Test Bank For Economics Principles and Policy 12th Edition By William J. Baumol

Test Bank For Economics Principles and Policy 12th Edition By William J. Baumol

Test Bank For Economics Principles and Policy 12th Edition By William J. Baumol

Economics Principles and Policy 12th Edition By William J. Baumol – Test bank

Economics Principles and Policy 12th Edition By William J. Baumol

Economics Principles and Policy 12th Edition

Economics Principles and Policy

Part 1: Getting Acquainted with Economics

Ch 1: What Is Economics?

Ch 1: Contents

Ch 1: Introduction

1-1: Ideas for Beyond the Final Exam

1-2: Inside the Economist’s Tool Kit

Ch 1: Summary

Ch 1: Key Terms

Ch 1: Discussion Questions

Appendix: Using Graphs: A Review

Ch 2: The Economy: Myth and Reality

Ch 2: Contents

Ch 2: Introduction

2-1: The American Economy: A Thumbnail Sketch

2-2: The Inputs: Labor and Capital

2-3: The Outputs: What Does America Produce?

2-4: The Central Role of Business Firms

2-5: What’s Missing from the Picture? Government

2-6: Conclusion: It’s a Mixed Economy

Ch 2: Summary

Ch 2: Key Terms

Ch 2: Discussion Questions

Ch 3: The Fundamental Economic Problem: Scarcity and Choice

Ch 3: Contents

Ch 3: Introduction

3-1: Scarcity, Choice, and Opportunity Cost

3-2: Scarcity and Choice for a Single Firm

3-3: Scarcity and Choice for the Entire Society

3-4: The Concept of Efficiency

3-5: The Three Coordination Tasks of Any Economy

3-6: Task 1. How the Market Fosters Efficient Resource Allocation

3-7: Task 2. Market Exchange and Deciding How Much of Each Good to Produce

3-8: Task 3. How to Distribute the Economy’s Outputs Among Consumers

Ch 3: Summary

Ch 3: Key Terms

Ch 3: Test Yourself

Ch 3: Discussion Questions

Ch 4: Supply and Demand: An Initial Look

Ch 4: Contents

Ch 4: Introduction

4-1: The Invisible Hand

4-2: Demand and Quantity Demanded

4-3: Supply and Quantity Supplied

4-4: Supply and Demand Equilibrium

4-5: Effects of Demand Shifts on Supply-Demand Equilibrium

4-6: Supply Shifts and Supply-Demand Equilibrium

4-7: Battling the Invisible Hand: The Market Fights Back

4-8: A Simple but Powerful Lesson

Ch 4: Summary

Ch 4: Key Terms

Ch 4: Test Yourself

Ch 4: Discussion Questions

Part 2: The Building Blocks of Demand and Supply

Ch 5: Consumer Choice: Individual and Market Demand

Ch 5: Contents

Ch 5: Introduction

5-1: Scarcity and Demand

5-2: Utility: A Tool to Analyze Purchase Decisions

5-3: Behavioral Economics: Are Economic Decisions Really Made “Rationally”?

5-4: Consumer Choice as a Trade-Off: Opportunity Cost

5-5: From Individual Demand Curves to Market Demand Curves

Ch 5: Summary

Ch 5: Key Terms

Ch 5: Test Yourself

Ch 5: Discussion Questions

Appendix: Analyzing Consumer Choice Graphically: Indifference Curve Analysis

Ch 6: Demand and Elasticity

Ch 6: Contents

Ch 6: Introduction

6-1: Elasticity: The Measure of Responsiveness

6-2: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure

6-3: What Determines Demand Elasticity?

6-4: Elasticity as a General Concept

6-5: The Time Period of the Demand Curve and Economic Decision Making

6-6: Real-World Application: Polaroid Versus Kodak

6-7: In Conclusion

Ch 6: Summary

Ch 6: Key Terms

Ch 6: Test Yourself

Ch 6: Discussion Questions

Appendix: How Can We Find a Legitimate Demand Curve from Historical Statistics?

Ch 7: Production, Inputs, and Cost: Building Blocks for Supply Analysis

Ch 7: Contents

Ch 7: Introduction

7-1: Short-Run versus Long-Run Costs: What Makes an Input Variable?

