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Principles of Economics

(7 reviews)

Copyright Year: 2016

ISBN 13: 9781946135162

Publisher: University of Minnesota Libraries Publishing

Language: English

Formats Available

Conditions of use.

Learn more about reviews.

Reviewed by Joyce Burnette, Professor of Economics, Wabash College on 8/12/19

This book covers everything I do in Principles, plus some things I would like to include if I had time. read more

Comprehensiveness rating: 5 see less

This book covers everything I do in Principles, plus some things I would like to include if I had time.

Content Accuracy rating: 5

Standard economics. Does a good job with the GDP measurement problems.

Relevance/Longevity rating: 4

Includes specific examples from the news. Examples are a couple years old. Most won't go out of date, but for a few you notice their age.

Clarity rating: 5

I particularly like the "Heads Up" section, which accurately points out the most common mistakes that undergraduates make.

Consistency rating: 5

AS/AD is introduced early in the macroeconomic section and is used in later chapters.

Modularity rating: 4

Arranged usefully into relatively short chapters. Inevitably, some chapters assume that you learned the previous material (S&D, or AS/AD).

Organization/Structure/Flow rating: 5

The typical organization. Micro and then macro.

Interface rating: 4

Some of the equations did not show up in the program I was using to read it. In chapter 5 the sections are in the wrong order.

Grammatical Errors rating: 5

No problems.

Cultural Relevance rating: 4

Most examples are from the US, but there are some examples from elsewhere in the world.

I found this book to follow quite closely the way I like to teach principles.

Reviewed by Marek Kolar, Associate Professor, Trine University on 5/30/19

The scope of the book is impressive, it even includes a chapter on the recent history of macroeconomic thought, with a great discussion of the macroeconomic policy during Great Depression, and since, doing a good job integrating the tools... read more

Comprehensiveness rating: 4 see less

The scope of the book is impressive, it even includes a chapter on the recent history of macroeconomic thought, with a great discussion of the macroeconomic policy during Great Depression, and since, doing a good job integrating the tools developed in earlier chapters. I don't recall seeing anything close to this in other intro to economics textbooks that I have seen. Individual topics are developed in sufficient depth, for instance the discussion of marginal benefit and marginal cost in chapter 6 is more detailed than in most of the other textbooks that I have seen. While the scope of the coverage is great, I couldn't find an index or a glossary of terms. Important terms are highlighted in the text, but I couldn't find a list of definitions to these.

The textbook seems to be accurate, without errors, and I think the author does a good job providing a balanced view, at least judging by the standards set by other principles of economics textbooks. The inclusion of topics is very standard and the discussion seems objective. I would personally like to see inclusion of the Austrian View of the Business Cycle, and of a more critical perspective on inflation, debt, and the role of government in general.

Relevance/Longevity rating: 3

The lack of recent updates is in my opinion the main weakness of the textbook. In most chapters it doesn't matter much, but for the discussion of monetary and fiscal policy it is important to point out that the discussion in the textbook ends with the immediate aftermath of the 2008 recession, thus is missing the more recent changes in the Fed's policy and recent developments. The book lacks a discussion of negative interest rates, Fed's growing balance sheet, and the recent increases in government debt and budget deficits. This seems not to have been updated since 2010.

For an economics textbook, the writing is easy to understand, which makes it accessible to a wide range of students, but may not be an ideal choice for a more advanced student who may prefer a more demanding text. I found many of the examples interesting and engaging, for instance the example of smokers being on net a positive externality in chapter 11, or the example of hockey teams maximizing profits in chapter 10.

The book is consistent throughout.

Modularity rating: 5

Each chapter is organized in a few sections, each with its own learning objectives, examples, and a few questions to be answered. It seems easy to either pick a section from a chapter, or skip a section, without losing continuity. It seems effort was put into chapters being able to stand alone on their own, for instance there is a separate chapter (23) on economic growth, investment (29), and interest rate - loanable funds market (13).

