The Economy Today FOURTEENTH EDITION Bradley R.
TheEconomyTodayFOURTEENTH EDITIONBradley R. SchillerAmerican University, emeritusWITH KAREN GEBHARDTColorado State UniversityMcGrawHillEducation
CONTENTSPREFACEviPART 1: THE ECONOMIC CHALLENGECHARTER 1: ECONOMICS: THE CORE ISSUES2The Economy Is Us 3Scarcity: The Gore Problem 4Opportunity Costs 6Production Possibilities 7Three Basic Decisions 12The Mechanisms of Choice 13What Economics Is All About 18Demand 48Supply 54Equilibrium 59Market Outcomes 63Summary 66THE ECONOMY TOMORROW:Deadly Shortages: The Organ Transplant Market64IN THE NEWSWalmart Slashes Galaxy S4 Prices 51Seafood Prices Rise after BP Oil Spill 58The Real March Madness: Ticket Prices 61Summary 20Appendix: Using Graphs 22WORLD VIEWDowned Malaysian Jet Causes Oil Spike 63THE ECONOMY TOMORROW:Harnessing the Sun 20CHARTER 4: THE ROLE OF GOVERNMENTIN THE NEWSJobless Workers Outnumber Manufacturing Workers 11WORLD VIEWChronic Food Shortage Shows Despite Effortsby North Korea to Hide It 10Rocket Laurich Cost Enough to End Faminein North Korea for a Year 10Market Reliance vs. Government Reliance? 15Index of Economic Freedom 16CHARTER 2: THE U.S. ECONOMY:A GLOBAL VIEW 3070Market Failure 71Growth of Government 78Taxation 80Government Failure 83Summary 86THE ECONOMY TOMORROW:"Righf'-Sizing Government? 84IN THE NEWSFirefighters Watch as Home Bums to the Ground 73Perpetuating Poverty: Lotteries Prey on the Poor 82Little Confidence in Government 84WORLD VIEWIsrael's "Iron Dome" Frustrates Hamas 72Secondhand Smoke Kills 600,000 Peoplea Year 75What America Produces 31How America Produces 35For Whom America Produces 38Summary 41PART 2: MEASURING MACRO OUTCOMESTHE ECONOMY TOMORROW:Ending Global Poverty 41WORLD VIEWComparative Output (GDP) 41GDP per Capita around the World 32The Education Gap between Rieh and Poor Nations 35Income Share of the Rieh 40CHARTER 3: SUPPLY AND DEMANDMarket Participants 46The Circular Flow 4745CHARTER 5: NATIONAL INCOMEACCOUNTING 92Measures of OutputThe Uses of OutputMeasures of IncomeThe Flow of Income93101102106Summary 109THE ECONOMY TOMORROW:The Quality of Life 107XXV
xxviCONTENTSCompeting Theories of Short-Run Instability 168Long-Run Self-Adjustment 170IN THE NEWSA Lot Going On under the Table 96Material Wealth vs. Social Health 109Summary 172WORLD VIEWGlobal Inequalities 95THE ECONOMY TOMORROW:Coping with Recession: 2008-2014 171CHARTER 6: UNEMPLOYMENT113The Labor Force 114Measuring Unemployment 116The Human Costs 119Defining Füll Employment 120The Historical Record 124IN THE NEWSMarket in Panic as Stocks Are Dumped in12,894,600-Share Day; Bankers Halt It 153Sharpest Economic Decline in 26 Years 160WORLD VIEWGlobal Depression157Summary 126CHARTER 9: AGGREGATE DEMAND 176THE ECONOMY TOMORROW:Outsourcing Jobs 125Macro Equilibrium 177Consumption 178The Consumption Function 181Investment 187Government and Net Export SpendingMacro Failure 192IN THE NEWSUnemployment Benefits Not for Everyone 119The Real Costs of Joblessness 120Unemployment Rate Hits a 26-Year High 125Outsourcing May Create U.S. Jobs 126CHARTER 7: INFLATION 130What Is Inflation? 131Redistributive Effects of Inflation 131Macro Consequences 137Measuring Inflation 138The Goal: Price Stability 141The Historical Record 143Causes of Inflation 144Protective Mechanisms 144Summary 196Appendix: The Keynesian Gross190197THE ECONOMY TOMORROW:Anticipating AD Shifts 195Summary 146IN THE NEWSOverspending 179Disposable Income and Outlays: May 2014 184Consumer Confidence Index at Record Low 185Wealth Effect Boost Spending 187Cuomo Proposes to Cut Spending by 8.9 Billion,Fire 9,800 Workers 190U.S. Leading Indicators Signal Continuing RecoveryTHE ECONOMY TOMORROW:The Virtues of Inflation 145WORLD VIEWPanasonic Cuts Spending 189IN THE NEWSColege Tuition Up Again 132Ignoring Cell Phones Biases CPI Upward 142CHARTER 10: SELF-ADJUSTMENT ORINSTABILITY? 