Chapter 17 Infl ation

• Students will learn how the supply of and demand for currencies determine exchange rates and what the consequences of a strong or a weak dollar are.

• The Analyze the Issue sections give students the chance to participate in an important environmental debate.

• The Keynesian argument against the classical school that prices and wages are inflexible downward can be seen by students here.

• A complete presentation of both Keynesian and self-correction models is required for the student to understand the macroeconomic public policy debate.

• Chapter 21(11) on Fiscal Policy uses realism as its hallmark by explaining the spending multiplier process with real-world updated numbers.

• The changing economic character of the United States with global comparisons to other countries is highlighted in Chapter 22(12) of The Public Sector.

• A new exhibit gives a global comparison of the national debt as a percentage of GDP and a discussion of the "PayGo" rule is included in this chapter.

• The link between economic freedom and quality-of-life indicators is explained in the chapter on Growth and the Less-Developed Countries.

• The economics puzzles posed in the preview appeal to the student's "Sherlock Holmes" impulses because they can be solved by understanding the material presented in the chapter.

• The conclusion statements of key concepts are highlighted at the end of the chapters.

• Miniature versions of the important graphs and causation chains are included in many of the summarized points.

• The purpose of these is to serve as visual reminders for students as they review and study for exams and quizzes.

• "Ask the Instructor Video Clips" and the "Graphing Workshop" can be found on the CourseMate Web site.

• The manual was prepared by Douglas Copeland of Johnson County Community College.

• Tucker can be downloaded from the Tucker Web site at www.cengage.com/economics/tucker.

• Our exclusive agreement to offer TurningPoint software lets you pose book-specifi c questions and display students' answers in the Microsoft PowerPoint slides of your own lecture, in conjunction with the "clicker" hardware of your choice.

• High-interest clips from current news events as well as historic raw footage from forty years ago are included in this supplement.

• These short videos provide students with a new lens through which to view the past and present, one that will greatly enhance their knowledge and understanding of significant events and open up new dimensions.

• Students can explore important economic concepts through a unique learning system made up of tutorials, interactive drawing tools, and exercises that teach how to interpret, reproduce, and explain graphs.

• If a student has trouble understanding an in-class lecture or is a visual learner, these video clips can help.

• Through hands-on exploration and analysis of the latest economic news stories, policy debates, and data, students can deepen their understanding of the theoretical concepts.

• It is one of the most teachable moments in modern history because of the intense real-life challenges that affect every family and business sector.

• Cengage Learning's Global Economic Watch helps instructors bring current events into the classroom through a suite of online content, discussion forums, testing tools, and more.

• Discussion and testing content, PowerPoint(r) slides on key topics, sample syllabus, and other teaching resources are available.

• To create an accompaniment to the textbook that is perfectly tailored to your course, choose just one reading, or many, even add your own material.

• The list of fascinating is full of economics problems requiring more and relevant topics continues throughout each powerful tool than just common sense.

• You will learn why colleges and universities charge different tuitions for different reasons and why economists might disagree with one another.

• If the chapter ends with a discussion of why you should worry if the government fails, you may want to major in economics.

• Maybe you would like a big home, gourmet meals, designer are forever greater clothes, clean air, better health care, shelter for the homeless, more leisure time, and than the available so on.

• Uncle Sam can't escape the problem of scarcity because the federal government doesn't have enough money to fund all of its programs.

• North America, Western Europe, and some parts of Asia have achieved substantial economic growth.

• Levi made a pair of pants from the canvas after meeting a miner who wanted sturdy pants that would last while digging for gold.

• When he saw it, he hired workers, built factories, and became one of the largest pants makers in the world.

• Capital includes factories, other buildings, warehouses, robots, trucks, and distribution facilities.

• An example of micro economic analysis would be to study economic units involved in the market for household, firm, and ostrich eggs.

• The model should only represent the shapes of the wings and fuselage, and not include tiny seats, electrical wiring, or other interior design details.

• The economist has to use a keen sense of observation to form a model because a theory only focuses on the main variables.

• The data is consistent with the theory that when the price of gasoline goes up, the quantity of gasoline consumed goes down.

• The conclusion is that the theory is valid if, for example, consumer incomes or population size do not change at the same time that gasoline prices rise.

• Researchers will be sent to all corners of the nation to check financial records to see if someone qualifies by owning assets worth $1 trillion or more.

A Latin phrase that the ceteris paribus assumption allows us to focus attention on selected means while certain variables is called A Latin phrase that the ceteris paribus assumption allows us to focus attention on selected means while certain variables is called A Latin phrase that the ceteris

• A model is only valid if a cause-and-effect relationship is stable or dependable over time, rather than being an association that occurs by chance and eventually disappears.

• Stock prices will fall or remain the same even though there is a statistical relationship between these two variables.

• It is possible that stock prices responded to changes in interest rates during the months when the voodoo dances were performed.

• Nebraska State officials are considering whether to remain independent or join a conference with high-quality football and basketball programs.

• A study shows that universities belonging to major athletic conferences have higher graduation rates than non members.

• The Federal Reserve is viewed as a spoof Board by the Wharton David L. Upshaw.

• The data on greeting card sales is used by a vice president of American chair competition.

• A win by an old team predicts rises and a slow National's sales precede a dip in the stock market.

• According to the company's sales indicators, there are usually ways to con before it happens.

• One econo about a one-year lag between a sumer spending and the marriage rate suggested that the surliness change in the marriage rate is a countercyclical economy.

• The quotes imply that economists should agree, but they ignore the fact that physicists, doctors, business executives, lawyers, and other professionals often disagree.

• Free trade among nations, the elimination of farm subsidies and rent ceilings, government spending to recover from a recession, and many other issues are all agreed upon by many economists.

• Politicians, business executives, relatives, and friends use a lot of statements to discuss economic issues.

• There are biases or preconceptions that can cloud an economist's thinking.

• List increased labor cost from a large students living at home or workers other minimum-wage minimum-wage hike would jeopar whose spouse earns a much higher arguments not discussed.

• A government economist might work on projects such as how to improve consumer prices or report national statistics for economic growth.

• Economics is an excellent major for those preparing for law school because of its emphasis on a logical approach to problem solving.

• When opinions or points of view are not based on facts, they are untestable.

• If universities that belong to big-time academic variables, such as tuition, quality of conferences, and student-faculty ratios, have higher graduation rates, and not athletic rates, then that is a good thing.

• Nebraska State offi cials will join a big-time athletic conference if correlation does not mean association between the graduation rate and tion.

• If you want to understand the relationship between economic variables, a graph is the simplest way to do so.

• Ceteris paribus shows that the expenditure per year for a personal computer has a direct relationship to annual income.

• Ceteris paribus shows an inverse relationship between the price per compact disc and the quantity of CDs consumers purchase.

• As income increases along the horizontal axis, the amount spent on toothpaste remains the same.

• An upward-sloping curve is drawn in Exhibit A-4 to show the relationship between the expenditure for a PC per year and annual income.

• Consumer income is one of the factors that can affect the relationship between the price and quantity variables.

• The price-quantity demanded curve shifts left as the annual income variable decreases.

• When the ceteris paribus assumption is relaxed and a third variable is allowed to change, there is a shift in the curve.

• When the ceteris paribus assumption is relaxed and a third variable is allowed to change, there is a shift in the curve.

• There is a relationship between the Copyright 2010 Cengage Learning and the survey sales data collected.

• A new textile machine can be purchased for a business, but it cannot be used to buy a new recreation facility for employees.

• The opportunity cost of dating a famous model or movie star might be the loss of your current girlfriend or boyfriend.

• The opportunity cost of the movie is giving up a DVD and study time that is needed to score higher on the economics exam.

• The economy is fully employed and produces the greatest output possible without waste or mismanagement.

• The production possibilities curve model assumes that resources can be replaced and the opportunity cost remains constant.

• The model used in the chapter on international trade and fi nance is a straight line.

• Computer chips, satellites, and the Internet are all examples of technological advances because of the use of science and engineering knowledge.

• Henry Ford changed auto industry technology by using the assembly line for making cars.

• Xerox Corporation accepted Carlson's invention and transformed a good idea into a revolutionary product.

• Entrepreneurs are important because they transform their new ideas into production and practical use.

• The phrase "new economy" refers to economic growth caused by technological advances that make businesses and workers more productive.

• Fewer deaths are being caused by computer-controlled monitors that track water temperatures, acidity, and chlorine levels.

• It was years before Smith Yale University had a good and because its airport has little looked like a genius.

• The com new idea, secured venture capital, bad weather to cause landing, posted a $27 million loss and made a fortune.

• In the morning hours, when the corner was turned, the items would be unloaded, sorted, and then taken off.

• The United States became the world's only superpower after the end of the Cold War and the disappearance of the former Soviet Union.

• The military's share of the budget was reduced by Congress and the White House in the 1990s.

• Alpha is unable to shift its production possibilities outward because of lack of capital and other resources.

• The capacity to expand production in the future is provided by newly built factories and machines.

• The production capital goods industry and new technology possibilities are shown in the table.

• As you travel the Economic Way of Thinking Highway, you can use the road map feature to tie material together.

• In Chapter 7 there is an extension of the concept of supply that explains how different costs of production change as output varies.

• For simplicity, we assume that Fred and Mary are the only two buyers in the market, and that they are sent a questionnaire that asks how many DVDs each would be willing to purchase at several possible prices.

• There are only so many golf clubs for sale at a sporting goods store because of the principle that there is a direct supply.

• The quantity of DVDs offered for sale at different prices is shown in the supply curve for Entertain City.

• Proponents of price controls said it was a way to ensure adequate supply without allowing oil producers to earn excess profits.

• The salaries of highly skilled workers would increase if many fi rms were competing for computer programmers.

• Reduction in production cost caused by a decline in the price of resources will increase supply.

• The supply curve shifts left as a result of the higher sales tax.

• In 1998 Intel reported that tributors who traditionally keep andAMD reduced the cost of consumables in a price war.

• When there is a shortage, consumers compete to get the product where they can pay a higher price.

He wrote, "We might as reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by utility or cost of production."

• Ceteris the only stable coordinate on the graph is when all willing to produce and offer for sale at possible other nonprice factors are held constant.

• Some people buy a lot of word processing software to increase the number of people they impress, while others buy a lot of watches to decrease the number of people they impress.

• Competition has arisen because the government is paying $1 per unit for email and fax communications.

• For an explanation of the correct answers, visit the Tucker Web site, which is sold in separate markets.

• The demand curve shows how much consumers are willing to pay for ground beef.

• The green shaded triangle is equal to the total consumer surplus if you move downward along the demand curve.

• The green triangular area between the demand curve and the horizontal line at the equilibrium price represents the total consumer surplus.

• The producers' minimum willingness to accept payment for ground beef offered for sale at various prices per pound is similar to the concept of consumer surplus.

• The red-shaded triangle is equal to the total producer surplus if you move upward along the supply curve.

• The entire red triangular area between the horizontal line at the equilibrium price and the supply curve is a total producer surplus.

• 6 million pounds of ground beef are bought and sold at the equilibrium price if more resources are devoted to production.

• The net loss for each pound sold is represented by the area under the supply curve and the horizontal equilibrium price line.

• Consumers experience a total net benefi t loss for each pound purchased, represented by the rectangular area between Copyright 2010 Cengage Learning.

• The deadweight loss is the total dollar value of potential benefits not achieved.

• Equilibrium conditions can be created by the absence of a competitive market, pollution, or vaccinations.

• The popularity of cruises to these vacation islands has suddenly risen due to extensive advertising that tastes and preferences.

• The federal government would set aside huge forest resources to protect the spotted owl and other wildlife if a new act was passed.

• New York City, Washington, D.C., Los Angeles, San Francisco, and other cities in the United States can be charged the maximum price.

• Rent controls are used to provide an essential service that would otherwise be impossible for many people to afford.

• Other outcomes include a black market, bribes, discrimination, and other illegal methods of dealing with a shortage of rental units.

