,CONTENTS
P r e f a ce Acknowledgements X
Xvi
i
PART 1 Working With Economics 1
CH A P T E R 1 : T h e E c o n o m ic P r o b le m 2
1 .1 How Economists Think 3
1 .2 Economic Choice 7
1 .3 Economic Systems 14
Last Word 23
Problems 23
The Founder Of Modern Economics: Adam Smith And The Invisible Hand 29
CH A P T E R 2 : D e m a n d A n d S u p p ly 32
2 .1 The Role Of Demand 33
2 .2 The Role Of Supply 39
2 .3 How Competitive Markets Operate 43
Last Word 49
Problems 49
Spoilt For Choice: William Stanley Jevons And Utility Maximization 54
CHAPT E R 3: E lasticity 58
3 .1 Price Elasticity Of Demand 59
3 .2 Price Elasticity Of Supply 68
Last Word 72
Problems 73
Prophet Of Capitalism’s Doom: The Economic Theories Of Karl Marx 78
PA R T 2 Efficien cy An d Eq u ity 81
CHAPT E R 4: Costs Of Production 82
4 .1 Production, Costs, And Profit 83
4 .2 Production In The Short Run 86
4 .3 Costs In The Short Run 91
4 .4 Production And Costs In The Long Run 96
Last Word 102
Problems 102
Critic Of The Modern Corporation: John Kenneth Galbraith And The 107
Role Of Management
, CONTENTS Vi i
CHAPTER 5: Perfect Competition 109
5.1 Market Structures 110
5.2 Perfect Competition In The Short Run 115
5.3 Perfect Competition In The Long Run 123
Last Word 126
Problems 126
Can Capitalism Su rvive? Jo seph Schu mpeter And The Prosp ects For Capitalism 129
CH A P T E R 6: Mo nop oly A nd I mp erf ec t Co mpe tition 131
6.1 Demand Differences 132
6.2 Monopoly 135
6.3 Imperfect Competition 141
6.4 Traits Of Imperfect Competition 152
Last Word 156
Problems 156
The Games People Play: Thomas C. Sch elling And Game Theory 165
CH A P TE R 7: Ec ono mic W elf are A nd Inco me D istribu tio n 167
7.1 Economic Welfare 168
7.2 Spillover Effects And Market Failure 174
7.3 Excise Taxes 182
7.4 Price Controls 185
7.5 The Distribution Of Income 190
Last Word 197
Problems 198
The Wealthy And The Rest: Thomas Piketty’s Analysis Of Income Inequality 205
P A R T 3 E co no m i c Sta bilit y 208
CH A P T E R 8: M ea sure s Of E cono m ic A ctivity 209
8.1 Gross Domestic Product 210
8.2 Economic Measures And Living Standards 220
Last Word 225
Problems 225
Adding The Human Dimension: Mahbub Ul Haq And The 229
Human Development Index
CHAPTER 9: Inflation And Unemployment 232
9.1 Inflation 233
9.2 Unemployment 242
Last Word 249
Problems 249
Boom, Bust & Echo: David K. Foot And The Economics Of Age Distribution 253
, Vi i i
CONTENT
S CH A P T E R 10: Ec ono m ic F luctuation s 256
10.1 Aggregate Demand 257
10.2 Aggregate Supply 264
10.3 Equilibrium 269
10.4 Economic Growth 273
10.5 The Busi ness Cycl e 281
Last Word 285
Problems 285
The Doomsday Prophet: Thomas Malthus And Population Growth 289
CHAPTER 11: Fiscal Policy 291
11.1 Fiscal P olicy 292
11.2 The Spending Multiplier 296
11.3 Impact Of Fiscal Policy 303
Last Word 310
Problems 310
Economist Extraordinaire: John Maynard Keynes And The 313
Transformation Of Macroeconomics
CHAPTER 12: Money 317
12.1 Money And Its Uses 318
12.2 The Money Market 326
12.3 Money Creation 329
Last Word 335
Problems 335
Money Matters: Milton Friedman And Monetarism 338
CHAPTER 13: Monetary Policy 341
13.1 The Bank Of Canada And Monetary Policy 342
13.2 Tools Of Monetary Policy 348
13.3 Inflation And Unemployment 352
Last Word 358
Problems 359
Cities, C reativity, And Diversity: Jane Jacobs And A New View Of Economics 362
P A R T 4 C a na da In T he G l o bal E con o m y 364
CHAPTER 14: The Foreign Sector 365
14.1 The Balance Of Payments 366
14.2 Exchange Rates 373
14.3 Exchange Rate Systems 380
Last Word 386
Problems 386
The World As Laboratory: Esther Duflo And Randomized Controlled Trials 390
