... behavior of people who want to save (the sup-
pliers of loanable funds) and the behavior of people who want to invest (the de-
manders of loanable funds).
We can now use this analysis of the market ... their sav-
ings.
Financial economists, however, are often skeptical of this second argument.
With thousands of money managers paying close attention to each company’s
prospects, t...
... elastic)
Quantity of
Apartments
0
Supply
Controlled rent
Shortage
Rental
Price of
Apartment
0
Rental
Price of
Apartment
Quantity of
Apartments
Demand
Supply
Controlled rent
Shortage
Demand
Figure 6-3
R
ENT
C
ONTROL ... total price of an apartment (in-
cluding the bribe) closer to the equilibrium price.
To understand fully the effects of rent control, we have to remember one of...
... follow a buy-and-hold strat-
egy: They buy the stock of well-run companies, hold it for
long periods of time, and do not respond to the daily fluctu-
ations reported in the paper.
Name of
company
Symbol ... Intel stock is a part owner of Intel; the owner of an Intel
bond is a creditor of the corporation. If Intel is very profitable, the stockholders en-
joy the benefits of the...
... States would not
tolerate the “flooding of our markets”
with low-cost goods from Asia and Rus-
sia, particularly steel, that are threaten-
ing the jobs of American workers.
The President’s statement ... NATIONAL-SECURITY ARGUMENT
When an industry is threatened with competition from other countries, opponents
of free trade often argue that the industry is vital for national security. In...
... of October to 6.6 percent at the end of the
month. In part because of the Fed’s quick action, the economy avoided a reces-
sion.
While the Fed keeps an eye on the stock market, stock-market participants
also ... downward-
sloping aggregate-demand curve. The theory also sheds light, however, on some
of the other events that alter the quantity of goods and services demanded. When-
e...
... groups of equal size, called quintiles. The second column of
the table shows the average income of each group. The poorest one-fifth of fam-
ilies had average income of $9,880; the richest one-fifth ... policymakers gener-
ally contend that the real fault lies with
Congress and its frequent, often well-
intentioned tinkering with the law. The
resulting complexity is taking an ever-...
... CURVE
We have been discussing the behavior of competitive profit-maximizing firms. You
may recall from Chapter 1 that one of the Ten Principles of Economics is that rational
people think at the ... by competition, the outcome in a market with a
monopoly is often not in the best interest of society.
One of the Ten Principles of Economics in Chapter 1 is that governments...
... universities’ envi-
able cartel position has been damaged
by the unenlightened Justice Depart-
ment, which argued that the price-setting
meetings were a violation of antitrust
laws. Since most of the universities ... claim of
this otherwise worthy contestant for the
first annual prize.
Officials of Ivy League universities
have been able to meet in semi-public fo-
rums to set rules tha...
... ideas of many of the best
economists of the twentieth century: from the Phillips curve of Phillips, Samuel-
son, and Solow, to the natural-rate hypothesis of Friedman and Phelps, to the
rational-expectations ... economics profession offered two conflicting pre-
dictions. One group of economists offered estimates of the sacrifice ratio and con-
cluded that reducing inflation wo...