Organization/Structure/Flow rating: 3

As mentioned under Modularity, the book does a good job including many stand-alone chapters, but this creates a problem in organization. For instance it is difficult to make the connection among interest rates, investment, saving, consumption, and economic growth, as the coverage is spread across chapters 13, 23, and 29. There is a small sub-section (a little over a page) in section 29.1 explaining the relationships, but overall I had difficulties finding the main points among the detailed discussion. I could see students getting a bit lost in the detail presented, and not being able to clearly see the bigger picture.

Interface rating: 5

I found the charts easy to read, and the use of colors is user-friendly. There are clickable links to figures within the text (if read online). The format is pretty easy to follow.

No grammatical errors encountered.

Cultural Relevance rating: 5

The pictures in the text feature people of various races, and examples feature a variety of countries from different continents.

This is a great textbook, likely to please anyone looking for a standard introductory economics text done well and freely available. The only significant downside is that it hasn't been updated since about 2010, which I find problematic for the monetary and fiscal policy discussions.

Reviewed by Joanna Short, Associate Professor, Augustana College on 6/19/18

This book includes all the usual principles topics, and then some. Want to talk about the effect of third-party payers in health care markets? Farm policy? Economies in transition? There's a chapter for each of these topics. Throughout, there... read more

This book includes all the usual principles topics, and then some. Want to talk about the effect of third-party payers in health care markets? Farm policy? Economies in transition? There's a chapter for each of these topics. Throughout, there are references to important historical events, which I appreciate. The Great Depression, for example, is mentioned several times. Some depth is sacrificed, through, to hit on all of these topics. I did not see a glossary, which is a glaring omission for an introductory textbook. In-text problems, with solutions, and end-of-chapter problems are included.

I did not notice any inaccuracies. Perhaps this is more of an interface issue, but I did notice a problem with the formula for elasticity. At least in the online version I was reading from, equation 5.1 "did not parse." This could be a big issue for students trying to understand the elasticity chapter. However, students would also probably be better than I am at finding a format that works

This text does a nice job of including a lot of environmental examples, which I think students usually find interesting and relevant. Chapter 1, for example, refers to oil extraction and water use, as well as careers and salaries in economics (another topic that should be of interest). Most case-in-point articles are at least 10 years old, though. I would like to see these updated.

Clarity rating: 4

In addition to the lack of depth, I find the writing style a little choppy. Reading this text is a little like reading a small-town newspaper. I frequently wanted more investigative reporting instead of just-the-facts. I am currently using the Krugman and Wells text (for Micro Principles), largely because it reads in many parts like a story.

I did not find many spots where I felt students would be confused, other than one spot in chapter 1, where a good is defined as "scarce" if it has alternative uses, such as air which we can either breathe or pollute. In other words, a good is scarce if it is limited. In contrast, a free good is not limited, like gravity. I find these examples (air and gravity, illustrating opposites) a little confusing particularly for chapter 1. If I were the author, I would avoid mention of free goods to emphasize that virtually everything is scarce. This is a minor issue, but I hate to see any issues so early in the book that might discourage later reading. In contrast, the section in this chapter on careers in economics is clear and engaging.

I did not notice any issues with consistency in the text.

This is a strength of the book. There are many chapters, instructors can pick and choose and rearrange as they see fit.

Organization/Structure/Flow rating: 4

Generally speaking, the text follows the usual order, micro then macro. Personally, I would have rearranged the chapters a little. For example, I would probably use chapter 6 (consumer surplus, and deadweight loss) before chapter 4 (applications of supply and demand) so we can analyze deadweight loss from price controls. Also, the Keynesian Cross from chapter 28 goes before Aggregate Demand and Supply (chapter 22). But you can always cover in any order you want. The flow suffers a little from the choppy writing style and lack of depth I mentioned under Clarity. Perhaps students appreciate this more than I do, however.

This is a real strength of the text. New terms are highlighted in blue. The graphs and charts are colorful and easy-to-read. I only found a few issues from the online version that I read from. First the elasticity formula didn't come through, and one of the TryIt! problems in chapter 2 appears to be missing part of the table. There is reference to the production possibilities for Plant R and Plant S, and I only see a table for Plant R.

I did not notice any grammatical errors.

I think the text does a good job of including some international examples, as well as frequent reference to environmental issues that some texts ignore.