P r e f a ce Acknowledgements X
Xvi
i
PART 1 Working With Economics 1
CH A P T E R 1 : T h e E c o n o m ic P r o b le m 2
1 .1 How Economists Think 3
1 .2 Economic Choice 7
1 .3 Economic Systems 14
Last Word 23
Problems 23
The Founder Of Modern Economics: Adam Smith And The Invisible Hand 29
CH A P T E R 2 : D e m a n d A n d S u p p ly 32
2 .1 The Role Of Demand 33
2 .2 The Role Of Supply 39
2 .3 How Competitive Markets Operate 43
Last Word 49
Problems 49
Spoilt For Choice: William Stanley Jevons And Utility Maximization 54
CHAPT E R 3: E lasticity 58
3 .1 Price Elasticity Of Demand 59
3 .2 Price Elasticity Of Supply 68
Last Word 72
Problems 73
Prophet Of Capitalism’s Doom: The Economic Theories Of Karl Marx 78
PA R T 2 Efficien cy An d Eq u ity 81
CHAPT E R 4: Costs Of Production 82
4 .1 Production, Costs, And Profit 83
4 .2 Production In The Short Run 86
4 .3 Costs In The Short Run 91
4 .4 Production And Costs In The Long Run 96
Last Word 102
Problems 102
Critic Of The Modern Corporation: John Kenneth Galbraith And The 107
Role Of Management
, CONTENTS Vi i
CHAPTER 5: Perfect Competition 109
5.1 Market Structures 110
5.2 Perfect Competition In The Short Run 115
5.3 Perfect Competition In The Long Run 123
Last Word 126
Problems 126
Can Capitalism Su rvive? Jo seph Schu mpeter And The Prosp ects For Capitalism 129
CH A P T E R 6: Mo nop oly A nd I mp erf ec t Co mpe tition 131
6.1 Demand Differences 132
6.2 Monopoly 135
6.3 Imperfect Competition 141
6.4 Traits Of Imperfect Competition 152
Last Word 156
Problems 156
The Games People Play: Thomas C. Sch elling And Game Theory 165
CH A P TE R 7: Ec ono mic W elf are A nd Inco me D istribu tio n 167
7.1 Economic Welfare 168
7.2 Spillover Effects And Market Failure 174
7.3 Excise Taxes 182
7.4 Price Controls 185
7.5 The Distribution Of Income 190
Last Word 197
Problems 198
The Wealthy And The Rest: Thomas Piketty’s Analysis Of Income Inequality 205
P A R T 3 E co no m i c Sta bilit y 208
CH A P T E R 8: M ea sure s Of E cono m ic A ctivity 209
8.1 Gross Domestic Product 210
8.2 Economic Measures And Living Standards 220
Last Word 225
Problems 225
Adding The Human Dimension: Mahbub Ul Haq And The 229
Human Development Index
CHAPTER 9: Inflation And Unemployment 232
9.1 Inflation 233
9.2 Unemployment 242
Last Word 249
Problems 249
Boom, Bust & Echo: David K. Foot And The Economics Of Age Distribution 253
, Vi i i
CONTENT
S CH A P T E R 10: Ec ono m ic F luctuation s 256
10.1 Aggregate Demand 257
10.2 Aggregate Supply 264
10.3 Equilibrium 269
10.4 Economic Growth 273
10.5 The Busi ness Cycl e 281
Last Word 285
Problems 285
The Doomsday Prophet: Thomas Malthus And Population Growth 289
CHAPTER 11: Fiscal Policy 291
11.1 Fiscal P olicy 292
11.2 The Spending Multiplier 296
11.3 Impact Of Fiscal Policy 303
Last Word 310
Problems 310
Economist Extraordinaire: John Maynard Keynes And The 313
Transformation Of Macroeconomics
CHAPTER 12: Money 317
12.1 Money And Its Uses 318
12.2 The Money Market 326
12.3 Money Creation 329
Last Word 335
Problems 335
Money Matters: Milton Friedman And Monetarism 338
CHAPTER 13: Monetary Policy 341
13.1 The Bank Of Canada And Monetary Policy 342
13.2 Tools Of Monetary Policy 348
13.3 Inflation And Unemployment 352
Last Word 358
Problems 359
Cities, C reativity, And Diversity: Jane Jacobs And A New View Of Economics 362
P A R T 4 C a na da In T he G l o bal E con o m y 364
CHAPTER 14: The Foreign Sector 365
14.1 The Balance Of Payments 366
14.2 Exchange Rates 373
14.3 Exchange Rate Systems 380
Last Word 386
Problems 386
The World As Laboratory: Esther Duflo And Randomized Controlled Trials 390