206WORLD VIEWZimbabwe's Trillion-Dollar Currency136PART 3: CYCLICAL INSTABILITYCHARTER 8: THE BUSINESS CYCLE 152Stable or Unstable? 153Historical Cycles 155A Model of the Macro Economy 160Aggregate Demand and Supply 161Leakages and Injections 207The Multiplier Process 211Macro Equilibrium Revisited 216Adjustment to an Inflationary GDP Gap219Summary 223THE ECONOMY TOMORROW:Maintaining Consumer Confidence221IN THE NEWSEverything Is on Sale and That's Not GoodHousing Starts Fall to 10-Year Low 212210
CONTENTSU.S. GDP Down 3.8% in Q4, Biggest Drop Since 1982 214Unemployment Spreading Fast across U.S. Industries 215The Paradox of Thrift 222WORLD VIEWAsian Economies Hurt by U.S. Recession216PART 4: FISCAL POLICY TOOLSCHARTER 11: FISCAL POLICY228Taxes and Spending 229Fiscal Stimulus 230Fiscal Restraint 240Fiscal Guidelines 243THE ECONOMY TOMORROW:The Concern for Content 245IN THE NEWSU.S. Congress Gives Final Approval to 787 BillionStimulus 234Just How Stimulating Are These Checks? 237Defense Cuts Kill Jobs 241CHARTER 12: DEFICITS AND DEBT250Budget Effects of Fiscal Policy 251Economic Effects of Deficits 258Economic Effects of Surpluses 260The Accumulation of Debt 261Who Owns the Debt? 264Bürden of the Debt 265External Debt 268Deficit and Debt Limits 269Summary 292THE ECONOMY TOMORROW:Are Bitcoins Tomorrow's Money? 291IN THE NEWSCDs Not Paying Much280WORLD VIEWThe Cashless Society277Summary 311THE ECONOMY TOMORROW:Is the Fed Losing Control? 310IN THE NEWSTreasury Prices Fall with Improved Economic OutlookU.S. Federal Reserve Cuts Interest Ratesto Historie Low 307300CHARTER 15: MONETARY POLICY315The Money Market 316Interest Rates and Spending 320Policy Constraints 322The Monetarist Perspective 326The Concern for Content 331THE ECONOMY TOMORROW:Dipping into Social Security 270IN THE NEWSDeficits to Swell with Obama Stimulus 251America's Biggest Worries 253Fiscal Policy in the Great Depression 258253PART 5: MONETARY POLICY OPTIONSCHARTER 13: MONEY AND BANKSStructure of the Fed 297Monetary Tools 298Increasing the Money Supply 307Decreasing the Money Supply 309WORLD VIEWChina Cuts Reserve RequirementsSummary 271What Is "Money"? 277The Money Supply 278Creation of Money 281289CHARTER 14: THE FEDERAL RESERVESYSTEM 296Summary 246WORLD VIEWBudget Imbalances CommonThe Money Multiplier 287Banks and the Circular Flowxxvii276Summary 336THE ECONOMY TOMORROW:Which Lever to Pull? 352IN THE NEWSFed Cut Means Lower Rates for Consumers 319Fed to Expand Bond-Purchase Program 321Prices Are Low! Mortgages Cheap! But YouCan't Get One 323Consumer Borrowing Dips More Than Expected inFebruary 324"Not Worth a Continental": The U.S. Experience withHyperinflation 329WORLD VIEWRising Rates Häven't Thwarted Consumers 325305