I like that instructors can easily pick and choose chapters, and the graphs and charts are colorful and engaging. Each chapter has TryIt! problems with answers, as well as end-of-chapter problems (both conceptual problems and numerical problems). The case-in-point articles are relevant but a bit dated. Will they be updated? Also, I just find it strange that the authors are "unnamed" or "anonymous." Is this common with OER textbooks? I just feel obligated to give credit where credit is due--I'm not sure I can put anonymous on my syllabus.

Reviewed by Robert Berman, Adjunct Instructor, American University on 2/1/18

Comprehensive in overall coverage; yet many on the sections leave out important discussions. For example, the table of contents covers everything that would be discussed in a two semester principles course -- micro & macro separately. However,... read more

Comprehensiveness rating: 3 see less

Comprehensive in overall coverage; yet many on the sections leave out important discussions. For example, the table of contents covers everything that would be discussed in a two semester principles course -- micro & macro separately. However, the discussions are insufficient, sometimes to the extent of misleading the reader. For example, discussion of the long-run average cost curve shows an area on economies OF scale (associated with multiple sizes of plot) flowed my a range of constant returns TO scale (TO which scale? Still talking about several scales), then an range of economies OF scale. Confusion is (1) reader never told that economies and discommodes BOTH exist over the entire range. Downward sloping and upward sloping reflect the NET economies. Beginning students wonder if the economies disappear, or if diseconomies only appear with very large sizes. It would be helpful to distinguish between technological and pecuniary, and between internal and external. Finally. Mixing discussion of returns OF and TO scale confuses with short-run diminishing returns TO scale with economies and diseconomies OF different scale alternatives.

Content Accuracy rating: 3

There are some problems in accuracy owing to attempts to simplify or "dumb down" for beginning students. This is the problem of principles texts generally, and the inaccuracies here are on a par with those in other published works. See above discussion on comprehensiveness. Also, no distinction between simple inventory / style fluctuations and surplus and shortage problems. Explanations do not adequately distinguish between WILLINGNESS to buy and sell and quantities bought and sold.

Relevance/Longevity rating: 5

Text is on par with most text in the field. Not likely to become obsolete. NB: I am no one who insists on most recent data or topical issues -- articles can easily supplement in this area. Theory and logic evolve over time. Updates should be relatively easy to implement. Most importantly in this area, organization and structure of presentation is classical and consistent with how I and many others structure a course.

Jargon is not a problem and text is not overly technical. As stated earlier, lucidity problems stem from inadequate discussion in attempt to simplify. Similar to published texts in this area.

Consistency rating: 3

Consistency is somewhat problematic, as discussed above, for example switching back and forth between quantity (actually) supplied/demanded and willingness to supply/demand such quantities; also economies OF scale and returns TO scale are used interchangeably

Modularity is good; similar to other published principles texts.

Organization/structure/flow is easy to work with.

No problems with interface. Electronic version (e.g., .PDF) takes advance of hyperlinks to reference charts and other sections.

No grammatical errors noted.

Did not review with an eye to cultural relevance or political correctness. Nothing stood out as being problematic.

I will seriously consider the text. It is on par with commercially published principles texts -- none of which I have been completely happy with. One potentially negative factor is the lack of an electronic homework capability. Need to confer with students about how useful this is to their learning (as opposed to my teaching); and perhaps experiment with using the electronic homework / quizzes/tests developed for a different text with this one.

Reviewed by Maxwell Eseonu, Professor of Economics, Virginia State University on 6/20/17

The text's coverage is comprehensive. The writing approach is a very good one; that is, giving the reader a heads-up in concept coverages, real world applications of concepts and giving the reader an opportunity to apply learned concepts into... read more

The text's coverage is comprehensive. The writing approach is a very good one; that is, giving the reader a heads-up in concept coverages, real world applications of concepts and giving the reader an opportunity to apply learned concepts into real world applications (Learning By Doing).

The chapter flows is very good. I am suggesting that Chapter 11: The World of Imperfect Competition should be spelled-out clearly: Monopolistic Competition and Oligopoly.

Chapter 16: Anti-trust Policy and Business Regulation should be brought forward and should read: Anti-trust Policy and Regulation - It is an Economics Text and not a Business Text. The normal flow in the Microeconomic Section is that once the Market Structure chapters are covered, the chapter on Anti-trust Policy and Regulation should follow.