7-2: Production, Input Choice, and Cost with One Variable Input

7-3: Multiple Input Decisions: The Choice of Optimal Input Combinations

7-4: Cost and Its Dependence on Output

7-5: Economies of Scale

Ch 7: Summary

Ch 7: Key Terms

Ch 7: Test Yourself

Ch 7: Discussion Question

Appendix: Production Indifference Curves

Ch 8: Output, Price, and Profit: The Importance of Marginal Analysis

Ch 8: Contents

Ch 8: Introduction

8-1: Price and Quantity: One Decision, Not Two

8-2: Total Profit: Keep Your Eye on the Goal

8-3: Economic Profit and Optimal Decision Making

8-4: Marginal Analysis and Maximization of Total Profit

8-5: Generalization: The Logic of Marginal Analysis and Maximization

8-6: Conclusion: The Fundamental Role of Marginal Analysis

8-7: The Theory and Reality: A Word of Caution

Ch 8: Summary

Ch 8: Key Terms

Ch 8: Test Yourself

Ch 8: Discussion Question

Appendix: The Relationships among Total, Average, and Marginal Data

Ch 9: Securities, Business Finance, and the Economy: The Tail That Wags the Dog?

Ch 9: Contents

Ch 9: Introduction

9-1: Corporations and Their Unique Characteristics

9-2: Stock Exchanges and Their Functions

9-3: Speculation

9-4: Betting on Securities: Risks to the Entire Economy

Ch 9: Summary

Ch 9: Key Terms

Ch 9: Test Yourself

Ch 9: Discussion Questions

Appendix: Buying Stocks and Bonds

Part 3: Markets and the Price System

Ch 10: The Firm and the Industry Under Perfect Competition

Ch 10: Contents

Ch 10: Introduction

10-1: Perfect Competition Defined

10-2: The Perfectly Competitive Firm

10-3: The Perfectly Competitive Industry

10-4: Perfect Competition and Economic Efficiency

Ch 10: Summary

Ch 10: Key Terms

Ch 10: Test Yourself

Ch 10: Discussion Questions

Ch 11: Monopoly

Ch 11: Contents

Ch 11: Introduction

11-1: Monopoly Defined

11-2: The Monopolist’s Supply Decision

11-3: Can Anything Good Be Said About Monopoly?

11-4: Price Discrimination Under Monopoly

Ch 11: Summary

Ch 11: Key Terms

Ch 11: Test Yourself

Ch 11: Discussion Questions

Ch 12: Between Competition and Monopoly

Ch 12: Contents

Ch 12: Introduction

12-1: Monopolistic Competition

12-2: Oligopoly

12-3: Monopolistic Competition, Oligopoly, and Public Welfare

12-4: A Glance Backward: Comparing the Four Market Forms

Ch 12: Summary

Ch 12: Key Terms

Ch 12: Test Yourself

Ch 12: Discussion Questions

Ch 13: Limiting Market Power: Regulation and Antitrust

Ch 13: Contents

Ch 13: Introduction

13-1: The Public Interest Issue: Monopoly Power versus Mere Size

13-2: Antitrust Laws and Policies

13-3: Measuring Market Power: Concentration

13-4: A Crucial Problem for Antitrust: The Resemblance of Monopolization and Vigorous Competition

13-5: Anticompetitive Practices and Antitrust

13-6: Use of Antitrust Laws to Prevent Competition

13-7: What Is Regulation?

13-8: Some Objectives of Regulation

13-9: Two Key Issues That Face Regulators

13-10: The Pros and Cons of “Bigness”

13-11: Deregulation

13-12: Concluding Observations

Ch 13: Summary

Ch 13: Key Terms

Ch 13: Discussion Questions

Part 4: The Virtues and Limitations of Markets

Ch 14: The Case for Free Markets: The Price System

Ch 14: Contents

Ch 14: Introduction

14-1: Efficient Resource Allocation and Pricing

14-2: Scarcity and the Need to Coordinate Economic Decisions

14-3: How Perfect Competition Achieves Efficiency: A Graphic Analysis

14-4: How Perfect Competition Achieves Optimal Output: Marginal Analysis

14-5: Toward Assessment of the Price Mechanism

Ch 14: Summary

Ch 14: Key Terms

Ch 14: Test Yourself

Ch 14: Discussion Questions

Ch 15: The Shortcomings of Free Markets

Ch 15: Contents

Ch 15: Introduction

15-1: What Does the Market Do Poorly?