• The stock of rental units will be reduced in the long run if landlords cut maintenance expenses and housing improves.

• President Nixon "froze" virtually all wages, prices, and rents for 90 days in 1971 in an attempt to control inflation.

• Natural gas shipped in interstate commerce and interest rates for loans have been placed on price ceilings in the past.

• In the former Soviet Union, price ceilings on food and rent were common.

• Soviet sociologists estimated that a typical urban household spent 40 hours a week standing in lines to get various goods and services.

• Corn, peanuts, soybeans, wheat, cotton, rice, tobacco, and dairy products have received price supports.

• Butter, cheese, and dry milk are often purchased with taxpayers' money.

• To reduce interstate milk price culture charge dairy farmers should draw a supply.

• Market failure is discussed in more detail in the chapter on environmental economics, except for the macroeconomics used in the produc version of the text.

• Adam Smith (1723- limits on the output of a good can cause higher prices and profi ts.

• Exhibit 7 shows how IBM, Apple, Gateway, Dell, and other suppliers of personal computers could be rigging the market.

• The sellers could lobby the government to pass a law that would allow PC suppliers to set production targets.

• The result of restricted supply is that the market fails because too few resources are used to make PCs.

• Opponents of artifi restricted supply argue that the economy loses because of the lack of competition.

• Under U.S. antitrust laws, the Justice Department is responsible for prosecuting colluding to restrict supply to force higher prices.

• When a community proudly displays its neat lawns, gorgeous FL owers, and freshly painted homes, visitors are third parties who did not do any work, but enjoyed the scenery.

• If steel fi rms discharge smoke and ash into the atmosphere, it reduces property values, raises health care costs, and erodes the quality of life.

• Legislation can force fi rms to clean up their emissions if they want to stay in business.

• The government could impose a tax on steel equal to the external cost imposed on society.

• It is possible for the government to increase consumption and shift the demand curve by requiring all citizens to purchase AIDS shots.

• The approach of capturing external benefi ts in market demand explains why all school-age children must have immunizations.

• The government would pay each citizen a dollar for every shot they buy.

• The goal of their proposal was to spend $8,000 per year to educate tuition that would be competitive and retain government funding, but a student, then the voucher could because public schools must give parents greater freedom to be for this amount.

• Under the current system, no one of the parents will face a strong incentive not being a veteran.

• The U.S. government tries to fight the use of drugs, such as marijuana and cocaine, by spraying crops with poisonous chemicals, imposing jail sentences for dealers and users, and confiscating cars, boats, and planes.

• There would be a lack of competition if hospitals, doctors, health maintenance organizations, or drug companies colluded.

• Some argue that some doctors guard against malpractice suits by ordering more tests orfi ce visits than they really need.

• The demand curve for health care services is shifting to the right because of rising incomes of consumers in the United States.

• Hospitals, nursing homes, physicians in private practice, HMOs, drug companies, and psychologists are some of the sellers of health care.

• The quality and safety of health care is regulated by the government or the American Medical Association.

• The number of people practicing medicine is limited by the American Medical Association.

• If the band increases the ticket centage change, you can calculate the per fans will purchase.

• The demand curve graphs show the relationship between a decrease in concert ticket price and a change in revenue.

• Suppose for the sake of ar which a small percentage change, that the demand curve is perfectly horizontal.

• Tobacco use is one of the causes of death in the world.

• The presence of young reduces smoking among Americans who die early from tobacco-related diseases.

• The Steel Porcupines band needs to know the impact of a recession on ticket sales.

• In Exhibit 1(b) in Chapter 4, a sharp rise in the price of gasoline causes the number of gas guzzlers purchased to decline.

• The elasticity concept is used by economists to analyze who really pays a tax.

• If demand is inelastic, the tax collected from sellers can be fully shifted to buyers.

• The two products raise the price by the full amount of the tax when the supply curve is cross-elastic.

• If demand is perfectly inelastic, the price can be raised by the full amount of budget spent for a good or service.

• If a small portion of the budget is spent on steak, the Jones family will get over 100 pounds a year.

• The law of Chapter 3 would say that the money you demand rested on a foundation of common sense and that the Coke and hot dog would have.

• The analysis to explain something that city raises marginal utility and price ply curve for water intersects the father of economics is scar plentiful than diamonds.

• The key to the diamond-water cal analysis that you can use inpuzzle is that they did not uncover the alleged paradoxes.

• Bob Moore, a sophomore at Seaview College, might behave given a limited budget and the choice between two goods.

• The substitution effect result comes from a number of factors, including changes in prices and expectations.

• In order to focus on the substitutwo levers, the price of root was placed in experimental cages with the same time as the income effect.

• This is reasonable because at each higher indif satisfaction or total ference curve the consumer is able to select more of both goods and therefore be utility.

• Consumers prefer curves farther from the origin where they can choose more quantities of two goods.

• You lease the basic principles of production and the way tory space, hire employees, and purchase raw various types of costs vary with output.

• Managers of fi rms sometimes pursue other goals, such as contributing to the United Way or building an empire for the purpose of ego satisfaction.

• The maximization goal is the best theory to explain why managers choose a certain level of output or price.

• You gave up the chance to earn costs of using resources owned by salary as an electrical engineer for someone else when you started Computech.

• The physical size of a fi rm's plant and the production capac can't be changed in a short period of time.

• When Eaglecrest increases labor from zero to one worker, output goes up by one unit of a variable input.

• The law of diminishing returns states add a fixed that the marginal product decreases as additional units of a factor.

• They must work with limited space, machines, and other inputs that they start stepping on each other's toes.

• In the short run, a fi rm's marginal cost initially falls as output expands, eventually reaches a minimum, and then rises, forming a J-shaped curve.

• The new important assumption is that the wage rate is constant at $100 per day and that labor is the only variable input.

• The classic example is Henry Ford's assembly line, which greatly reduced the cost of producing automobiles, because each worker can specialize by mastering narrowly defi ned tasks rather than trying to be a jack-of-all-trades.

• The long-run average cost curve does not change when the fi rm increases output.

Is it possible to shift from the view of traditional broadcast TV only for those who believe in market price matching buyers and or radio?

• The sellers of a product were successful in applying the ad mous saying by economist Milton with many participants and only a vertising approach to freemiums.

• If the wage rate long run is constant, the plant size selected by the fi rm in the product of a variable input will rise.

• As you travel the Economic Way of Thinking Highway, you can use the road map feature to tie material together.

• Click on the Tucker Web site at www.cengage.com/economics/tucker, select the chapter, and play the visual causality chain game designed to make learning fun.

• Different types of markets are defined by a set of characteristics that determine demand and supply conditions.

• During the late 80's and 90's, people bought alternatives to 1990's and mad cow disease caused mating pairs to increase unexpectedly.

• The business sector of the system for the key economy shows that there are different market structures for different types of businesses.

• When each market has no share of total output and small firms, there is no ability to affect the product's price.

• In South Carolina, there is a famous Grand Strand and Calabash seafood.

• We suppose for simplicity that the industry each firm's average variable cost curve is the minimum point of competition.

• The industry supply curve is based on the assumption that input prices will not change as output expands.

• In the long run, a fi rm can change its plant size or any input used to produce a product.

• If there are economic losses in an industry, existing fi rms leave, causing the short-run supply curve to shift to the left, and the price goes up.

• The fi rm adjusts its cost curve as firm's average total is shown in part (a) of Exhibit 11.

• The proportion of electrical engineers in the country is used by the electronic component disc business.

• The long-run supply curve is derived from the assumption that input prices will go up as output goes up.

• The steers and slopping hogs decided to try their hand at purses, shoes, and belts after seeing the lizard "look" of milk cows.

• In 2007, the long-run Bill Chaplin fires his "bankstick" response to numerous complaints competitive equilibrium and dispatches a six-footer with a nuisance alligator, the Florida condition for the typical single round of.44 magnum am.

• Do continues to produce in the short run if you explain the conditions under which a fi rm increase output when it makes a profi t.

• The industry supply curve will always be equal to which of the two is.

• Students are likely to pay higher prices for textbooks than they can afford if that is the case.

• This chapter explains why firms don't or can't enter a particular market, or compete with a pay the price, or lose the game.

• Monopoly, like perfect competition, only corresponds to real-world industries, but it serves as a useful benchmark model.

• A monopolist can prevent a newcomer from entering an industry by controlling the entire supply of strategic input.

• From the late 19th century until the end of World War II, there was a monopoly on the U.S. aluminum market.

• Government franchises and licenses are the most effective barriers to protect a fi rm from potential competitors.

• Water and sewer service, natural gas, and cable television are all under the control of state and local governments.

• In most states, physicians, lawyers, dentists, nurses, real estate agents, hairstylists, taxicabs, liquor stores, funeral homes, and other businesses are required to have a license.

• Patents and copyrights are granted to encourage innovation and new products by guaranteeing exclusive rights to new ideas for a limited time.

• These industries are granted an exclusive franchise by the government so that consumers can the entire market.

• When one firm in an industry can supply the entire cant economies of scale, there will be cost savings.

• As a result of its scarcity, the company made a lot of profi ts from the eggs of stur nopoly, which is near the trade in Indian cotton goods, silks, and spices.

• The Central Selling Organization (CSO) is based in London and it is interesting to note that DeBeers controls 80% of the diamonds sold in the world.

• The fall of the Soviet Union made it impossible for the Ministry of Fisheries to sell their rough dia control to other countries.

Why did suppliers of republics allow DeBeers to set the price and export contracts for rough diamonds?

• Exhibit 1 shows how network goods can increase sales rapidly and achieve economies of scale.

• In this inelastic range, the monopolist can increase total revenue by cutting output and raising price.

• Standard Oil was able to eliminate competition by acquiring its became because its profits grew and it had grown up selling eggs.

• Railroads and pipe 1890 were found by petitors after the Sherman Antitrust Act of all the money he could.

• The monopolist might want to charge a price below $88 and produce an output greater than 5 units per hour.

• Second, applicants' high school grades and SAT scores allow the admissions offi ce to classify consumers with different price elasticities of demand.

• Hotels and restaurants often give discounts to senior citizens, and airlines offer lower fares to vacationers who buy weeks early.

• It is possible for superior students who can't afford a higher tuition to attend University X because of price discrimination.

• Elderly people can enjoy hotels and restaurants they could not otherwise afford because of price discrimination.

• The differences between monopoly and perfect competition are the basis for many government policies, such as antitrust laws.

• Under a perfectly competitive market structure, the monopolist charges a higher price and produces a lower output.

• The majority of cabs in New are green flags and charged bargain quent auctions.

• Taxis are engaged in price competition and have a yellow stripe on their car.

• ATLC sets rates and imposes regu.

• A green flag means Today, the aluminum badges that the taxi market before the cabbie was offering a discount give the rights to pick up passen 1920s.

• The result is an optimal allocation of resources when the price is equal to the marginal cost.

• The monopolist sells a unique curve to fi nd the price-output combination that product, and extremely high barriers to entry maximize its profi t and minimize its loss.

• If the positions of a monopolist's demand and a network goods system give it a profi t and nothing disturbs the product to each person, it will be increased.

• The demand curve is facing a monopolist market.

• There are differences in the price elasticity of demand between groups of buyers.

• It is possible to earn an economic profi t in c. if you discount fi rm.

• Many customers think Ivan's has the best seafood in town, even though other restaurants offer a similar product.

• Lower prices, a higher quality of service, and new products are some of the things that are advertised.

• The fi rm hopes advertising will make the demand curve less elastic and shift it rightward by changing consumers' tastes in favor of its product.

• New entrants and rising costs will shrink yogurt stores' economic profi ts to zero in the long run.

• It Can't be Yogurt and other fi rms spend a lot of money on advertising to keep their market share.

• The book implemented a new approach to advertising that uses niche sites that inform friends whenever to promote product specific activities for a hyper a member purchased something, which is a form of nonprice targeted audience.