xxviiiCONTENTSTHE ECONOMY TOMORROW:Hands On or Hands Off? 403PART 6: SUPPLY-SIDE OPTIONSCHARTER 16: SUPPLY SIOE POLICY:SHORT RUN OPTIONS 342IN THE NEWSGreat Recession Officially Ended Last YearNo Recession, Bernanke Says 397CBO's Flawed Forecasts 399Stimulus: Spend or Cut Taxes? 400Aggregate Supply 343Shape of the AS Curve 343Shifts of the AS Curve 347Tax Incentives 350Human Capital Investment 355Deregulation 357Easing Trade Barriers 359WORLD VIEWComparative Macro PerformanceCHARTER 19: CONSUMER CHOICETHE ECONOMY TOMORROW:Rebuilding America 359IN THE NEWSThe Misery Index 348WORLD VIEWJapan Sees Quake Damage Bill of Up to 309 Billion,Almost Four Katrinas 349CHARTER 17: GROWTH AND PRODUCTIVITY:LONG RUN POSSIBILITIES 365The Nature of Growth 366Measures of Growth 367Sources of Growth 372Policy Tools 376Summary 424Appendix: Indifference Curves 425THE ECONOMY TOMORROW:Caveat Emptor 423IN THE NEWSMen vs. Women: How They SpendCHARTER 20: ELASTICITYTHE ECONOMY TOMORROW:Limitless Growth? 378Price Elasticity 435Price Elasticity and Total RevenueCross-Price Elasticity 444Income Elasticity 446Elasticity of Supply 448368Policy Tools 387Idealized Uses 391The Economic Record 393Why Things Don't Always Work 395Summary 406411434441Summary 449377PART 7: POLICY CONSTRAINTSCHARTER 18: THEORY VERSUS REALfTY410Determinants of Demand 411The Demand Curve 413Market Demand 417Consumer Surplus 417Price Discrimination 419Choosing among Products 419Summary 382WORLD VIEWHigh Investment Fast Growth 373U.S. Workers Compete Well 375IMF Wams of Acute Debt Challenges for West395PART 8: PRODUCT MARKETS:THE BASICSSummary 361IN THE NEWSThe New Economy396386THE ECONOMY TOMORROW:Achieving Energy Independence449IN THE NEWSFederal Cigarette Tax Going Up Again 439After iPhone Price Cut, Sales Are Up by 200Percent 439Americans Apply Brakes as Gas Price Soars 440Professor Becker Corrects President's Math 441Samsung Stung by Apple Moves 445SUV Sales Drop with Gasoline Price Rise 446WORLD VIEWHigh Gold Price Swells Ranks of Illegal Miners448
CONTENTSCHARTER 21: THE COSTS OF PRODUCTiON 454The Production Function 455Marginal Productivity 458Resource Costs 459Dollar Costs 461Economic vs. Accounting Costs 469Long-Run Costs 470Economies of Scale 472THE ECONOMY TOMORROW: 99 iPads? 523IN THE NEWSU.S. Catfish Industry Bleeding Finally Stops 509Chasing the iPad 525WORLD VIEWEconomy Threatens Catfish Industry 507Fiat Panels, Thin Margins 511Competition Shrinks India's Phone Bills 522Summary 475THE ECONOMY TOMORROW:Global Competitiveness 473CHARTER 24: MONOPOLYMarket Power 530Market Power at Work: The Computer MarketRevisited 533A Comparative Perspective of Market Power 539Pros and Cons of Market Power 544IN THE NEWSTesla Banks on Gigafactory 472WORLD VIEWUnited States Gains Cost Advantage529475Summary 551PART 9: MARKET STRUCTURECHARTER 22: THE COMPETITIVE FIRM480IN THE NEWSLive Nation and Ticketmaster Announce MergerAgreement 539U.S. Sues over Drug's Price Mike 541Ticketmaster Rolls Out "Dynamic" Pricing 542Intel 's Concessions Settie Antitrust Suit 544Jury Awards 26 Million for SuppressedTechnology 545US FTC Enables Boeing-Lockheed 'Monopoly' 546A Sirius Mistake? FCC Approves XM-SiriusMerger 547Judge Rules Microsoft Violated Antitrust Laws 549Feds Probe Google Dominance 551The Profit Motive 481Economic vs. Accounting Profits 482Market Structure 485The Nature of Perfect Competition 486The Production Decision 488Profit-Maximizing Rule 490The Shutdown Decision 496The Investment Decision 497Determinants of Supply 498Summary 502THE ECONOMY TOMORROW:Internet-Based Price Competition502IN THE NEWSAre Profits Bad? 481The Value of Hiro's Strawberry Farm 483Too Many Seilers: The Woes of T-Shirt Shops 485Southern Farmers Hooked on New Cash Crop 493WORLD VIEWGM Closing 15 Plants for 9 Weeks 498Ford to Shutter Australian Plants 498CHARTER 23: COMPETITIVE MARKETSThe Market Supply Curve 507Competition at Work: Microcomputers 510The Competitive Process 521Summary 525THE ECONOMY TOMORROW:Microsoft and Google: Bullies or Geniuses? 548506WORLD VIEWRussia's Sable Monopoly Persists 534CHARTER 25: OLIGOPOLY555Market Structure 556Oligopoly Behavior 559The Kinked Demand Curve 563Game Theory 565Oligopoly vs. Competition 567Coordination Problems 569Barriers to Entry 571Summary 577THE ECONOMY TOMORROW:Antitrust Enforcement 574xxix
