, 75 Y
346“347, 388
Transfer payments, 35, 157, 225“226, 332 Mexico, trade with, 346 Y-intercept, 16
Transit fares, 46 openness of economy, 24
Treasury bills, 265“266 share of GDP, 22 Z
Treaty of Maastricht, 375 taxes in. see Taxation
Zambia, 71
“Trickle-down economics.” see trade deficit, 388
Zero slope, 14
Supply-side economics unemployment rates, 25“26, 111
Zimbabwe, 124
Tucker, Sophie, 110 Unpredictable inflation, 123



Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Licensed to:




Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Licensed to:




Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Licensed to:




Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Licensed to:




Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
AINTED WITH ECONOMICS (12) (13) (14) (15) (16) (17) (18)


Price Level Real Money Supply
Chained Consumer Average Civilian M1
Reality
(in December)
GDP Price Hourly Labor Unemployment
(billions of
Price Index Index Earnings Population Forceb Rate
nomic Problem: Scarcity and Choice
(2000 = 100) (1982-1984 = 100) (1982 dollars) (millions) (percent) dollars)
Initial Look
11.9 17.1 ”” 121.9 49.2 3.2 ””
ONOMY: AGGREGATE SUPPLY AND DEMAND 8.9 13.0 ”” 125.7 51.6 24.9 ””
9.7 13.9 ”” 131.0 55.2 17.2 ””
acroeconomics
12.5 18.0 ”” 139.9 53.9 1.9 ””
conomic Policy

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