15-2: Efficient Resource Allocation: A Review

15-3: Externalities: Getting the Prices Wrong

15-4: Provision of Public Goods

15-5: Allocation of Resources Between Present and Future

15-6: Some Other Sources of Market Failure

15-7: Market Failure and Government Failure

15-8: The Cost Disease of Some Vital Services: Invitation to Government Failure

15-9: The Market System on Balance

15-10: Epilogue: The Unforgiving Market, Its Gift of Abundance, and Its Dangerous Friends

Ch 15: Summary

Ch 15: Key Terms

Ch 15: Test Yourself

Ch 15: Discussion Questions

Ch 16: Externalities, the Environment, and Natural Resources

Ch 16: Contents

Ch 16: Introduction

16-1: The Economics of Environmental Protection

16-2: Review—Externalities: A Critical Shortcoming of the Market Mechanism

16-3: Basic Approaches to Environmental Policy

16-4: Two Cheers for the Market

16-5: The Economics of Natural Resources

16-6: Economic Analysis: The Free Market and Pricing of Depletable Natural Resources

16-7: Actual Resource Prices in the Twentieth Century

Ch 16: Summary

Ch 16: Key Terms

Ch 16: Test Yourself

Ch 16: Discussion Questions

Ch 17: Taxation and Resource Allocation

Ch 17: Contents

Ch 17: Introduction

17-1: The Level and Types of Taxation

17-2: The Federal Tax System

17-3: The State and Local Tax System

17-4: The Concept of Equity in Taxation

17-5: The Concept of Efficiency in Taxation

17-6: Shifting the Tax Burden: Tax Incidence

17-7: When Taxation Can Improve Efficiency

17-8: Equity, Efficiency, and the Optimal Tax

Ch 17: Summary

Ch 17: Key Terms

Ch 17: Test Yourself

Ch 17: Discussion Questions

Part 5: The Distribution of Income

Ch 18: Pricing the Factors of Production

Ch 18: Contents

Ch 18: Introduction

18-1: The Principle of Marginal Productivity

18-2: Inputs and Their Derived Demand Curves

18-3: Investment, Capital, and Interest

18-4: The Determination of Rent

18-5: Payments to Business Owners: Are Profits Too High or Too Low?

18-6: Criticisms of Marginal Productivity Theory

Ch 18: Summary

Ch 18: Key Terms

Ch 18: Test Yourself

Ch 18: Discussion Questions

Appendix: Discounting and Present Value

Ch 19: Labor and Entrepreneurship: The Human Inputs

Ch 19: Contents

Ch 19: Introduction

19-1: The Markets for Labor

19-2: Wage Determination in Competitive Markets

19-3: The Supply of Labor

19-4: Why Do Wages Differ?

19-5: Unions and Collective Bargaining

19-6: The Entrepreneur: The Other Human Input

19-7: The Market Economy’s Incredible Growth Record

19-8: Sources of Free-Market Innovation: The Role of the Entrepreneur

19-9: Entrepreneurship and Growth

19-10: Institutions and the Supply of Innovative Entrepreneurship

Ch 19: Summary

Ch 19: Key Terms

Ch 19: Test Yourself

Ch 19: Discussion Questions

Ch 20: Poverty, Inequality, and Discrimination

Ch 20: Contents

Ch 20: Introduction

20-1: The Facts: Poverty

20-2: The Facts: Inequality

20-3: Some Reasons for Unequal Incomes

20-4: The Facts: Discrimination

20-5: The Trade-Off between Equality and Efficiency

20-6: Policies to Combat Poverty

20-7: Other Policies to Combat Inequality

20-8: Policies to Combat Discrimination

20-9: A Look Back

Ch 20: Summary

Ch 20: Key Terms

Ch 20: Test Yourself

Ch 20: Discussion Questions

Appendix: The Economic Theory of Discrimination

Part 6: U.S. Economic Leadership

Ch 21: Is U.S. Economic Leadership Threatened?