On the Macroeconomics side, the flow between chapters 20 - 23 is a good one but I would suggest a re-arranging of the chapters so that Fiscal Policy Issues are addressed before the Monetary Policy Chapters. Therefore, the proposed re-arranging should be as follows: 1. Chapters 20 - 23 2. Chapter 31 3. Chapters 28, 29 and 27 4. Chapters 24,25, 26 and remaining chapters can then follow.

It is OKAY for an introductory text. The relevant concepts coverage are in place.

It is a GOOD text and considering the high cost of textbooks, I will strongly consider using it in my Principles of Economics courses. Thank you to whomever envisioned such a worthwhile venture!

It is very clear and concise. It will be easily readable and understood by students.

The text is relevant, good coverage of concepts and will be easily understood by students.

It is easily readable but I have also made some suggestions in re-arranging the flow of chapters.

See suggestions above.

For a text made available to Community of Learners, without any cost, it achieves the purpose like other high-priced textbooks. All I can say is THANK YOU!

Grammatical Errors rating: 4

It is in line with other high-priced texts. Being first edition, the second edition will be better.

It is a balanced text. Instead of extolling the vices, I commend the writer(s) for a splendid job and should continue the GOODWORK!

I very much like the text and will consider it highly for adoption in my Principles of Economics Courses. One of the problems I encounter with my students is that majority of them do not buy the prescribed textbook and this will be a great solution to this problem - THANK YOU VERY MUCH!

Reviewed by Choikam Yip, Adjunct Instructor, Portland Community College on 1/7/16

This textbook is very comprehensiveness. It covers almost all the major topics in mainstream micro and macroeconomic studies. The examples and data used are very current and up-to-date. read more

This textbook is very comprehensiveness. It covers almost all the major topics in mainstream micro and macroeconomic studies. The examples and data used are very current and up-to-date.

The book is accurate in terminology, concept, model, graphing, and wording.

The authors are using "big" and on-going economic issues in the illustration, explanation, and case in point. This makes the study of the concept very relevant to real world experience. Since those are important on-going economic issues in our economy, the longevity of the content will last and is easy to update with relevant information and data.

Terminologies are defined in easy understandable language/wording. Concepts are explained with examples and illustrations. Graphs are using grid-lines and arrows to show the effect of it and are easy to follow and understand. Overall, the book is very clear and precise.

All chapters are using the same format. Terminologies, concepts, and graphs are consistently applied and moved on from one chapter to another chapter.

1. I found that the display in HTML version is a bit different from the PDF file. HTML has more space between paragraphs and sections whilst PDF file does not have space. The HTML format is better and easy to read. 2. Inside each chapter, it has the section numbers which are missing in the Table of Contents. For example, in chapter 1, "Defining Economics" is section 1.1. It would be better to put back the section number 1.1 in the Table of Content as well. Other than the above, the text in each chapter has good sections and sub-units.

The topics in the text are presented in a logical and clear fashion. The organization/structure/flow are consistent and coherent. All chapters are organized in the same format by using colored text box, heading and sub-heading, highlighted text, and bullet point. Easy to read and follow.

Interface rating: 3

1. As I have mentioned in 6 above, the PDF file does not space out appropriately and makes it hard to navigate through the text and go back to find text. 2. The Table of Contents should include section number for each chapter. 3. The Table of Contents should be divided into Microeconomics and Macroeconomics. 4. There is no glossary and index list at the end of the book.

I can't any grammatical error.

The authors are cultural sensitive and relevance. They are using lots of different quotes to back up their points without prejudice or bias. Different countries' cultural and economic issues are discussed and included in its content.

More Try It Problems would be better. For example, provide more Try It calculation on Elasticities, Costs of Production, etc., and provide answers and explanations. I wonder if the book comes with test bank and quiz/exam paper generation tool for the instructor? That would be great!