xxxCONTENTSIN THE NEW*Pop Culture: RC Goes for the Youth Market 562Major Airlines Match Southwest's Fare Cuts 564Major U.S. Airlines Roll Back LatestFare Mike 564Coke and Pepsi May Call Off Pricing Battie 567Eliminating the Competition with Low Prices 571Frito-Lay Eats Up Snack-Food Business 572Joe Camel Acquires Newport 573WORLD VIEWPutting Size in Global Perspective 559OPEC Agrees to Maintain Its Oil Output Ceiling at30 Million Barrels per Day 568CHARTER 26: MONOPOLIST#COMPETITION 582Structure 583Behavior 585Summary 593THE ECONOMY TOMORROW:No Cease-Fire in Advertising Wars 594IN THE NEWSWhat's Behind Starbucks' Price Mike? 584Selling "Pure Water": A Billion Scam? 586Fast-Food Rivals Suit Up for BreakfastWar 587Premium Coffee Shops May Be Hearing SaturationPoint 590The Cola Wars: It's Not All Taste 591WORLD VIEWThe Best Global Brands 593CHARTER 28: ENVIRONMENTAL PROTECTION618The Environmental Threat 619Pollution Damages 621Market Incentives 622Market Failure: External Costs 624Regulatory Options 627Balancing Benefits and Costs 631Summary 636THE ECONOMY TOMORROW:Capping C02 Emissions 635IN THE NEWSKaua'i Beach among Most Polluted 620Air Pollution Kills 622Cut the Power to Save the Fish? 624White House Report Says Benefits of EPA Rules FarOutweigh Costs 632Recycling Wastes Money 633New Rules Would Cut Thousands of Coal Jobs 634A "War on Coal"? 636WORLD VIEWPolluted Cities 619Paying to Pollute 630CHARTER 29: THE FARM PROBLEM640Destabilizing Forces 641The First Farm Depression, 1920-1940 644U.S. Farm Policy 645The Second Farm Depression, 1980-1986 650Summary 653THE ECONOMY TOMORROW:Farmers on the Dole 651PART 10: REGULATORY ISSUESCHARTER 27: NATURAL MONOPOLIES:(DE)REGULATION? 598Antitrust vs. Regulation 599Natural Monopoly 599Regulatory Options 601The Costs of Regulation 604Deregulation in Practice 607Summary 614IN THE NEWSCom Acres Expected to Soar in 2007; USDA SaysEthanol, Export Demand Lead to Largest Planted Areain 63 Years 644Farm Subsidies Ripe for Reform 653WORLD VIEWEU Farm Subsidies648PART 11: FACTOR MARKETS:BASIC THEORYTHE ECONOMY TOMORROW:Deregulate Everything? 613CHARTER 30: THE LABOR MARKETIN THE NEWSSleep Rules Raise Trucking Prices 606The JetBlue Effect 610Financial Woes Heating Up 613Labor Supply 659Market Supply 662Labor Demand 663A Firm's Hiring Decision 668658
CONTENTSMarket Equilibrium 671Choosing among Inputs 673PART 12: DISTRIBUTIONAL ISSUESCHARTER 33: TAXES: EQUITY VERSUSEFFICIENCY 724Summary 677THE ECONOMY TOMORROW:Capping CEO Pay 676IN THE NEWSMore Than 1,000 Line Up at A.C. Job Fair 659Challenging Work and Corporate Responsibility Will LureMBA Grads 660Marlins Sign Stanton to Record 325 MillionContract 669Obama Calls for 10.10 Minimum Wage 673Summary 739THE ECONOMY TOMORROW:A Fiat Tax? 738WORLD VIEWYour Money or Your Life 662CHARTER 31: LABOR UNIONSWhat Is Incomel 725The Size Distribution of Income 725The Federal Income Tax 727Payroll, State, and Local Taxes 733laxes and Inequality 735What Is Fair! 736IN THE NEWSThe Obamas' Taxes682The Labor Market 683Labor Unions 684The Potential Use of Power 685The