Ch 21: Contents

Ch 21: Introduction

21-1: Productivity Growth

21-2: Entrepreneurship

21-3: Innovation

21-4: The Budget Deficit and Public Debt

21-5: The Trade Deficit

21-6: Health Care

21-7: Education

21-8: Poverty and Inequality

21-9: Conclusions: Mixed Prospects for Future U.S. Growth

Ch 21: Summary

Ch 21: Key Terms

Ch 21: Test Yourself

Ch 21: Discussion Questions

Part 7: The Macroeconomy: Aggregate Supply and Demand

Ch 22: An Introduction to Macroeconomics

Ch 22: Contents

Ch 22: Introduction

22-1: Drawing a Line Between Macroeconomics and Microeconomics

22-2: Supply and Demand in Macroeconomics

22-3: Gross Domestic Product

22-4: The Economy on a Roller Coaster

22-5: The Problem of Macroeconomic Stabilization: A Sneak Preview

Ch 22: Summary

Ch 22: Key Terms

Ch 22: Test Yourself

Ch 22: Discussion Questions

Ch 23: The Goals of Macroeconomic Policy

Ch 23: Contents

Ch 23: Introduction

23-1: The Goal of Economic Growth

23-2: The Capacity to Produce: Potential GDP and the Production Function

23-3: The Growth Rate of Potential GDP

23-4: The Goal of Low Unemployment

23-5: The Human Costs of High Unemployment

23-6: Counting the Unemployed: The Official Statistics

23-7: Types of Unemployment

23-8: How Much Employment Is “Full Employment”?

23-9: Unemployment Insurance: The Invaluable Cushion

23-10: The Goal of Low Inflation

23-11: Inflation as a Redistributor of Income and Wealth

23-12: Real versus Nominal Interest Rates

23-13: Inflation Distorts Measurements

23-14: Other Costs of Inflation

23-15: The Costs of Low versus High Inflation

23-16: Low Inflation Does Not Necessarily Lead to High Inflation

Ch 23: Summary

Ch 23: Key Terms

Ch 23: Test Yourself

Ch 23: Discussion Questions

Appendix: How Statisticians Measure Inflation

Ch 24 : Economic Growth: Theory and Policy

Ch 24: Contents

Ch 24: Introduction

24-1: The Three Pillars of Productivity Growth

24-2: Levels, Growth Rates, and the Convergence Hypothesis

24-3: Growth Policy: Encouraging Capital Formation

24-4: Growth Policy: Improving Education and Training

24-5: Growth Policy: Spurring Technological Change

24-6: -The Productivity Slowdown and Speed-Up in the United States

24-7: Growth in the Developing Countries

24-8: From the Long Run to the Short Run

Ch 24: Summary

Ch 24: Key Terms

Ch 24: Test Yourself

Ch 24: Discussion Questions

Ch 25: Aggregate Demand and the Powerful Consumer

Ch 25: Contents

Ch 25: Introduction

25-1: Aggregate Demand, Domestic Product, and National Income

25-2: The Circular Flow of Spending, Production, and Income

25-3: Consumer Spending and Income: The Important Relationship

25-4: The Consumption Function and the Marginal Propensity to Consume

25-5: Factors That Shift the Consumption Function

25-6: The Extreme Variability of Investment

25-7: The Determinants of Net Exports

25-8: How Predictable Is Aggregate Demand?

Ch 25: Summary

Ch 25: Key Terms

Ch 25: Test Yourself

Ch 25: Discussion Questions

Appendix: National Income Accounting

Ch 26: Demand-Side Equilibrium: Unemployment or Inflation?