Reviewed by Bill Burrows, Economics Instructor, Lane Community College, Eugene,OR on 1/7/16

Being a product of the Pleistocene epoch, I sometimes don't trust my online navigation skills. That said, after repeated attempts, I was unable to locate a glossary or index for this otherwise fine text. Assuming they don't exist, their absence... read more

Being a product of the Pleistocene epoch, I sometimes don't trust my online navigation skills. That said, after repeated attempts, I was unable to locate a glossary or index for this otherwise fine text. Assuming they don't exist, their absence is certainly not a deal-breaker. In my long and labored experience, nearly all college principles of economics texts really are pretty much interchangeable in terms of providing basic content. They are obligated to cover these basics if they intend to be even moderately useful. This text provides solid, competent, confident coverage of all the rudiments in a clear, useful, and even fun manner: Scarcity, Choice, Supply and Demand, Elasticity, Costs of Production, Market Structures, Aggregate Supply & Demand, Money & Banking, Blah, Blah, Blah. You get the idea. The chapter on Socialist Economies in Transition was an interesting and welcome addition to the usual list of topics. Another absolutely wonderful thing the text did was to address the students with respect. Specifically, the authors recognized and acknowledged that the vast majority of students in college are there to gain knowledge and/or a degree that will help them provide for themselves and their families (present or future). Few texts in any discipline make even vague reference to what should be an obvious reality of their end customers' worlds. Most college texts authors ignore such tawdry issues out of a misplaced concern for sullying the purity of their disciplines with such pedestrian and base concerns. Also, I suspect, many of them are annoyed by the realization that what they teach (or how they teach) is of little practical value. Whoa! Where-the-heck did all THAT come from?!? Apparently someone's little "soapbox" button got pushed. Meanwhile, back to the topic at hand: Libby Rittenberg & Timothy Tregarthen are rare and refreshing exceptions to the norm. They go on at length about Careers in Economics, Application of Economics to Other Fields, LSAT Scores and Undergraduate Majors (Economics majors rank quite well), and Starting Salaries of Economists vs other Professionals (again, not-so-bad). If they had been in the room as I read these sections, I would have kissed them squarely on the lips.

Okay, I'll try to curb myself a bit and not run on quite so much with this response. As I read through the text (no, I didn't read every page, but I did read quite a bit; samplings from nearly every chapter), I wasn't once struck by an obvious inaccuracy or biased presentation of concepts and material. I haven't always had that impression when reading texts, economics or otherwise. Krugman's springs to mind. These folks did an admirable job of fairly and evenhandedly compelling students to understand far reaching ramifications and consequences of topics such as the unavoidable reality (sometimes unpleasant) of having limited choices, how not "black-and-white" antitrust policies can be in a complex world of international economies, the economics of environmentalism, causes and remedies for income inequality, poverty, and discrimination, and other hot-button issues.

References are made to relatively current topics such as the great recession and its ongoing and potent relevance to the future of the economies of the U.S. and the world in general. Events of this magnitude and scope will certainly remain relevant for some time to come even as they transition from a current event to an important historic lesson (think, "The Great Depression"). Likewise, investigations into the inner goings on of present-day socialist economies will likely be of interest as they continue their unprecedented morphication (?) into Lord knows what. I could be wrong (often am, ask the wife), but the authors of this text leave me with the impression that they will be responsible stewards of their OER text. The phrase, "labor of love" springs to mind. I see ongoing updates in this book's future. I am rating the text as a 4 rather than 5 only because, as economists are painfully aware, the future is a shimmering, unfocused phenomenon.

Let's face it, when preparing for a relaxed evening in front of a warm, crackling fire, hot Belgian cocoa in hand, and trusty canine underfoot, few would pull a love-worn economics text off the carved mahogany bookshelf (I'm painting a picture here) as an appealing choice for the evening's read. It is a sad reality that no viable college economics text (including this one) will ever be described on course evaluations with words such as, "lilting prose" or "Like the vampires in 'Twilight' this economics text made marginal cost curves spring to life; flying off the pages and into my heart..." However, Libby Rittenberg & Timothy Tregarthen truly do do (good thing my 13-year-old boy isn't in the room) a marvelous job of keeping the (captive) reader's interest and attention. From the references to Heraclitis in the preface to the effect of cancelled games on pro-basketball players' earnings in a later chapter, the reading is peppered with references and examples designed to clarify potentially (and actually) complex social, political, economic, and mathematical concepts. They rank, "well above the norm" among econ texts. Once again, I'm choosing a rank of 4 rather than 5. I do this for two reasons: 1) I am a bitter old man who grades way to hard (I've been told), and 2) I'm saving the ultimate-highest-rank of 5 for when they finally make a digital text that plugs directly into the higher learning centers of our students' cortices (directly bi-passing the sizable portions of their brains dedicated to Netflix and pizza).