• The challenge for Web econ idea is that being at a concert TV networks charge such high omy entrepreneurs is to earn prof and text messaging a shout-out prices for commercial airtime its by differentiating their product to your friends.

• Your message can be heard during the concert next to the Super Bowl football game.

• Televi engine is a highly successful busi large ad from a company when the search stage is on a big screen.

• If someone imposes a negative externality advertising world on golf clubs, sponsored links for that distracts others in the audiaway.

• Just press the fast forward button and you'll get tailored ads to people's on the remote of a digital video specific interests.

• Exhibit 2 shows the short-run equilibrium position for Ivan's Oyster Bar.

• The nonprice factors allow Ivan's to raise the price of their products slightly without losing many sales.

• Ivan's demand curve goes down as new restaurants take away some of Ivan's market share.

• Some economists believe that the long-run equilibrium condition for a monopolistically competitive fi rm results in poor economic performance.

• Ivan's increases advertising and other expenses in order to compete against new entrants.

• The criticism of monopolistic competition is that there are too many fi rms producing too little output and wasting society's resources in the process.

• There are five well-known models of oligopoly: nonprice competition, kinked demand curve, price leadership, price leadership, and game theory.

• Advertising expenditures are large in the cigarette, soft drink, athletic shoe, and automobile industries because of this model of behavior.

• A demand curve is drawn for Tucker Motor Company, which we assume competes with GM, Ford, Toyota, and Chrysler in the automobile market.

• The reason for the small sales boost is that other manufacturers cut their prices so that they can keep their market share.

• Management is afraid of raising or lowering the price of its product because of the demand curve.

• Kinked demand theory states that widespread use of price lists in catalogs is consistent with this.

• About 70 percent of the world's oil reserves can be found in 12 countries that are part of this membership.

• Because oil is a standardized product, each fi rm fears raising its price because it will lose customers.

• Both airlines have been forced to charge the low fare in cell D because of price competition.

• The payoff matrix shows how a competitive oligopoly results in both rivals using a low-price strategy that doesn't maximize mutual profits.

• During the Final Four of the basketball tournament, the cans of cans ofPepsi appeared all the way over the downtown area on the sidewalks and on top of the building.

• The official prices for parking lots, leaving, and tickets were also checked.

• Painters were three times their normal price for leaving the plane at the airport and filling in the weekend.

• The airlines could collude and make a formal agreement that they would charge the high fare if the cartels were legal in the United States.

• As long as the benefits exceed the costs, cheating can threaten formal or informal agreements.

• Let's assume that if a perfectly competitive industry is suddenly turned into an oligopoly, there will be some changes.

• An oligopoly is likely to spend money on advertising, product differen tiation, and other forms of nonprice competition.

"Because price equals fi rm's demand curve to those of a perfect long-run average cost and profi ts are zero, a competitor and a monopolist."

• A ban on all cigarette advertising is a barbaric ban on price war.

• Monopolistic competition is an ineffi cient way to make output decisions.

• Brad Pitt was paid an impressive amount of money in 2009, but Oprah hired him.

• While one headline reports a sports team signed famous by playing baseball--a kid's game-- their star player to a contract paying $10 million while other workers might be exploited by firms annually, another cites a recent survey showing with labor market power.

• The chapter begins with the development of a corporation that is paid millions of dollars in a competitive labor market.

• Market structure affects the price and quantity of a good or service sold to consumers.

• We assumed in Chapter 8 that the fi rm called Computech produces and sells electronic units for automated teller machines in a perfectly competitive market.

• The of labor can sell any quantity of its product at a price determined by the market.

• The horizontal axis shows the marginal revenue product of the number of workers Computech will hire per day.

• It is not possible for Computech to maximize profi ts by hiring the fi fth worker.

• Although the supply curve of labor is upward sloping for the electronic compo nents market, this is not the case for an individual fi rm.

• The American Federation of Government Employees is one of the biggest unions.

• Exhibit 6 shows how unions can use their power to increase the wage rate of their members by limiting the supply of labor.

• During the Great Depression, millions of people were out of work and union membership was low.

• Between 1935 and 1945 there was a surge in union membership due to the impact of this legislation.

• We will proceed to the nuts and bolts after we relax and take a deep breath.

• If General Griffi n's attempts to pay different wage rates for the same job, workers will not be happy.

• Joe led the Eagles to victory over plained as a group of fi rms that use receiving greater sports revenue because of Chapter 10.

• Notre Dame played a collusive agreement to act as a school that followed the rules in the Sugar Bowl.

• The next and universities will act as monop pearances, tournament play, bowl year's ticket sales, alumni and hire the services of college invitations and scholarships.

• Click on the Tucker Web site at academic.cengage.com/economics/tucker, select the chapter, and play the visual causality chain game designed to make learning fun.

• Competition is not perfect and Hoot's Chicken 'n' Ribs is a monopolistic competitor.

• The Microsoft case and the deregulation of energy are topics discussed in the second chapter.

• Discrimination is one of the topics related to discussing government programs that affect labor market wage decisions.

• The total family income "pie" is cut into various issues of Social Security in a special feature.

• You will look at government data that shows the trend over the years in the share of poverty and income disparity.

• The Lorenz curve would become bowed out if the shaded area was larger.

• After discussing the broader question of how income distribution inequality is measured, we now turn our attention to the issue of poverty.

• Poverty can be defined as the level of income needed to purchase some minimum amount of goods and services essential to meeting a person's or a family's basic needs.

• The Social Security Act of 1935 requires each worker to pay a payroll tax equal to his or her employer.

• Unwed teenage parents must stay in school and live at home, and people convicted of drug-related felonies are banned from receiving TANF or food stamp assistance.

• Nonworking adults must participate in community service within two months of receiving their benefi ts and must work within two years.

• Supplementary lowcost insurance programs can be used to help pay for doctor services and prescription drug expenses.

• The system will begin dipping costs for new government debt required into the trust fund to make up the difference to pay benefits to current retirees.

• Federal and state governments have different programs to provide affordable housing for the poor.

• Much of the transfer ends up in the pockets of administrators, consultants, and staff, as well as higher income recipients, from programs advertised as antipoverty efforts.

• The entire patchwork of federal, state, and local welfare programs has been transformed by the negative income tax.

• Poor people wouldn't suffer the stigma of using food stamps or standing in lines at the welfare office.

• Workfare programs require able-bodied adults to work for the local government or any available private-sector employer in order to be eligible.

• Exhibit 10 explains how discrimination can cause the equilibrium wage to be lower for nonwhites than for whites.

• The equilibrium wage rate for white workers of $280 is higher than the $210 paid to African Americans.

• Comparable worth replaces labor-market wage-setting process with bureaucratic judgments about the valuation of different is used to evaluate jobs.

• Women working full time Municipal Employees won the Obama case as one of the highest earning cases against the cosponsors.

• The court serves as a basis for workers to argue that the equal-pay idea has failed and that they should be able to file a lawsuit.

• The Lilly Ledbetter Fair was enacted, the pay act was passed, and the social union lost the case.

• Employers are in compliance with the wage rate of $10 per hour, which appears to be a competitive labor market.

• Income inequality payments from Social Security, unemployment among families in the United States, and Temporary Assistance to Needy Families have not changed since 1929.

• The minimum wage in the United States would be equal to $5 per person per day.

• A negative comparable worth, union power, professional income tax plan with a guaranteed minimum licensing, and other restrictive practices would be implemented by the government.

• The U.S. government is exempt from antitrust legislation when it comes to labor unions, the firm and Bill Gates.

• The media compared the case to John D. Rockefeller's Standard Oil of military equipment.

• In the second half of the chapter, antitrust laws have been successfully used to regulate large corporations.

• During the rapid industrialization of the 1870s and 1880s, the railroads and telegraph linked diverse regions of the country and enabled fi rms to expand into national markets.

• Sometimes trusts and other firms will sell a product below cost until their weaker competitors are unable to survive, causing mounting losses and forcing them out of the industry.

• By the end of the 19th century, a public opinion hostile to big business was created by the threat of economic and po litical abuses.

• Farmers blamed the trusts for the high railroad charges that were making farming unprofi table.

• Congress passed laws to prevent fi rms from engaging in anticompetitive activities because of the populist fear of big business.

• There are serious consequences of violating the Sherman Act in the case of ADM.

• An agency was needed to investigate anticompetitive practices in the early 1900s because of the federal government's antitrust responsibility.

• The Robinson-Patman Act encourages lawsuits by small independent fi rms because it broadens the list of illegal price discrimination practices.

• The Sherman Act prohibits interstate price fi xing and other combinations that restrain trade.

• The Supreme Court found that until Pie's prices were the lowest, they accounted for Salt Lake City's market.

• The defendants were guilty of price for almost all the frozen fruit pies.

• As a market, it appears that the price of baking dessert pies in Salt results in larger pies being sold for less in Salt Lake City than in Lake City.

• Railroad discounts, espionage, control of supplies to rivals, and predatory pricing were used by John D. Rockefeller's trust to gain a monopoly.

• After 13 years of litigation, IBM spent over $100 million on its defense and built an entire building to store case documents.

• Telephone service was no longer a monopoly because of satellites.

• The government alleged that competitors were being charged unfairly high fees for access to AT&T's local telephone lines.

• The group's goal was to make sure that students who applied to more than one school received the same aid.

• The eight Ivy League univer sities and MIT were charged by the U.S. Justice Department.

• The Justice Department dropped charges after an appeals court ordered a new trial.

• The presidents of the universities charged with price-fixing in the MIT case defended their business practices with the argument that they openly met to fix prices in order to improve education.

• A major concern with this remedy was that a three-headed monopoly monster might destroy innovation and a seamless transition between Windows and other software applications.

• A federal appeals court ruled in 2001 that Microsoft violated antitrust law to protect its Windows operating system monopoly.

• The court ruled that the government had failed to prove that Microsoft tried to monopolise the internet browser market.

• The U.S. will be more competitive in world markets if this type of merger takes place.

• The internationalization of competition has led some economists to call for a relaxation of antitrust laws.

• Weak antitrust laws are designed for the global market because other countries have fewer potential customers.

• The evolution of regulation and federal regulatory agencies in the United States can be traced back to the same distrust of big business that is the basis of antitrust laws.

• The areas of health, safety, and environment were regulated more and more after 1970, when a deregulation movement began.

• Due to an antitrust lawsuit, AT&T was broken up and forced to compete with other companies for long-distance service.

• The bill required television manufacturers to equip new sets with a computer chip to block shows parents don't want their children to watch.

• Privately held utility companies obtained the right to operate a monopoly in exchange for government regulations.

• Congress approved the Energy Policy Act in 1992 which opened the way for deregulation of power companies.

• The railroad, trucking, bus, and water carrier industries are regulated interstate ground transportation.

• Stated another way, the creation of a level for competitors may not be in the best interest of the economy.

• Natural monopolies include local telephone, gas, electric, cable TV, and water companies.

• To avoid abuse of this type of monopoly, the prices or rates these public utilities can charge are determined by a federal, state, or local regulatory commission or board.

• In order to keep electric, California utilities had no blackouts, increased demand and decreased with a daily regime of rolling the California legislature supply.

• Vision Cable serves 80,000 customers and earns zero economic profi t because of the price ceiling.

• Government regulators can achieve efficiency for a natural monopoly by setting a price ceiling equal to the intersection of the demand and the marginal cost curves, but this policy results in losses.

• The exact nature of the regulation may include direct controls, pollution-control equipment, and taxation.

• Consumers may not be aware of the dangers of unsafe drugs, hazardous chemicals, and faulty products if they don't have complete and reliable information.

• Deregulation only lasts with costly nonprice competi per mile for a decline in advertising.

• The higher the quality of planes, the more profits were squeezed because of the lower number of consumer complaints.

• The airlines that try to boost profi ts by lobbying "belly up" are in trouble.

• The deregulation of the system allowed carriers to gather passengers from the "spoke" and critics argued that it would hurt safety.