Ch 26: Contents

Ch 26: Introduction

26-1: The Meaning of Equilibrium GDP

26-2: The Mechanics of Income Determination

26-3: The Aggregate Demand Curve

26-4: Demand-Side Equilibrium and Full Employment

26-5: The Coordination of Saving and Investment

26-6: Changes on the Demand Side: Multiplier Analysis

26-7: The Multiplier Is a General Concept

26-8: The Multiplier and the Aggregate Demand Curve

Ch 26: Summary

Ch 26: Key Terms

Ch 26: Test Yourself

Ch 26: Discussion Questions

Appendix A: The Simple Algebra of Income Determination and the Multiplier

Appendix B: The Multiplier with Variable Imports

Ch 27: Bringing in the Supply Side: Unemployment and Inflation?

Ch 27: Contents

Ch 27: Introduction

27-1: The Aggregate Supply Curve

27-2: Equilibrium of Aggregate Demand and Supply

27-3: Inflation and the Multiplier

27-4: Recessionary and Inflationary Gaps Revisited

27-5: Adjusting to a Recessionary Gap: Deflation or Unemployment?

27-6: Adjusting to an Inflationary Gap: Inflation

27-7: Stagflation from a Supply Shock

27-8: Applying the Model to a Growing Economy

27-9: A Role for Stabilization Policy

Ch 27: Summary

Ch 27: Key Terms

Ch 27: Test Yourself

Ch 27: Discussion Questions

Part 8: Fiscal and Monetarypolicy

Ch 28: Managing Aggregate Demand: Fiscal Policy

Ch 28: Contents

Ch 28: Introduction

28-1: Income Taxes and the Consumption Schedule

28-2: The Multiplier Revisited

28-3: Planning Expansionary Fiscal Policy

28-4: Planning Contractionary Fiscal Policy

28-5: The Choice between Spending Policy and Tax Policy

28-6: Some Harsh Realities

28-7: The Idea Behind Supply-Side Tax Cuts

Ch 28: Summary

Ch 28: Key Terms

Ch 28: Test Yourself

Ch 28: Discussion Questions

Appendix A: Graphical Treatment of Taxes and Fiscal Policy

Appendix B: Algebraic Treatment of Taxes and Fiscal Policy

Ch 29: Money and the Banking System

Ch 29: Contents

Ch 29: Introduction

29-1: The Nature of Money

29-2: How the Quantity of Money Is Measured

29-3: The Banking System

29-4: Systemic Risk and the “Too Big to Fail” Doctrine

29-5: The Origins of the Money Supply

29-6: Banks and Money Creation

29-7: Why the Money-Creation Formula Is Oversimplified

29-8: The Need for Monetary Policy

Ch 29: Summary

Ch 29: Key Terms

Ch 29: Test Yourself

Ch 29: Discussion Questions

Ch 30: Monetary Policy: Conventional and Unconventional

Ch 30: Contents

Ch 30: Introduction

30-1: Money and Income: The Important Difference

30-2: America’s Central Bank: The Federal Reserve System

30-3: Implementing Monetary Policy in Normal Times: Open-Market Operations

30-4: Other Instruments of Monetary Policy

30-5: How Monetary Policy Works in Normal Times

30-6: Money and the Price Level

30-7: Application: Why the Aggregate Demand Curve Slopes Downward

30-8: Unconventional Monetary Policies

30-9: From Financial Distress to Recession

30-10: From Models to Policy Debates

Ch 30: Summary

Ch 30: Key Terms

Ch 30: Test Yourself

Ch 30: Discussion Questions

Ch 31: The Financial Crisis and the Great Recession

Ch 31: Contents

Ch 31: Introduction

31-1: Roots of the Crisis

31-2: Leverage, Profits, and Risk

31-3: The House Price Bubble and the Subprime Mortgage Crisis

31-4: From the Housing Bubble to the Financial Crisis

31-5: From the Financial Crisis to the Great Recession

31-6: Hitting Bottom and Recovering

31-7: Lessons from the Financial Crisis

Ch 31: Summary

Ch 31: Key Terms

Ch 31: Test Yourself

Ch 31: Discussion Questions

Ch 32: The Debate over Monetary and Fiscal Policy

Ch 32: Contents

Ch 32: Introduction

32-1: Velocity and the Quantity Theory of Money

32-2: Debate: Should the Fed Use Unconventional Monetary Policies?