As I sheepishly admitted somewhere above, I didn't read everysingleword of the text. However of the very many pages I did read, terminology was always consistent. I didn't find one instance where students would have been confused by the same terms being used different ways. The framework of the text was logical and consistent with the majority of economics texts available today, both OER and elsewhere. Just to be clear, that is a good thing. I'm generally unimpressed with authors that strive to distinguish their text by presenting material in an avant-garde or experimental way.

Okay, I can't help myself, is "modularity" really a word? According to the authors themselves, all the chapters are written using a “modular” format. It appears that most of the chapters are divided into major sections (three in most cases). This helps keep topics from becoming too darn unwieldy. Each section also contains learning objectives, summaries, examples, and problems. Each chapter is introduced with a nice story to motivate the material and each chapter ends with a wrap-up and additional problems. Good stuff! Plenty of useful examples and a good assortment of different types of questions (with answers). I'm seriously considering using this text in my in-class sections and perhaps my online as well. Hence, the modularity issue is an important one to me. I don't have the time or inclination to cover all the chapters of any economics text, including this one. As most of you reading this likely know, this can be a problem with some texts that have chapters so tightly linked that missing out on one or more "episodes" (let alone ten) would leave the students quite befuddled (kind of like, "Downton Abbey"). Reading through this text leaves me with the strong impression that this would not be a problem (more like, "General Hospital"). In the authors' own words, "To ensure students realize that economics is a unified discipline and not a bewildering array of seemingly unrelated topics, we develop the presentation of microeconomics and of macroeconomics around integrating themes."

Boy, this sure sounds an awful lot like #5 and to a lesser extent #6 above which reference "consistency" ,"framework", "easily realigned" and other related concepts.That said, I'll do my best to approach it as a somehow unique and separate query. And even if I am unable to do so, I will almost certainly still manage to write many many words. Why? Because I've been to graduate school! To aid the "organization/structure/flow" of the text, the authors have organized the material a manner deliberately intended to show students that economics is a cohesive body of thought and not some sort of maddening series of complex and unrelated topics. Economic concepts can be (and regularly are) divided into the two general categories of Macroeconomics and Microeconomics; "Integrating themes" are used for both the Macro and Micro topics. For Macro, the integrating theme is the notion of Aggregate Supply and Aggregate Demand (sexy stuff that). The integrating theme for microeconomics is the "marginal decision rule." This powerful (and fun!) idea is presented quite early in the text and then used throughout the remaining discussions of microeconomics.

A great job was done with the text's interface. All the graphs and charts and tables are clear and uncluttered and generally user-friendly. Understandably, you won't find the dizzying array of expensive multi-colored, 3D, flip-page gadgets that appear in some $307.59 economics texts. That stuff is spendy and lest we forget, the point of OER materials is to bring costs to students down. I can happily accept the simple, straight-forward, understandable format contained herein. Frankly, many of the "fancier" presentations often provide more distraction than edification.

Granted, I didn't have magnifying glass in hand, but in all the material I read I don't recall seeing a single grammatical faux pas.

While I can't absolutely guarantee that there's not a single humanoid on our fair planet that would find any words in this text offensive, I can with some confidence say that if we did find such a person they would likely be more than a little bit wacko. While the authors didn't shy away from potentially controversial but relevant economics related topics, they were without exception respectful and inclusive.

If you haven't figured it out by now, I'll spell it out: This is a great college level economics principles text. Before long, I intend to quite requiring the expensive text now used in my in-class courses and require students to read chapters from this OER text instead. Thanks Libby Rittenberg & Timothy Tregarthen for all your good work!