• The Consumer Product Safety Commission should expose the problem and the media should report stories about crash victims who have been severely burned.

• Government can prevent companies from making false or deceptive claims by gathering and distributing accurate information to consumers.

• The movement to further deregulate electric is being questioned after the Federal Trade Commission established it.

• It is possible for regulators to establish a aimed at large retail chain stores that were fair return price equal to long-run average cost and get volume discounts.

• The antitrust use marginal cost pricing and government laws deal less with monopolies than subsidy covers the loss.

• Climate shifts that could render today's from an almost unlimited number of goods and farms tomorrow's deserts can be chosen by Americans.

• Global warming will cause the melting of the polar ice sider, which will lead to rising ocean levels and improve our environment.

• Competitive markets don't achieve preferred levels of output when they treat valuable resources like air and water as if they are free.

• When buying a jet ski, consumers consider purchase price, styling, and performance features.

• Acid rain is thought to be caused by sulfur emissions.

• The chance of skin cancer from the sun's ultraviolet rays is increased by a hole in the atmosphere's ozone layer.

• The ozone hole is not expected to disappear before 2050, despite the decline in chlorofluorocarbons as a result of the Montreal Protocol.

The effects of cigarette smoke on the health of nonsmokers, as well as cigarette butts tossed out of car windows, farmers' use of pesticides that wash into soil and water with detrimental health effects, and even noise from your next-door neighbor who is having a loud party are all everyday external

• A steel company can buy old cars and retire them as a way to reduce emissions.

• Competition leads to a lower price and larger quantity than the socially effi cient point when externalities are present.

• Competitive fi rms produce too much and the market equilibrium price is too low compared to a socially effi cient industry.

• The regulations require that the fi rm to meet, but not beat, the standard, so automakers have little incentive to invest in better technology.

• CAC regulations may act as a barrier to other fi rms, both domestic and international.

• Consumers face high gas prices and seek more fuel-effi cient cars.

• Second, studies that attempt to measure external cost to be large need a substantial tax.

• Old coal-fi red plants that are exempt from stringent regulations known as New Source Performance Standards that can only be met by newer technology are worth continuing to operate.

• If the government picks the right approach and rewards cleaner technology, some economists favor the CAC over the imperfect emissions trading to date.

• EV powered by photovoltaic cells that use solar energy are closer to being emissions free, but there is still pollution in the production process.

• Market participants pay for external costs if the government establishes laws, taxes, or permit systems.

• The Beijing weather report frequently calls for "smoky" skies, the government plays a major role in the economy.

• Weapons left behind at toxic burial sites include Oak Ridge, Tennessee.

• The cost of complying with hundreds of thousands of pages of environmental legislation is more expensive than the U.S. tax code.

• The role of the gov should be limited to the legal establishment of property rights, with private market disputes resolved with the help of the court.

• In veloped countries to pay them, as they claim they short, the conference produced almost no progress are slowing their own development by growing new on greenhouse gas emissions.

• After growing its GDP at stronger hurricanes, and the spread of tropical dis nearly a 10 percent annual rate for the last three, it is no longer a problem for warming countries.

• When cows are brought smaller in volume, they may face problems, as methane is more potent in effect.

• In the absence of greenhouse gas emissions, consumers and producers of carbon failure issue that arises in working emitting products, such as coal-burning power plants toward a global agreement to limit and gasoline-burning automobiles.

• While ignoring external costs, Ostrom will design institutions to sustain the resource.

• The effort to work toward improved oversupply and underprice products that government solutions seem worthwhile, will be unregulated competitive markets.

• The markets where transaction costs are low can't be said to be the best solution for environmental problems.

• It is more diffi cult to reach global by vehicles that are powered by photovoltaic cells or batteries that are environmental agreements.

• You will not be compensated for the $7,000 you lost due to the smell reduced hog odors if you pay up to market.

• The market mechanism can handle the pollution in the city's drinking water.

• The most efficient way to get water from the Mississippi River is through central planning.

• Click on the Tucker Web site at www.cengage.com/economics/tucker, select the chapter, and play the visual causality chain game designed to make learning fun.

• In order to increase society's total welfare, a production process that produces a negative externality should be taxed.

• The size of the tax should be based on the external cost of the pollutant.

• The late economist Simon Kuznets wanted to provide accounting methodologies for tion and the opposing presidential candidate's macro data.

• To answer the question, we need to attach price tags to apples and oranges.

• GDP uses dollars instead of listing the number of cars, heart transplants, legal cases, toothbrushes, and tanks produced.

• Exhibit 1 shows the flow of products from businesses to a hypothetical economy with no government, no fi nancial markets, and no foreign households.

• Only the households and the busi flow of resources make decisions in a pure market economy.

• Households spend all of their income in the upper loop and demand consumer goods and services from businesses.

• The forces of supply and demand in individual markets determine the price and quantity of each product.

Changes in the amount of steel produced per A flow is the rate of month, the number of computer games purchased per day, the amount of income change in a quantity during a given time earned per year, and the number of gallons of water pouring into a bathtub per period, such as minute

• The national income approach measures GDP by adding all the spending for goods and services during a period.

• Recreation, legal advice, medical treatment, education, and any transaction not in the form of a tangible object are services.

• Spending by businesses for investment in assets that are expected to earn profi ts in the future is included in the national income account.

• The rental value of newly constructed residential housing is included in the national income accountants' calculation.

• A new home is considered an investment if it provides services in the future that the owner can rent for a profit.

• Spending for police and state university professors is entered into the GDP accounts at the prices the government pays for them.

• The sign indicates that the United States is spending more money on foreign products than it is getting from the rest of the world.

• The effect of a negative net exports is to reduce U.S. GDP.

• The United States was a net exporter prior to the early 1980s, selling more goods and services to the rest of the world than we purchased from abroad.

• Each dollar of expenditure paid by households to businesses in the product markets means a dollar of income for households through the factor markets as a payment for the land, labor, and capital required to produce the product.

• Adding depreciation to payments is necessary to make sure that national income is equal to GDP.

• In 2009, income earned from wages, salaries, and certain supplements made up 55 percent of GDP.

• It is not surprising that employee compensation is the largest share of the GDP income pie since labor services play an important role in production.

• Rent and royalties received by property owners who allow others to use their assets during a time period is the smallest source of income.

• Homemaker production, child rearing, and do-it-yourself home repairs and services are not included in GDP because they are not market transactions.

• Econa's products include computers, cell phones, wheat, milk, houses, and other consumer items.

• Critics argue that the Bureau of Economic ronmental problems are damages.

• After years of trial, the com accountant loses the case and has to pay the Survey of Current Business.

• The millions of dollars spent to clean new accounts would adjust for complexample, national in up the water supply.

• GDP even in changes in air and water quality come accountants have not ignored the health care expenses of and depletion of oil and miner these criticisms.

• GDP includes renewable natural resources such as forests and fi sh stocks.

• Suppose a nuclear power is cut down and oil is added to GDP to make up for the loss of trees.

• GDP includes an estimated value of capital goods required to replace those worn out in the production process, so it is not entirely a measure of newly produced output.

• Adding compensation of employees, rents, profi ts, net interest, and indirect producing output can be used to calculate national capital worn out in income.

• Transfer payments are excluded from NI because they can be spent, saved, or used to pay taxes.

• A measure that compares changes "defl ator" index calculated by a complex chain-weighted geometric series.

• The data in Exhibit 11 was used to calculate the purchase price of 100 shares of IBM national income.

• If you said that both reports can be correct, GDP rose from 1,300 to 1,500 billion because of the difference between nominal and real percent increase.

• The United States engages in international trade in a model presented in the exhibit.

• The economy forces a "bust" later in the GDP because some firms into bankruptcy and workers lose their jobs.

• These measures of macroeconomic are important because they affect your etary, nonmonetary, and demographic costs of future.

• According to the National Bureau of Economic Research's Business Cycle Dating Committee, the U.S. economy entered a recession in 2001.

• Employment, industrial production, income, and sales are some of the factors that the committee considers in determining a recession.

• The model in Exhibit 1(a) shows that over time our real GDP tends to rise.

• A television reporter interviewing a local car dealer to find an answer to the state of the economy's health.

• Exhibit 5 has a set of 10 variables that are used to forecast the business change.

• The theory that changes in total expenditures are the cause of GDP variations is accepted by economists today.

• Businesses use a profi table to produce a lower volume of goods when total spending falls.

• Aggregate demand and supply curves can be used to understand why changes occur in national output, unemployment, and the price level.

• They may be motivated by the fact that they have given up their eligibility for unemployment compensation or welfare benefi ts.

• The unemployment in the economy is caused by the fact that job market information is imperfect.

• The situation creates structural unemployment for military personnel who need retraining after a war.

• In order to regain employment, unemployed autoworkers must retrain and find new jobs in other industries, such as manufacturing IBM computer printers in North Carolina.

• Poor schools, new products, foreign competition, geographic differences, and shifts in government priorities are some of the causes of structural unemployment.

• Structural unemployment is caused by public and private programs that train employees.

• Ac doesn't measure the impact of unemploy ing in cardboard shacks and doesn't measure the selling apples on the street.

• Some people jumped they trimmed health-related ex means lost wages, but it also is out of windows and others are roaming penses, 32 percent skipped some pairs health and social relation the country is trying valiantly to sur preventative care such as a mam ships.

• The impact of sustained ers who lost a job through no 25 percent of the civilian labor unemployment that is not their fault was frightening.

16 economists, co-authored a study of diabetes or heart disease over a million Americans who were out of unemployment in 30 selected big next year and a half, compared work when our country's popula cities from 1976 to 1990

• Millions of people change their behavior because of the 5.6 percent more deaths from workers who were discouraged by layoffs, cutbacks, or a heart disease.

• In 2009, the unemployment rate was 9.3 percent, but the burden by race, age, and educational attainment was shown in the exhibit.

• The minimum wage law is one of the explanations for the concentration of AfricanAmericans in the inner city.

• When the inflation rate in Zimbabwe reached 231,000,000 percent, voters were quick to blame any administration that reached it.

• Retail stores, homeowners, and tenants in selected cities throughout the United States are contacted each month by the bureau's price collectors.

• Food, housing, apparel, transportation, medical care, entertainment, and other expenditures are included.

• Exhibit 2 shows the basic idea behind the price index.

• In 1982, a typical family in the United States would buy a market basket of only hamburgers, gasoline, and jeans.

• If the prices of lemonade, hot dogs, and jeans actually fall, the rate will be 5 percent.

• The source of income can be wages, salary, rent, dividends, interest, or pensions.

• Even though the general price level has gone up, your purchasing power has gone up because of the percentage rise in nominal income more than the rate of inflation.

• People who own forms of wealth that increase in value faster than the rate of inflation are winners.

• If you received a one-year loan from your parents to start a business, you can understand how it can make those who borrow winners.

• The general price level in the economy is pulled up by buyers' total expenditures.

• Businesses can't expand their plants to meet the demand in the short run.

• As a result, national output remains the same and prices rise as buyers try to outbid one another for the available supply of goods and services.

• If spending goes down, the pressure on the available supply of products will go down as well.

• If buyers see prices rise and think they should buy a new house or car today, the items will cost more tomorrow.

• You can use the chapter on aggregate demand and supply to analyze the factors that determine national output, employment, and the price level.

• Credit cards, home mortgages, life insurance policies, pensions, bonds, and other forms of savings are jeopardized by huge unforeseen involution.

• If nominal interest rates rise unexpectedly, borrowers will be more diffi cult to make their monthly payments.

• When management thinks it can boost prices faster than labor costs, there is a wage-price spiral.

• The government of Weimar printed money to pay its bills after World War I.

• The visual causation chain game is designed to make learning fun.

• If the broom factory's workers can't get new jobs because their skills aren't good, then they are classifi ed as unemployed.

• John Maynard Keynes published a book in 1936 called "Theoreti cal model", which contains two chapters that present the model.