Extent of Union Power 688Employer Power 690Collective Bargaining 694The Impact of Unions 697WORLD VIEWU2 Avoids Taxes, Raising Ire in IrelandTop Tax Rates 737729CHARTER 34: TRANSFER PAYMENTS:WELFARE AND SOCIAL SECURITY 743Major Transfer ProgramsWeifare Programs 746Social Security 751Summary 699THE ECONOMY TOMORROW:Merging to Survive 699744Summary 756IN THE NEWSThe GM-UAW Deal 685A Win for the Graduate(s) 691Judge Rejects Deal to Settie Silicon ValleyCollusion Case 692Caterpillar vs. the UAW 695THE ECONOMY TOMORROW:Privatize Social Security? 754PART 13: INTERNATIONAL ECONOMICSWORLD VIEWUnion Membership 689Walmart Shutters Quebec Store as Union Closes InCHARTER 32: FINANCIAL MARKETS703The Hole of Financial Markets 704The Present Value of Future Profits 705The Stock Market 709The Bond Market 715CHARTER 35: INTERNATIONAL TRADE696760U.S. Trade Patterns 761Motivation to Trade 764Pursuit of Comparative Advantage 768Terms of Trade 769Protectionist Pressures 771Barriers to Trade 774Summary 782THE ECONOMY TOMORROW:Policing World Trade 781Summary 719THE ECONOMY TOMORROW:Venture Capitalists—Financing Tomorrow'sProducts 718IN THE NEWSAlibaba IPO Sets Record 711Where Do Start-Ups Get Their Money?731719IN THE NEWSCalifornia Grape Growers Protest MixingForeign Wine 772End the Import Quotas on Sugar 779NAFTA Reallocates Labor: Comparative Advantageat Work 782xxxi
xxxiiCONTENTSWORLD VIEWExport Ratios 771U.S. Imposes Tariffs on Steel from Nine CountriesAccused of Dumping 774Meat Imports "Threaten" Farmers 775U.S. Imposes Tariffs on Solar Panels from China 776"Beggar-Thy-Neighbor" Policies in the 1930s 777Mexico Retaliates for Loss of Truck Program 780CHARTER 36: INTERNATIONAL FINANCE786Exchange Rates: The Global Link 787Foreign-Exchange Markets 787Market Dynamics 791Resistance to Exchange-Rate Changes 794Exchange-Rate Intervention 796806American Poverty 807Global Poverty 808Goals and Strategies 810Income Redistribution 810Economic Growth 813Summary 823THE ECONOMY TOMORROW:Unleashing Entrepreneurship 823WORLD VIEWGlaring Inequalities 811The Way We Give 813The Female "Inequality Trap" 815Dying for a Drink of Clean Water 816Muhammad Yunus: Microloans 818Jeffrey Sachs: Big Money, Big Plans 818Maduro: "Bourgeois Parasites" Thwart GrowthSummary 802THE ECONOMY TOMORROW:Currency Bailouts 801WORLD VIEWForeign Exchange Rates 790Who Gains, Who Loses from Strong Dollar 793Nobel Prize Was Nobler in October 795The Risks of China's Foreign-Exchange StockpileCHARTER 37: GLOBAL POVERTYPhoto Credits C-1Glossary G-1Index 1-1Reference Tables T-1799820
FOURTEENTH EDITION Bradley R. Schiller American University, emeritus WITH KAREN GEBHARDT Colorado State University Mc . The Cashless Society 277 CHARTER 14: THE FEDERAL RESERVE SYSTEM 296 Structure of the Fed 297 . THE BASICS CHARTER 19: CONSUMER C
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Le genou de Lucy. Odile Jacob. 1999. Coppens Y. Pré-textes. L’homme préhistorique en morceaux. Eds Odile Jacob. 2011. Costentin J., Delaveau P. Café, thé, chocolat, les bons effets sur le cerveau et pour le corps. Editions Odile Jacob. 2010. Crawford M., Marsh D. The driving force : food in human evolution and the future.
Le genou de Lucy. Odile Jacob. 1999. Coppens Y. Pré-textes. L’homme préhistorique en morceaux. Eds Odile Jacob. 2011. Costentin J., Delaveau P. Café, thé, chocolat, les bons effets sur le cerveau et pour le corps. Editions Odile Jacob. 2010. 3 Crawford M., Marsh D. The driving force : food in human evolution and the future.
