Ten Principles of Economics - Part 1

... her part- time job for some extra spending money. scarcity the limited nature of society’s resources economics the study of how society manages its scarce resources CHAPTER 1 TEN PRINCIPLES OF ECONOMICS ... fully the strengths and weaknesses of the market’s invisible hand. A DAM S MITH FYI Adam Smith and the Invisible Hand CHAPTER 1 TEN PRINCIPLES OF ECONOMICS 11 forces. Central planners failed ... and Causes of the Wealth of Na- tions, was published in 17 76, the exact year American revolu- tionaries signed the Declara- tion of Independence. But the two documents do share a point of view that...

Ten Principles of Economics - Part 44

... founders of utilitarianism are the English philosophers Jeremy Bentham (17 48 18 32) and John Stuart Mill (18 06 18 73). To a large extent, the goal of utilitarians is to ap- ply the logic of individual ... amount of income— $10 0,000 in our example—were fixed. But, in fact, it is not. Utilitarians reject com- plete equalization of incomes because they accept one of the Ten Principles of Economics ... considered sufficient. Suddenly, 46 mil- lion Americans, or 17 percent of the pop- ulation, would be recognized as officially below the line, not the 12 .7 percent an- nounced last month, the lowest...

Ten Principles of Economics - Part 47

... Optimum Quantity of Pepsi 0 Price of Pepsi $2 1 (b) The Demand Curve for Pepsi Quantity of Pepsi 15 0 B A B A I 1 I 2 New budget constraint Initial budget constraint Figure 2 1- 1 1 D ERIVING THE ... income effect induces him to save less. Consumption when Young 0 55,000 $11 0,000 $50,000 Consumption when Old 10 0,000 Optimum I 3 I 2 I 1 Budget constraint Figure 2 1- 1 5 T HE C ONSUMPTION -S ... and consumption. For every hour of leisure she gives up, she works one more hour and gets $50 of consumption. Figure 2 1- 1 3 shows Sally’s budget constraint. If she spends all 10 0 hours en- joying...

Ten Principles of Economics - Part 49

... Y $8, 511 $ 31, 522 10 0% Consumption, C 5,808 21, 511 68 Investment, I 1, 367 5,063 16 Government purchases, G 1, 487 5,507 18 Net exports, NX 15 1 Ϫ559 Ϫ2 S OURCE : U.S. Department of Commerce. CHAPTER ... measure of the price level calculated as the ratio of nominal GDP to real GDP times 10 0 Billions of 19 92 Dollars 3,000 4,000 5,000 6,000 $8,000 $7,000 19 70 19 75 19 80 19 85 19 90 200 019 95 Figure 2 2-2 ... OGS P RICEOF H AMBURGERS Q UANTITY OF H AMBURGERS 20 01 $1 100 $2 50 2002 2 15 0 3 10 0 2003 3 200 4 15 0 Y EAR C ALCULATING N OMINAL GDP 20 01 ( $1 per hot dog ϫ 10 0 hot dogs) ϩ ($2 per hamburger ϫ...

Ten Principles of Economics - Part 50

... RICE Q UANTITY P RICEOF Q UANTITY Y EAR OF M ILK OF M ILK H ONEY OF H ONEY 20 01 $1 100 qts. $2 50 qts. 2002 $1 200 $2 10 0 2003 $2 200 $4 10 0 510 PART EIGHT THE DATA OF MACROECONOMICS a. Compute ... economic well-being rise more in 2002 or 2003? Explain. 6. Consider the following data on U.S. GDP: N OMINAL GDP GDP D EFLATOR Y EAR ( IN BILLIONS )( BASEYEAR 19 92) 19 96 7,662 11 0 19 97 8 ,11 1 11 2 a. ... ($8/$8) ϫ 10 0 ϭ 10 0 2002 ( $14 /$8) ϫ 10 0 ϭ 17 5 2003 ($20/$8) ϫ 10 0 ϭ 250 S TEP 5: U SE THE C ONSUMER P RICE I NDEX TO C OMPUTE THE I NFLATION R ATE FROM P REVIOUS Y EAR 2002 (17 5 Ϫ 10 0) /10 0 ϫ 10 0 ϭ...

10
1,051
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Ten Principles of Economics - Part 2

... market failure, p. 11 externality, p. 11 market power, p. 11 productivity, p. 12 inflation, p. 13 Phillips curve, p. 14 Key Concepts 1. Give three examples of important tradeoffs that you face ... CHAPTER 1 TEN PRINCIPLES OF ECONOMICS 13 In the 19 80s and 19 90s, for example, much debate in the United States centered on the government’s budget deficit—the excess of government spending over gov- ... analysis is built using the ten principles introduced here. Table 1- 1 T EN P RINCIPLES OF E CONOMICS H OW P EOPLE #1: People Face Tradeoffs M AKE D ECISIONS #2: The Cost of Something Is What You...

Ten Principles of Economics - Part 3

... is not always straight- forward. This tendency is rooted in one of the Ten Principles of Economics in Chap- ter 1: People face tradeoffs. Economists are aware that tradeoffs are involved in most ... just the sum of the activities of all these decision- makers in all these markets. The field of economics is traditionally divided into two broad subfields. Microeconomics is the study of how households ... or the effects of compulsory school attendance on workers’ earnings. A 2 ,10 0 2,000 A E Quantity of Cars Produced 700 750 0 4,000 3,000 1, 000 Quantity of Computers Produced Figure 2-3 AS HIFT IN...

Ten Principles of Economics - Part 51

... to turn 19 31 dollars into today’s dollars. A price index determines the size of this inflation correction. 19 65 Percent per Year 15 CPI GDP deflator 10 5 0 19 70 19 75 19 80 19 85 19 90 19 9 819 95 Figure ... 19 39 $920 2. Star Wars 19 77 798 3. The Sound of Music 19 65 638 4. Titanic 19 97 6 01 5. E.T. The Extra-Terrestrial 19 82 6 01 6. The Ten Commandments 19 56 587 7. Jaws 19 75 574 8. Doctor Zhivago 19 65 ... inflation 19 65 Interest Rates (percent per year) 15 Real interest rate 10 5 0 Ϫ5 19 70 19 75 19 80 19 85 19 90 19 95 19 98 Nominal interest rate Figure 2 3-3 R EAL AND N OMINAL I NTEREST R ATES . This figure...

Ten Principles of Economics - Part 52

... 18 70 19 97 1, 890 21, 860 1. 95 China 19 00 19 97 570 3,570 1. 91 Argentina 19 00 19 97 1, 824 9,950 1. 76 United States 18 70 19 97 3 ,18 8 28,740 1. 75 Indonesia 19 00 19 97 708 3,450 1. 65 India 19 00 19 97 537 1, 950 ... EGINNING OF P ERIOD a AT E ND OF P ERIOD a PER YEAR Japan 18 90 19 97 $1, 196 $23,400 2.82% Brazil 19 00 19 97 619 6,240 2. 41 Mexico 19 00 19 97 922 8 ,12 0 2.27 Germany 18 70 19 97 1, 738 21, 300 1. 99 Canada 18 70 19 97 ... India 19 00 19 97 537 1, 950 1. 34 United Kingdom 18 70 19 97 3,826 20,520 1. 33 Pakistan 19 00 19 97 587 1, 590 1. 03 Bangladesh 19 00 19 97 495 1, 050 0.78 a Real GDP is measured in 19 97 dollars. S OURCE :...

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