• The un cures requiring the government to play an active employment rate soared to 25 percent when businesses closed their doors.

• Economists recognized that business downturns would interrupt the na tures if the level of consumption and investment was high.

• After a temporary economists' adjustment period, markets always clear because all goods and services theory are offered for sale.

• The economic thinking capitalistic price system would automatically restore full employment in a recession.

• Unemployment is the result of a short-lived adjustment period in which wages and prices decline or people choose not to work, according to the classical view.

• His book challenged classical economists by turning Say's Law upside down and establishing macroeconomics as a separate field of economics.

• The chapter on GDP states that consumption is the largest single spend for goods and aggregate expenditures.

• The amount can be drawn down from savings accounts, personal stocks, and bonds.

• Savings can be in a variety of forms, such as funds in a passbook.

• Holding all other factors constant, the more wealth households accumulate, the more they spend at any current level of disposable income, causing the consumption function to shift upward.

• The nation's consumption function can be changed by changes in prices of assets and wealth.

• Families spend less at any level of disposable income when the value of their fi nancial wealth falls.

• Keynes says that changes in the private sector components of aggregate expenditures are the major cause of the business cycle.

• Imagine a consulting firm buying a new computer program for $1,000 that will be obsolete in a year, and using a micro example to illustrate the investment decision-making process.

• The fi rm's investment demand curve can be seen in the changes in the interest rate.

• Government spending and tax policies, world events, population growth, and stock market conditions are some of the factors that make forecasting diffi cult.

• Less costly ways of production includerobots, personal computers, fax machines, cellular phones, the Internet, and similar new inventions.

• The outlook for sales growth is positive, as the plants may be operating at a high rate of capacity utilization.

• The debate over whether the 1929 stock market crash was caused by cago, who was attending the meet ate aftermath, or just a symptom, has continued.

• The moment the plane hit, the forecast became obso tacks.

• Americans feel poorer because of their income because of the plunge in private investment on September 17, 2001.

• Everyone discussed in more detail in the Average gradually rose toward its fears of a steep downhill ride on the You're The Economist.

• Adding aggregate spending components and explaining macro equilibrium will be added to the Keynesian Cross model in the next chapter.

• It is impossible to continue the depression because it is easier to identify the break-even or eliminate shortages.

• If you become wealthier, you will spend your entire income, a higher marginal propensity to save and conse and perhaps even dis save, just to afford necessities.

• An increase in business taxes is shown in Exhibit 12.

• During the Great Depression, there were powerful ideas offered by the link nomic theory.

• Keynesian theory states that during the Great Depression, plants had enough capacity to absorb a huge increase in aggregate spending of $1.

• Keynesian economics ignores price level changes cure for an economy in deep recession, instead focusing on how full-employment out ment policies that expand aggregate demand, raise put can be achieved by changes in aggregate national output, create jobs, and restore full expenditures.

• Like investment and government spending, exports and imports can be treated as independent expenditures unaffected by a nation's domestic level of real GDP.

• Firms respond to the happy state of affairs by hiring more workers, expanding output and generating more income.

• The model doesn't show that empty shelves and warehouses cause the economy to create jobs and reduce the unemployment rate.

• Businesses will reduce employment and production will fall until the economy reaches $5 trillion.

• The crux of Keynesian macroeconomic policy depends on a change in aggregate expenditures, which is multiplied or amplifi ed by rounds of spending.

• The graphical presentation of the spending multiplier process should make the basic mechanics clear to you, but we need to be more specifi c and derive a formula.

• The spending multiplier effect is based on an infinite geometric series.

• The good news is that macroeconomic policy can change the economy's performance by a relatively small change in expenditures.

• The level of investment should be assumed to be rounds of the spending multiplier effect.

• In this chapter, you will use aggregate demand ment rate soared and remained high during the and supply analysis to study the business cycle.

• The basic tools for organizing on the classical model that rejects the federal's thinking about the macro economy are provided by the opposition view today.

• The impact on total dollars from their wallet and checking accounts in order to purchase goods and spending services.

• Household borrowing is discouraged due to rising interest rates.

• Higher interest rates translate into a lower GDP if the price level increases.

• A leftward shift in the aggregate demand curve may be caused by a decrease in government spending.

• The aggregate supply curve shows the total dollar amount of goods and services produced in an economy at various price levels.

• Keynes argued in the book that during a depression or recession, prices and wages can affect unemployment.

• Government should intervene and actively manage aggregate demand to avoid a depression.

• Businesses are prevented from lowering wage rates by union contracts.

• Exhibit 5 shows why classical economists believe a market economy can self-correct without government intervention.

• Business temporarily cut back on production and reduced the price level from 300 to 200 because of unsold inventories.

• The surplus condition in the factor markets means that some workers who are willing to work are laid off and replaced by others who are willing to work less.

• There is no upward or downward pressure for the macroeconomic equilibrium to change because the GDP value is bought and sold at 200.

• The economy shown in Exhibit 7 has a negative GDP gap of $8 trillion.

• Businesses don't underestimate the real GDP demanded at the price level.

• In this case, management will lay off workers, cut back on production, and reduce prices if there are too many unsold goods on the shelves.

• In the Keynesian range, substantial production capacity can be put to work at existing prices.

• Wage demands are more diffi cult to reject when the economy is doing well.

• Inflation is caused by increases in aggregate demand rather than real GDP when the economy reaches full employment.

• Resource prices, technological change, taxes, subsidies, and regulations are some of the nonprice-level factors affecting aggregate supply.

• Businesses seek to increase production at any price level with lower labor costs.

• Maybe there is war in the Persian Gulf or the Organization of Petroleum Exporting Countries disrupting supplies of oil and higher energy.

• Businesses decrease their output at any price level in response to higher production costs.

• Changes in the supply of money in the economy can affect the aggregate demand curve and macroeconomic performance.

• Exhibit 12(a) shows how a leftward shift in the supply curve can cause problems.

• The reason for the oil embargo was due to the U.S. support of Israel in its war with the Arabs.

• Aggregate demand and a rise in the general supply analysis can be used to explain demand pull.

• In 1965, when the unemployment rate was close to the natural rate of un from an excess of employment, real government spending went up without a tax increase.

• Keynes increased its endowment tenfold and used the aggregate educated atCambridge andEton over the data.

• A rightward shift of the aggregate demand curve can cause GDP and employment to rise.

• Each dollar buys only the effect of the quantity of goods and services at the full-employment GDP when the aggregate supply curve is vertical.

• Once the economy reaches full-employment, the real GDP demanded at the prevailing output in the classical range is increased.

• The theory that the economy will automatically increase in price and decrease in adjust to achieve full employment was popular prior to the Great Depression.

• This occurs because fi rms increase work hours and train and hire homemakers, retirees, and unemployed workers who were not profi table at or below full-employment real GDP.

• The upward-sloping shape of the short-run aggregate supply curve is the result of fixed nominal wages and salaries.

• In the short term, workers' nominal incomes remain the same with contracts negotiated based on an expected price level of 200.

• Greater quantities of plants, production lines, computers, and other forms of capital increase potential real GDP.

• Exhibit A-5 uses basic aggregate demand and supply analysis to explain a hypothetical price level between 2005 and 2015.

• The amount of your paycheck can be affected by tax policies and real GDP output.

• President George W. Bush signed into law tax cuts in order to help the economy during the recession.

• There are three basic types of discretionary fi scal policies listed in Exhibit 1 and the corresponding ways in which the government can influence them.

• The nation's spending, employment, and table show that the government can increase aggregate demand by price level.

• One approach the president and Congress can follow is provided by classical theory.

• If members of Congress are willing to increase government spending to boost employment now, that will be a good thing.

• The administration believes that this measure will provide a 2,400 billion boost to GDP this year because consumers will spend their extra cash on HD TVs and other items.

• The government should cut taxes to increase aggregate demand and restore full employment.

• Exhibit 5 shows that a tax reduction adds less to aggregate demand than an increase in government spending.

• Mark Zandi, chief economist for Moody's Economy.com, gave estimates for the one-year multiplier effect for several fi scal policy options.

• Keynesian expansionary fi scal policy, born of the Great Depression, has been presented as the cure for an economic downturn.

• If Congress and the president decided to use fiscal policy to reduce the CPI from 220 to 215, they would fear the wrath of voters.

• Although a fall in consumption, investment, or net exports might do the job, Congress and the president prefer cutting government spending.

• Government spending for unemployment compensation, welfare, and other transfer payments decreases when the economy expands.

• Government expenditures fall to $1 trillion because fewer people are collecting transfer payments.

• When the economy expands, the fall in government spending for transfer payments and the rise in taxes result in a budget surplus.

• As the budget surplus grows, people send more money to Washington, which affects the growth of real GDP.

• When the economy contracts, the rise in government spending for transfer payments and the fall in the level of taxes yield a budget.

• People receive more money from Washington as the budget grows, which slows the decrease in real GDP.

• When real GDP is above 14 trillion, a federal budget surplus increases automatically.

• The focus so far has been on fi scal policy that affects the macro economy solely through the impact of government spending and taxation on aggregate demand.

• The U.S. economy in the 1970s had high unemployment and high government policies.

• Increasing the ability of the U.S. economy to generate long-term advances in the stan aggregate supply aroused concern.

• The supply-siders have a better theoretical case than the demand-siders when unemployment is a concern.

• For supply-side economics to be effective, the government must implement policies that increase the total output that fi rms produce at each price level.

• The Reagan administration wanted to increase the aggregate supply of goods and services at any price level by reducing tax rates on wages and profi ts.

• Businesses have an extra incentive to invest and produce more at each price level, so the aggregate supply curve would shift rightward.

• The Keynesian increase in the aggregate demand curve and a higher price level will occur if there is no reduction in government spending.

• Lower tax rates would shift the aggregate demand curve to the right, expanding the economy and creating more jobs.

• The theory behind fiscal was presented by Steve Forbes in the previ Republican presidential nomination.

• President Bill Clinton said cutting taxes was not a good idea because it was placed in perspective.

• The trend in federal taxes and expenditures should be the first thing you check for if you want to ensure the integrity of Social Security.

• During World War II, total government expenditures skyrocketed as a per centage of GDP, but then took a sharp plunge, but not to previous peacetime levels.

• The federal government spent the same amount of money on debt as it did on international affairs, veterans' benefi ts, and agriculture.

• The Swedes, French, Italians, Germans, Canadians, Spanish, and British pay more in taxes than Americans.

• It would be foolish to ask families receiving food stamps to pay all the taxes they need to.

• The personal exemption and standard deduction are adjusted each year so that taxpayers don't end up in higher tax brackets.

• The Jones family will spend less of their income on food, clothing, and other purchases because of a sales tax.

• Ms. Rich can still live a comfortable life after paying her taxes.

• Congress had the power to impose taxes on income when the states ratifi ed the Sixteenth Amendment to the Constitution in 1913.

• The law doubled the personal exemption allowed for taxpayers and their dependents, removing millions of households from the tax rolls.

• Buchanan and other public choice theorists raise the issue of how well a democratic society can make economic decisions.

• The basic principle of public choice theory is that politicians follow their own self-interest and try to maximize their reelection chances rather than promoting the best interests of society.

• Like theVAT that is popular in Europe, loopholes would be found in many other countries.

• Taxpayers would save if VAT was based on a percentage and not the betax system.

• The problem of federal government income people getting the ment is already collecting the biggest tax break in the country.

• The pursuit of selfinterest is the motivation for consumers and producers.

• Individuals within any government agency or institution will act in the same way as their private-sector counterparts, giving priority to improving their own earnings, working conditions, and status, rather than being altruistic.

• Spending programs are popular because it is easy to organize special-interest constituencies and lobby politicians to spread the cost.

• The small cost of each pet program per taxpayer means there is little reward for a single voter to learn the details of the many special-interest legislation proposals.

• Politicians tend to favor immediate benefi ts, with future generations paying most of the costs.

• The activity of a profi t-maximizing fi rm follows has increased since the end of World War II.