32-3: Debate: Should Policy Makers Fight Asset Price Bubbles?

32-4: Debate: Should We Rely on Fiscal or Monetary Policy?

32-5: Debate: The Shape of the Aggregate Supply Curve

32-6: Debate: Should the Government Intervene at All?

32-7: Dimensions of the Rules-versus-Discretion Debate

Ch 32: Summary

Ch 32: Key Terms

Ch 32: Test Yourself

Ch 32: Discussion Questions

Ch 33: Budget Deficits in the Short and Long Run

Ch 33: Contents

Ch 33: Introduction

33-1: Should the Budget Always be Balanced? The Short Run

33-2: The Importance of the Policy Mix

33-3: Teficits and Debt: Terminology and Facts

33-4: Interpreting the Budget Deficit or Surplus

33-5: Why Is the National Debt Considered a Burden?

33-6: Budget Deficits and Inflation

33-7: Debt, Interest Rates, and Crowding Out

33-8: The Main Burden of the National Debt: Slower Growth

33-9: The Economics and Politics of the U.S. Budget Deficit

Ch 33: Summary

Ch 33: Key Terms

Ch 33: Test Yourself

Ch 33: Discussion Questions

Ch 34: The Trade-Off between Inflation and Unemployment

Ch 34: Contents

Ch 34: Introduction

34-1: Demand-Side Inflation versus Supply-Side Inflation: A Review

34-2: Origins of the Phillips Curve

34-3: Supply-Side Inflation and the Collapse of the Phillips Curve

34-4: What the Phillips Curve Is Not

34-5: Fighting Unemployment with Fiscal and Monetary Policy

34-6: What Should be Done?

34-7: Inflationary Expectations and the Phillips Curve

34-8: The Theory of Rational Expectations

34-9: Why Economists (and Politicians) Disagree

34-10: The Dilemma of Demand Management

34-11: Attempts to Reduce the Natural Rate of Unemployment

Ch 34: Summary

Ch 34: Key Terms

Ch 34: Test Yourself

Ch 34: Discussion Questions

Part 9: The United States in the World Economy

Ch 35: International Trade and Comparative Advantage

Ch 35: Contents

Ch 35: Introduction

35-1: Why Trade

35-2: International versus Intranational Trade

35-3: The Law of Comparative Advantage

35-4: The Arithmetic of Comparative Advantage

35-5: Tariffs, Quotas, and Other Interferences with Trade

35-6: Why Inhibit Trade?

35-7: Can Cheap Imports Hurt a Country?

Ch 35: Summary

Ch 35: Key Terms

Ch 35: Test Yourself

Ch 35: Discussion Questions

Appendix: Supply, Demand, and Pricing in World Trade

Ch 36: The International Monetary System: Order or Disorder?

Ch 36: Contents

Ch 36: Introduction

36-1: What Are Exchange Rates?

36-2: Exchange Rate Determination in a Free Market

36-3: When Governments Fix Exchange Rates: The Balance of Payments

36-4: A Bit of History: The Gold Standard and the Bretton Woods System

36-5: Adjustment Mechanisms Under Fixed Exchange Rates

36-6: Why Try to Fix Exchange Rates?

36-7: The Current “Nonsystem”

Ch 36: Summary

Ch 36: Key Terms

Ch 36: Test Yourself

Ch 36: Discussion Questions

Ch 37: Exchange Rates and the Macroeconomy

Ch 37: Contents

Ch 37: Introduction

37-1: International Trade, Exchange Rates, and Aggregate Demand

37-2: Aggregate Supply in an Open Economy

37-3: The Macroeconomic Effects of Exchange Rates

37-4: Fiscal and Monetary Policies in an Open Economy

37-5: Ternational Aspects of Deficit Reduction

37-6: Should We Worry About the Trade Deficit?

37-7: On Curing the Trade Deficit

37-8: Conclusion: No Nation Is an Island

Ch 37: Summary

Ch 37: Key Terms

Ch 37: Test Yourself

Ch 37: Discussion Questions

Appendix: Answers to Odd-Numbered Test Yourself Questions