• Abraham Lincoln's 1864 Annual Message to Congress was more about paying off the national debt than it was about the Civil War.

• In 2009, federal government borrowing to revenues flowed into the U.S. Treasury from import cover its budget deficits had accumulated a tariffs and the sale of public land.

• The public in the late 1990s and early 2000s watched the federal budget sway between defi cits and surpluses, like a high-wire performer swinging one way and then another.

• When the government spends more than it collects in taxes, a federal budget defi cit occurs.

• The budget battle on Capitol Hill involves political decisions on how much the government will spend and where the money will come from.

• The budget process is complicated by world events, special-interest groups, volatile public opinion, and political ambitions.

• Congress passes a budget resolution that sets targets for spending, taxes, and the defi cit.

• After receiving advice from the president, the OMB compiles all the proposals into a budget recommendation.

• Nine months before the new fi scal year begins, the president submits his proposed budget to Congress.

• Congressional committees and subcommittees prepare spending and tax law bills while Congress and the president debate.

• A budget defi cit occurs when federal expenditures exceed tax revenues.

• The Social Security trust fund is used to lend money to the federal government for spending.

• The spending caps combined with tax increases and a growing high-employment economy made the federal budget surpluses in the late 1990s.

• The automatic stabilizers explained in the previous chapter that during a recession government expenditures rise for transfer payments when people lose jobs and tax revenues decline from individuals and companies making less money.

• Federal government spending increased relative to tax collections as a result of the Wall Street bail out.

• The rise in the defi cit to 5 percent of GDP was caused by the combination of a recession, a military spending build up, and a cut in income taxes.

• Since World War II, the federal defi cit has been at a record high of 9.9% of GDP.

• The surplus should be saved, spent, and projected by the Reserve Chairman Alan Greenspan to be devoted to tax cuts.

• Greenspan suggested that the Senate Budget Committee increase or decrease the infrastructure, research and development if they were to testify before a tax cut.

• The government shut down for three days during the Columbus Day weekend in 1990 after Congress rejected President George H. W. Bush's spending plan.

• In response, Greece cut civil service salaries, froze pensions, and enacted new taxes on a long list of items.

• The national debt is rising at a rapid rate because of the amount of federal defi cits in the United States.

• The debt increases rapidly during downturns like the 1930s, 1974-1975, 1981-1982, 1990-1991, 2001 and 2007 because of lower tax collections and more spending for unemployment compensation and welfare.

• After 1980, the federal debt as a percentage of GDP increased, and has risen to a historic high of 83 percent, which is back to its 1951 level.

• The national debt as a percentage of GDP is lower today than it was at the end of World War II.

• The U.S. Treasury has the authority to collect taxes, print money, or refi nance its obligations at the maturity date of a government security.

• Suppose the government doesn't raise taxes or cause debt if it just prints money.

• When a $1 million government bond comes due, the U.S. Treasury can roll over the debt.

• The fear is that interest payments to the national debt will eat into the federal government's budget pie.

• Future generations will pay more of their tax dollars to the government's creditor and have less to spend on public programs.

• The "we owe it to ourselves" argument is weakened if foreign governments, banks, corporations, and individual investors hold part of the national debt.

• If the U.S. Treasury relied on domestic savings to purchase federal government securities, the interest rates would be higher.

• The aggregate demand curve shifts rightward when the interest rate is lower.

• Exhibit 2 of Chapter 2 shows how people were forced to trade off consumer goods production for Copyright 2010 Cengage Learning.

• People were forced to give up their private consumption of houses, cars, refrigerators, and so on because of the huge amount of resources diverted to World War II.

• If the federal government spends deficits financed by and borrows rather than collecting taxes, it will use the money to fund new health care programs.

• Future generations will have a smaller productive capacity if federal borrowing crowds out private investment.

• State and local governments run budget surpluses when the cost of long- lasting assets is not so large.

• The capital budget believes the public's $5,000 to take a zero is real growth in the national debt.

• Private businesses and state and local govern rules argue that the controversial ex apartment is the reason for changing the accounting move out of your rented apartment.

• The aggregate demand curve can be shifted by increasing spending or cutting expectations.

• There spending for highways, dams, universities is a large amount of external national debt that is offset by the decline in transfers purchasing power to foreigners.

• Suppose you are the economic policy adviser to the president and you are asked what should be done to eliminate the federal government during the Great Depression.

• The horizontal segment of the aggregate supply curve shows that GDP can only increase by affecting the economy's price level.

• The following chapter compares different macroeconomic theories and concludes with a discussion of monetary policy in the Great Depression and the current financial crisis.

• Imagine if you learned how variations in the stock of money in the along the beach affect total spending, unemployment, and find a beautiful bamboo hut for sale.

• Farmer Brown is trying to find Mr. Jones so he can trade for wheat.

• If this planet is fortunate enough to have economists, they would explain that anything, regardless of its value, can serve as money.

• This explains why precious metals, unit of skins, wampum, and cigarettes have all been used as money.

• More and more people are avoiding using checks, paper currency, and coins by using various Internetbased and other systems to transfer funds.

• On the small island of Yap, life is easy, but Stone disks may change ownership during the currency is hard as a rock.

• Each has a hole in the canoes that they use to bring the huge stones over the sea in the center so they can be slipped onto the trunk of a fallen ancient times tree.

• They in grocery stores and gas stations, but reliance on are in short supply, pose formidable stone money.

• Counterfeiters were able to win their battle with the U.S. Secret Service thanks to advances in computer graphics, scanning, and color copying.

• An item's ability to serve as money does not depend on its own market value or the backing of precious metal.

• The money defi nition measures purchasing power immediately available to the public without borrowing.

• The terms prevent a president from stacking the system of the United the board with members who favor the incumbent party's political interests.

• The buying and selling of U.S. is directed by the president of the New York Federal Reserve Bank and seven other members of the Board of committee.

• The Fed has three policy tools that it can use to change the stock of money in the banking system.

• Changes in the money supply can affect total spending, GDP, employment, and the price level.

• Most tourists don't go to view a Federal Reserve bank's vault, but I strongly recommend this tour.

• Commercial banks and other fi nancial institutions can pay unrestricted interest on checking accounts.

• Major corporations can offer traditional banking services, and federal credit unions can make residential real estate loans.

• Before this act, S&Ls paid a slightly higher interest rate on passbook savings deposits than commercial banks.

• The measure lifted Depressionera barriers and allowed banks, securities, and insurance companies to sell each other's products.

• It is estimated that Lincoln's relatives earned millions of dollars when regulaKeating hired a staff to carry out his wishes.

• Keating took Lincoln prison for swindling small inves reforms of deposit insurance out of sound home mortgage loans tors.

• With a 10-year state prison example, the limit on insured hotels is $500,000 per room sentence.

• Keating was ordered by the judge to pay $122.4 million in reduced or eliminated.

• The savings and loan crises of the 1980s and early 1990s were one of the worst in the United States.

• Money market mutual fund shares are less secure than converting an asset directly into currency.

• The ability of banks to amplify checkable depos chapter is only partly true because it involves generating a spiral of new loans and money which is used for new spending in the economy.

• The goldsmiths were very conservative and issued receipts equal to the amount of gold in their vaults.

• The T-account of Typical Bank in Balance Sheet 1 only lists major categories and doesn't include details.

• Brad Rich, one of Best National Bank's depositors, takes $100,000 in cash from under his mattress and deposits it into his checking account.

• The incentive for the bank offi cials to not let $90,000 from a new deposit sit in excess reserves is provided by the profi t motive.

• Suppose, then, thatConnie Jones walks in with a big smile, asking for a $90,000 loan to purchase equipment for her health spa.

• Best National Bank's liabilities are reduced by $90,000 as shown in Balance Sheet 4.

• Better Health Spa made a $90,000 donation to the Yazoo National.

• An initial deposit of $100,000 in Best National Bank can create a $900,000 increase in the money supply.

• Many people lose confi dence in the banking system when there is a fi nancial crisis.

• The Fed's main function is to control and change the money supply using three policy tools or levers, according to the previous chapter.

• The Fed can change the money supply by using these three tools.

• You've seen how decisions of the public--including those of Brad Rich, Connie Jones, and Better Health Spa--went through the banking system and increased M1.

• The 90-day U.S. Treasury bills are called T-bills.

• The initial $100,000 checkable deposit and excess reserves for loans have been created by the Fed.

• The public's expectations about the economy can be affected by changes in the discount rate.

• The Monetary Control Act of 1980 allows the Fed to set reserve requirements for all banks and savings and loan associations.

• The Fed wants to restrain the money supply so that it won't hurt the economy.

• The Fed's most economists, bankers, and other powerful monetary policy sources have views with the Federal Open Market conditions.

• Board members express system when the required reserve ratio is 10 percent after formation of economic staff.

• Changing the required reserve ratio is considered a heavy-handed approach that is rarely used.

• The Fed bought federal government securities in the fall of 1990 in order to inject new reserves into the banking system.

• The Fed pays the most for the Directive to be voted on when measuring the consensus.

• It reached a record low of zero with the chair voting and the rates in general are low.

• The Fed responded to the 2001 recession by using open market purchases of securities to increase the money supply.

• The Fed reduced its reserve requirement and expanded its scope in response to the loss of credit in the fi nancial markets.

• The Fed used Depression-era emergency powers to become a "lender of last resort" source of short-term loans for a wide range of institutions other than banks.

• The public's decision to hold cash and the willingness of banks to make loans affect the total expansion from an initial change in excess reserves.

• When the business cycle is in an upturn, banks are willing to use their excess reserves to make loans.

• In the popular version of the story, the hare is much faster, but goofs off along the way, and eventually loses to the tortoise at the fi nish line.

• The impact on this bank's checkable deposits can be supported by $10 assets and liabilities.

• The dealer who deposits the Fed's check in the money supply buys $500,000 in T-bills from securities of the monetary policies.

• During World War II, he planned to change the demand for money so that it would cause counterfeit British currency and drop it from terest rates.

• The second half of the chapter shows the opposing time when people can exchange goods and view the monetarists.

• You're The Economists will allow you to analyze the Keynesian and monetar supply of money and how they interact to deter ist views applied to the current financial crisis and mine the rate of interest.

• Unexpected repair expenses or lower-than- anticipated cash receipts can affect the stock of money.

• The $500 billion read along the horizontal axis in Exhibit 1 is held to make purchases and handle unforeseen events.

• There is no upward or downward pressure on the interest rate because people want to hold exactly the amount of money in circulation.

• The Fed's expansionary monetary policy will create a $500 billion surplus of money at a 12 percent interest rate.

• Investment spending, aggregate demand, and real GDP are all affected by interest rates.

• Imagine a consulting firm buying a new computer program for $1,000 that will be obsolete in a year, and using a micro example to illustrate the investment decision-making process.

• Keynesians believe monetary policy works only indirectly, causing changes in the interest rate before affecting aggregate demand and prices.

• When Mr. Zeno puts your money in his pocket, he buys an economics book and learns how Keynes views final goods and ians and monetarists differ.

• The relationship does not exist for all years, but the evidence supports the idea that higher growth in the money supply leads to increases in the rate of inflation.

• Changes in the money supply directly determine economic performance instead of working through the rate of interest.

• If the Fed picks a rate and sticks to it, there will be short periods of unemployment.

• The evidence points to the fact that during the periods of 1960- 1981 and 1993-2000 velocity rose along a predictable or steady annual rate.

• Keynesians are willing to accept policy errors in order to maintain Fed flexibility to change the money supply in order to affect interest rates, aggregate demand, and the economy.

• Banks lent billions of dolhousing market bubble when he home's value with zero down, using risky stro.

• "How do we know when the vision shows advertised the idea pay the bank when the payments rational exuberance has caused interest rates to rise?"
• asked the home buyers.

• The Fed's response to "teaser" interest rates caused a banking and debt crisis in 2001.

• The Recovery Act of 2008 allowed some borrowers to partial ownership in private U.S.

• The market bubble was based on the hardest-hit communities in Congress.

• One can argue that the home prices people walked away from were enacted bubble, and that increasing eign investors were stuck with bad authority under the TARP program.

• Classical theory assumes that given time to adjust, prices and wages will decrease to ensure the economy operates at full employment.

• The economy is thought to be operating in the long run along a vertical aggregate supply curve.

• They argue that fi scal policy has little or no impact on output or employment because of a total crowding-out effect.

• The monetarists believe that moving the defi cit will increase the interest rate and crowd out investment spending.

• Schwartz argued that the Fed's monetary policy resulted in a deficit of 5.9 percent.

• Between 1929 and 1933, the investment demand level declined by 24 percent.

• Keynesians believe that the shape of the investment prices and the interest rate help the money market to achieve equilibrium.

• The crowding-out effect is caused by the interest demand curve being less steep.

• If Friedman argues that the target is missed, he must resign.

• The assumption is that nominal wages will fall as a result of competition for jobs.

• The classical approach to a recession is to let market forces shift the short-run aggregate supply curve.

• The Keynesian approach to cure a recession is to use discretionary fiscal and monetary policy to increase aggregate demand.

• The classical approach to an inflationary gap is to let market forces shift the short-run aggregate supply curve leftward and restore the economy to full employment.

• The Keynesian approach to cure inflation uses discretionary fiscal and monetary policy to decrease aggregate demand.

• Keynesians support expansionary fi scal and theory advocates contractionary fi scal and monetary policy to decrease aggregate and return the economy to the natural rate of demand and achieve full-employment macro unemployment.

• The Keynesian approach uses monetary policy and discretionary policy to increase aggregate demand and decrease aggregate demand and achieve full employment real GDP.

• Labor has the power to push up wages and prices at low rates of unemploy.

• Most economists, including Paul Samuelson and Robert Solow of MIT, believed that thePhillips curve was stable.

• Policymakers decided to use a "misery index" which added unemployment rates to their focus.

• The president and Congress want to make voters happy by reducing the unemployment rate to 4% before the election.

• The concept of tive expectations theory assumes that people don't know about future events.

• If policymakers follow a contractionary policy, adaptive expectations will operate in reverse.

• When the actual rate increases from 6 to 9 percent, nominal wage increases will be a step slow in catching up.

• Expansionary monetary and fiscal policies to reduce the unemployment rate are useless in the long run according to the adaptive expectations theory.

• We can give an explanation for the tendency of the unemployment points to shift upward to the right in the 1970s and early 1980s.

• Keynes commits the sin of truth and tells, then the concern is that the voters will be hurt until the next election looms.

• If people want jobs, the politicians want to dent them.

• The diagram to explain process will force benefi t at the expense of their op the short-run and long-run a lower unemployment rate.

• The Fed will slow down its monetary policy once the election is over because of the effects of a contractionary exchange.

• The business cycle of the 1980s caused people's expectations to shift inward due to the short-runPhillips curve.

• Information to revising unemployment compensation, changing the minimum wage law, providing predict the future, better education and training, improving information on available jobs, removing the future impact of predictable discrimination, and reducing the natural rate of unemployment are all available.

• If businesses and workers predict a surge in the money supply or a tax cut, the rate will go up to 6 percent.

• Workers anticipate that the aggregate demand curve will shift rightward, causing a rise in the price level and a fall in real wages, since they use all relevant information to predict future changes.

• Workers rationally raise their nominal wage demands without a time lag so that there is no gap between the actual and expected rates.

• Automatic nominal wage increases are provided by escalator clauses in many collective bargaining agreements.

• Expansionary monetary and fiscal policies used to reduce unemployment are harmful because they result in higher inflation.

• Rational expectations theory says that monetary policy can quickly cool infl ation without increasing unemployment.

• Keynesians reject rational expectations theory because they argue that prices and wages are "sticky" downward.

• The economy's self-correction mechanism will restore the natural rate of unemployment if flexible wages and prices are adjusted immediately.

• An agency was established to publicly announce violators of the national interest.

• The voluntary standards of the Truman and Eisenhower administration tried to discourage business and labor from raising prices and wages.

• Consumers have to wait in long lines for gasoline if price is not allowed to serve as a rationing device.

• During the Vietnam War, high expectations were built up.

• The unemployment rate would rise to 6 percent, but policymak framework to understand the wage-price spiral would explain the turn of events.

• Instead, repeal patriotism that would dis the discount rate again in the fall, policymakers tried to shift the ag courage businesses and labor from 1974, and President Ford called for higher prices and wages.

• Assume the economy price controls to cool the WIN button and the is in equilibrium at full expectations.

• The tax surcharge and federal spending employment caused food prices to go up.

• The public needs to be convinced that policymakers will aggregate supply by cutting marginal tax rates and sticking to government regulations.

• The effect will provide incentives to work, invest, and credibility.

• The majority view is that controls ruin the allocation of resources provided by the price system and intrude on economic freedom.

• If incomes policies do not cure an overheated economy during peacetime, policymakers must decide which school to wear.

• Stable policies are the best way to lower the achieve low and constant money supply growth rate.

• If the students know that the quiz dates are unknown, they will use this information to make up for missing class.

• In the long run, expansionary monetary and fi scal policies to reduce the unemployment rate are useless.

• The second chapter looks at the theoretical debate over capitalism and the transition of Cuba, Russia, and China to this system.

• If you sip French wine, coffee, or tea, you could be triggering a crisis in the world, such as poverty, soaring oil prices, or Indian tea.

• It is possible to get jobs to lower paid workers overseas and still not buy Italian shoes and TVs.

• In the second part of the chapter, you will learn how communication is important in world trade.

• World trade allows countries to escape the prison of their own production possibilities by producing bread, cars, or whatever goods they make best.

• We don't know how much labor, land, or capital the United States or Japan uses to produce a ton of grain or steel.

• The Japanese may be better using fewer productive producers, but their advantage does not matter in specializa resources or world trade decisions.

• Before Ruth was traded to the Yankees, he was the best left-handed pitcher in the American League for a few seasons.

• Despite the advice of economists, every nation protects its own domestic producers between countries without restrictions to foreign competition.

• There is a limit on the amount of sugar that can be imported into the United States.

• In addition to embargoes, tariffs, and quotas, some nations use subtler measures to discourage trade, such as setting up an overwhelming number of bureaucratic steps that must be taken in order to import a product.

• Workers and owners from import-competing areas go to Washington to lobby for protection because they have more at stake than consumers.

• With time, an infant industry can reduce costs and catch up with established foreign industries.

• The new industry won't experience the competitive pressures necessary to encourage growth and participation in world trade once protection is granted.

• By protecting critical defense industries, a nation will not be dependent on foreign countries for the essential defense-related goods it needs to defend itself in wartime.

• The sale of imported goods comes at the expense of domestically produced goods according to this protectionist argument.

• The General gling economies of Latin America were the only bright spot for the region's strug ond time.

• The purpose of these restrictions was to give trade pref milk cheese, British biscuits, and German coffee to 66 former colonies of ers.

• The elimination of trade restrictions will allow the United States to give more U.S. goods to Mexico.

• Increasing Mexican exports to the United States was expected to raise Mexico's wages and standard of living.

• Workers must enter the United States under a limited immigration quota or illegally if they want to work in the country.

• The United States can reim countries can export up to 775,000 tons of bananas duty-free.

• An exposed scheme saw Italian banana importers use false licences to pay reduced customs duties.

• Critics are worried that regional free trade accords will make global agreements harder to achieve.

• In 1999, 11 European countries joined the United States actions to remove exchange.

• The US's trade deficit reached a record-breaking level of over $800 billion in 2008 due to the rising price of oil.

• In 2009, oil import prices plummeted and the United States experienced a decline in trade with China.

• There are other ways to move dollars between the United States and other countries in the current account.

• A Japanese tourist who pays a hotel bill in Hawaii buys an export of services, which is a plus or credit to their current account.

• Income back from U.S. investments abroad is a payment for use of U.S. capital.

• Foreign banks and businesses need to purchase U.S. assets and give loans to the US that have a balance equal to $500 billion.

• The United States has its largest trade with China, Japan, Canada, and Mexico according to Exhibit 7.

• The United States is enjoying a higher standard of living because of continued trade with other countries.

• The United States would be forced to run a trade surplus if other countries refuse to provide new capital and liquidate their investments.

• Japanese individuals, corporations, and governments want to buy dollars in the world currency market.

• Japanese investors buy bonds and other interest-bearing securities in the United States in order to take advantage of more attractive yields.

• A weak dollar makes U.S. pro ducers happy because they can sell their less expensive exports to foreign buyers.

• A weak dollar makes foreign producers and domestic consumers unhappy because the prices of Japanese cars, French wine, and Italian shoes are higher.

• A weak dollar makes foreign goods and services more expensive for U.S. consumers.

• The prices of Japanese cars, French wine, and Italian shoes are lower because of a strong dollar.

• A strong dollar makes foreign producers happy because the prices of their goods and services are cheaper in the US.

• We will return to the discussion of the free trade agreement in order to show how a strong dollar affects trade.

• Washington, D.C., the Tin Wood trast, a nation with a balance of payments surplus man represents the industrial worker, and the oppo is the farmer are all metaphors for the site.

• In the 1939 film, Ruby found her way home and boosted employment and the price level.

• The author of the story, L. Frank Baum, never stated that he didn't want governments to control their money supplies, which can be argued as an issue of duct monetary policy.

• The exchange rate rose from 3.12 to 13.50 pesos per dollar, which is why you should not blame this trade on the North American Free Trade Agreement.

• The finance ministers of the Western countries will increase the money supply if the Allies win the war.

• Nations were expected to lose a lot of jobs because of un mined gold.

• Nixon said that the United States would no longer honor its obligation to sell gold at $35 an ounce.

• The gold standard was no longer in place by 1973, and the stronger dollar has made US goods more expensive for Mexican consumers.

• The desire of the international U.S. citizens to purchase foreign goods is dependent on the supply of dollars.

• The Marxists believe that with a discussion of the three basic types of capitalism, private property, and profit, they can understand how the pieces of the global economic puzzle fit together.

• The global clash market system is personified by the success of McDonald's in Russia and Wal-mart in China.

• Over time, the way past generations decided what crops are planted, how they are harvest, and to whom they are distributed remains the same.

• Critics argue that the traditional system does not lead to the production of advanced goods, new technology, and economic growth.

• The Gosplan set production quota and prices for farms, factories, mines, housing construction, medical care, and other units.

• According to the master plan, the distribution of output to consuming units of individuals and households is shown in the bottom portion of the pyramid.

• The central planning board at the top is the main feature of a command economy.

• According to the approved master plan, the factories, farms, mines, and other producers distributed the specifi ed output to consumers.

• Everyone is provided food, clothing, shelter, and medical care regardless of their ability to contribute to society, according to an allegation.

• When shortages of these parts became a problem, Soviet drivers removed the side mirrors from their cars.

• The supply curve is set by the central planners and therefore unresponsive to price variations.

• Long lines, empty shelves, and black markets are consequences of central planners setting prices below equilibrium for goods and services.

• No single person or central planning board makes a formal decision to shift resources and tell fi rms how to produce what many might view as a frivolous product.

• The market system provides a wide variety of goods and services that buyers and sellers exchange at the lowest prices.

• The supporters of the market system argue that people should be rewarded for their contributions to the system.

• The traditional, command, and market economies can be found in a wide variety of political situations.

• The economic goals for indus market systems are discussed annually by the French offi cials.

• One of the goals of the METI is to encourage exports so that Japan can earn the foreign currency it needs to pay for oil and other resources.

• Private ownership limits the power of government to deny goods, services, or jobs.

• The rich can give better education, legal aid, political platforms, and wealth to their heirs.

• The pursuit of profi t and self-interest can take precedence over damage to the air, rivers, lakes, and streams.

• The Tennessee Valley Authority, the National Aeronautics and Space Administration, and the U.S. are all owned and operated by the federal government.

• Marx was the first economist to reject the idea of a society operating through private interest.

• The government allowed those holding small private plots on peasant farms to operate in free markets that determined price and output levels.

• Critics argue that the main goal of centralization is to perpetuate the personal dictatorships of leaders such as Stalin in the old Soviet Union and Castro in Cuba.

• Soviet planners altered earnings to attract workers into certain occupations and achieve their goals before the open market reforms.

• Consumers stood in line for cheap products that never seemed to be available while the market waited for orders from the Soviet planners.

• There is no unemployment because the government assigns all workers a job and allocates resources to complete their production goals.

• Due to millions of economic units, central planners are the key translator of consumer preferences and production capabilities.

• Communism was no longer able to claim better living standards for its citizens because of the severe shortages of food, housing, cars, and other consumer goods.

• There are reforms aimed at introducing market power into the economic systems of Cuba, Russia, and China.

• To earn foreign exchange, the dollar has been legalized, and the Cuban government has poured capital into tourism by building several new state-owned hotels.

• Because few Cubans have dollars or other hard currency, many are earning it by engaging in illegal activities, such as prostitution, or selling Cuba's famous cigars and coffee on the black market.

• Cuban owners of classic American cars were recruited by the government to apply for taxi licenses and set their own fares in order to improve its transportation system.

• Workers receive free education, housing, health care, low state salaries in pesos, and a monthly allowance of rice, beans, and milk.

• Workers, the public, and even foreign investors were allowed to buy state property because markets must offer incentives.

• In 1992, the model predicts, the average price of goods increased by 1,735 percent and a greater variety of goods appeared on the shelves.

• Russian entrepreneurial spirit and acceptance of it in society is in its infancy, and corruption, including the legal system, is a frequent way of life.

• Photographs of Marx, Lenin, and Mao were hung on every street corner and factory under his rule.

• The Chinese government encourages the formation of nonstate enterprises owned by managers and their workforces and special economic zones open to foreign investment.

• The communists abolished private property, executed landlords, and put farmers to work in collectives after 1949.

• The state doesn't cover key goods and services, such as coal, petroleum, steel, losses, because of a two-track pricing system.

• The hold contract responsibility system was created as a village nonstate enterprise after house surplus labor moved into emerging township.

• The market-oriented reforms begun years ago are visible in the forests of glossy skyscrapers, expressways, upscale apartments, and enormous shopping malls in Beijing, Shanghai, and other cities.

• Kentucky Fried Chicken and McDonald's can be found in many cities throughout the country.

• Consumers who can afford cars and trucks are pushing swarms of bicyclists off the road.

• Farming accounted for 70% of the Fund representative in Beijing in the late 1970s.

• The threat of what goods the Chinese workers might produce and sell abroad is the other side of the coin.

• China is a market of great promise and promise as it transitions from a communist command economy to capitalism.

• The two equilibriums for goods and services are not created by any nation in the world and the United States has long lines.

• The World Bank estimates that 20 percent of economic ward growth is due to the steel, automobiles and automobiles.

• A family is more likely to produce goods and services outside of the price system in countries with a focus on agriculture.

• The GDP per capita gap between nations may be widened or narrowed because the fluctuations in exchange rates do not reflect actual differences in the value of goods and services produced.

• GDP per capita doesn't measure the distribution of income or the political environment that provides the legal, monetary, education, and transportation structures necessary for economic growth.

• Human capital is the education, training, experience, and health that improve the knowledge and skills of workers to produce goods.

• A country with a lower literacy rate has less ability to educate its labor force and create a basic foundation for economic growth.

• The skills of workers in the poor countries are usually suited to agriculture, rather than being appropriate for a wide range of industries and economic growth.

• Alpha is unable to shift its production possibilities outward because of lack of capital and other resources.

• New power-driven machines, advanced communication devices, new energy sources, and countless ways to produce more output with the same resources have been invented by brainpower over the last 250 years.

• Consider the impact of CD-ROMs, fax machines, DVDs, personal computers, word processing software, cell phone photography, and the Internet.

• Waterwheels, cloth, and oxcarts are the main means of transportation in many poor countries.

• The United States and other IACs have provided the world with an abundance of technological knowledge that can be used by the LDCs.

• China, Hong Kong, Singapore, Taiwan, South Korea, and Japan have all achieved rapid growth in part from technological borrowing.

• Russia and other Eastern European nations are trying to apply existing technological knowledge to boost their rates of growth.

• Even though IACs have developed advanced technologies that the world can use, many LDCs still experience low growth rates.

• In order for LDCs to achieve economic growth and development, they must wisely use natural resources.

• Private property rights have encouraged an entrepreneurial class in the IACs.

• It is vital that wise decisions are made regarding infrastructure if the price system is used to allocate goods and services.

• In the previous chapter, it was explained that policies such as tariffs and quotas restrain international trade and impede economic growth and development.

• It is diffi cult for countries to break the poverty barrier because they must follow various avenues and improve many factors in order to increase their economic well-being.

• Investment in human resources, capital, technological advances, and the political environment are some of the important factors shown in the exhibit.

• It is important to remember that the lack of one or more key factors, such as natural resources, does not mean that an LDC is under development.

• Microsoft could build a plant in the Philippines to make software, or Bank of America could lend money to the government of Haiti.

• Multinationals often look for new investment opportunities in LDCs because they have abundant supplies of low- wage labor and raw materials.

• The LDCs complain that foreign aid comes with too many strings attached.

• Congress has grown more reluctant to send taxpayers' money abroad except in the clearest cases of need or national security because of this belief.

• The poor countries are able to complete projects and thus make short use of the economic returns to pay off the lender with interest.

• The debtor countries are usually required to implement monetary policies that will alleviate balance-of-payments problems and promote economic growth.

• The International Monetary Fund has provided short-term loans to developing countries and economies making the transition to capitalism in recent years.

• In 2010 the International Monetary Fund and some EU countries made a rescue loan to debt-plagued Greece with the condition of deep cutbacks in government spending and tax hikes.

• Critics say that low-cost loans from the International Monetary Fund encourages bad government policies and excessive risk taking by banks.

• It was in the best interest of both rich and poor countries to eliminate the debt burden.

• There is no single correct country, output is produced without large strategy for economic development, and a lack of technologically advanced capital of strength in one or more of the fi ve areas.

• The debt crisis of the 1980s, which was in exchange rates, affects GDP per capita by writing off and restructuring the gaps between countries, and there is no loans.

• Multinational corporations that locate climate and a cheap labor force are important sources of foreign investment for adequate infrastructure.

• The International Monetary Fund is low because many of the LDCs lack it.

• The price of travel to sunny vacation spots can affect this relationship.

• The demand curve shifts because tastes and preferences change according to the importance of each game, but the number of seats remains constant.

• A monopolist's price will earn less profi ts than a maverick's price.

• The age, race, and education of the head of the U.S. metals industry are some of the important characteristics try.

• The Sherman Act states that predatory welfare includes bookstore pricing in order, which reduces the work incentive, and is ineffi cient to monopolize its college market for books.

• The federal government will charge a violator if they are found to be in violation of the Clayton Act.

• The Sherman Act outlaws price-fi xing or an organized politically than either new competi tive practices designed to eliminate tors or consumers.

• Regulators would be Act by outlawing specifi c business practices, expected to interpret "necessary" to mean that including price discrimination, exclusive the service provided by existing fi rms is suffi dealing, tying contracts, stock.

• The Federal Trade Commission is responsible for enforcing laws that are unpopular with the public.

• No one ends up paying the cancer risk since the neighbor uses price and the buyer saves $10,000.

• It is diffi cult to fi nd mar location, nearby schools, and environmental kets where the transaction costs of reaching an amenities are.

• Since most pollution spills buyer, bear the consequences, not a third party, it is diffi cult near a nuclear plant.

• The free-rider problem arises when an instructor who doesn't turn in all homework assignments is showing command-and-control regula agreements, but letting others bear the cost.

• Classical economists argued that men for child the long run are more likely to be priced out of the labor force than are men in the labor force.

• The power decline in a given year is one of the factors that can affect the salary increase.

• Ceteris paribus, if the proportion to the dollar value of benefi ts among tax rates are cut, there will be strong incentives individual voters.

• They reallocate the debt to another group of U.S. citizens by issuing new government bonds.

• The economy is operating in the Keynes fi liate with the banks that are chartered by the states.

• Customers who hold cash, rather than supply, cause the interest rate to be lowered and cause a check to be written for the full amount of the loan.

• Under the command system, the purchase of imports was more worrying than the sale of errors and crop failures.

• Everyone in society has a basic income because the state makes the capital account decisions.

• Embracing a market IACs exceeds the GDP per capita growth rate oriented system means a transfer of power.

• Markets are incompatible with the principle because there is a lot of diversity among socialist citizens.

• The high GDP per capita and narrow industrial LDC may not be able to achieve economic success in a country with a resources.

• Switzerland, Japan, and the United poor are included in the list of economies that lack investment.

• External funds from Argentina, Mexico, South Africa, Jordan, and others allow the LDC to increase its capital Bangladesh.

• Money payments are made when revenues exceed government expenditures.

• The number of people 16 growth and contraction can be measured by years of age and older who are employed or who change in real GDP.

• The total of checking account is a form of socialism.

• An increase in private-sector similar levels of education, training, experience, and spending as a result of federal budget responsibility.

• Business investment spending increases to produce a good at a lower opportunity cost.

• The demand for labor and other long-run average cost curve is affected by factors of production that depend on the consumer's output.

• The national income accounting method measures GDP by adding all the spending for goods and services during a period of time.

• A cost or benefi t is imposed on people by the annual percentage increase in the GDP.

• The market value is the amount of goods and services produced in a year.

• Goods between countries can be bought with permits that allow them to be without restrictions or special taxes.

An increase in the general price ing method that measures GDP by adding all in level of goods and services in the economy

• The horizontal segment of the different possible price levels during a time period in aggregate supply curve represents an econ which nominal incomes change by the same percent in a severe recession.

• The mental and physical capacity of work distribution of income is different to the amount of goods and services produced.

• To be eligible for public the last unit produced, a family's income must be equal to the marginal cost of not exceeding a certain level.

• The primary function of cost is a one-unit increase in the quan money to be widely accepted in exchange for goods.

• The Federal Reserve was given the power to enforce from the sale of one additional unit of output.

• Money supply and buyers interact to determine the price and quantity of excess reserves held by banks.

• A market structure using prices determined by the interaction of many small sellers and different forces of supply and demand.

• An incentive to keep assets past the ized is provided by a market structure character tions.

• The total income was ignored by the decision maker because the households that are available for consumption are not included in the total income.

• The maximum amount of output that a fi rm can provide is what people hold to pay unpredictable amounts of inputs.

• The impact on total spending forever greater than the available supply of time is caused by the inverse relationship between goods and resources.

• Individuals will use an amount of product sellers are willing to produce open access resource to the point of exhaustion, bas and offer for sale at possible prices during a speci ing of their use on private benefi ts.

• A voluntary standards insurance program pays income for a short set by the government for "permissible" wage and time period for unemployed workers.

• CHECKPOINT Walking the Balanced Budget Tightrope Automatic Stabilizers Supply-Side Fiscal Policy YOU'RE THE ECONOMIST The Laffer Curve CHAPTER 22 The Public Sector Government Size and Growth Financing Government Budgets The Art of Taxation Public Choice Theory YOU'RE THE ECONOMIST Is It Time to Trash the 1040s?
• The Monetarist View of the Role of Money YOU'RE THE ECONOMIST America's Housing Market Bubble Busts CHECKPOINT A Horse of Which Color?
• Applying the AD-AS Model to the Great Expectations Debate Incomes Policy YOU'RE THE ECONOMIST Ford's Whip Inflation Now (WIN) Button CHECKPOINT Can Wage and Price Controls Cure Stagflation?