Table of Contents

• Chapter 1: Economics: The Study of Choice
• Chapter 2: Confronting Scarcity: Choices in Production
• Chapter 3: Demand and Supply
• Chapter 4: Applications of Demand and Supply
• Chapter 5: Elasticity: A Measure of Response
• Chapter 6: Markets, Maximizers, and Efficiency
• Chapter 7: The Analysis of Consumer Choice
• Chapter 8: Production and Cost
• Chapter 9: Competitive Markets for Goods and Services
• Chapter 10: Monopoly
• Chapter 11: The World of Imperfect Competition
• Chapter 12: Wages and Employment in Perfect Competition
• Chapter 13: Interest Rates and the Markets for Capital and Natural Resources
• Chapter 14: Imperfectly Competitive Markets for Factors of Production
• Chapter 15: Public Finance and Public Choice
• Chapter 16: Antitrust Policy and Business Regulation
• Chapter 17: International Trade
• Chapter 18: The Economics of the Environment
• Chapter 19: Inequality, Poverty, and Discrimination
• Chapter 20: Macroeconomics: The Big Picture
• Chapter 21: Measuring Total Output and Income
• Chapter 22: Aggregate Demand and Aggregate Supply
• Chapter 23: Economic Growth
• Chapter 24: The Nature and Creation of Money
• Chapter 25: Financial Markets and the Economy
• Chapter 26: Monetary Policy and the Fed
• Chapter 27: Government and Fiscal Policy
• Chapter 28: Consumption and the Aggregate Expenditures Model
• Chapter 29: Investment and Economic Activity
• Chapter 30: Net Exports and International Finance
• Chapter 31: Inflation and Unemployment
• Chapter 32: A Brief History of Macroeconomic Thought and Policy
• Chapter 33: Economic Development
• Chapter 34: Socialist Economies in Transition

Ancillary Material

About the book.

This book is intended for a two-semester course in Economics taught out of the social sciences or business school. Principles of Economics aims to teach considerable range and depth of Economic concepts through an approachable style and methodology. The authors take a three-pronged approach to every chapter: The concept is covered with a “Heads Up” to ward off confusion, a real-world application for that concept, and a “You Try It” section to make sure students are staying on top of the concept.

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NEW GCSE ECONOMICS 2017 spec activity or homework booklet for the whole year!

Subject: Economics

Age range: 5-7

Resource type: Worksheet/Activity

Last updated

22 February 2018

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Macroeconomics

Unit 1: basic economics concepts, unit 2: economic indicators and the business cycle, unit 3: national income and price determination, unit 4: financial sector, unit 5: long-run consequences of stabilization policies, unit 6: open economy: international trade and finance, unit 7: keynesian approaches and is-lm, unit 8: contemporary macroeconomic issues.

Introduction

Chapter objectives.

In this chapter, you will learn about:

• What Is Economics, and Why Is It Important?
• Microeconomics and Macroeconomics
• How Economists Use Theories and Models to Understand Economic Issues
• How Economies Can Be Organized: An Overview of Economic Systems

Bring It Home

Decisions ... decisions in the social media age.

To post or not to post? Every day we are faced with a myriad of decisions, from what to have for breakfast, to which route to take to class, to the more complex—“Should I double major and add possibly another semester of study to my education?” Our response to these choices depends on the information we have available at any given moment. Economists call this “imperfect” because we rarely have all the data we need to make perfect decisions. Despite the lack of perfect information, we still make hundreds of decisions a day.

Now we have another avenue in which to gather information—social media. Outlets like Facebook and Twitter are altering the process by which we make choices, how we spend our time, which movies we see, which products we buy, and more. How many of you chose a university without checking out its Facebook page or Twitter stream first for information and feedback?

As you will see in this course, what happens in economics is affected by how well and how fast information disseminates through a society, such as how quickly information travels through Facebook. “Economists love nothing better than when deep and liquid markets operate under conditions of perfect information,” says Jessica Irvine, National Economics Editor for News Corp Australia.

This leads us to the topic of this chapter, an introduction to the world of making decisions, processing information, and understanding behavior in markets —the world of economics. Each chapter in this book will start with a discussion about current (or sometimes past) events and revisit it at chapter’s end—to “bring home” the concepts in play.

What is economics and why should you spend your time learning it? After all, there are other disciplines you could be studying, and other ways you could be spending your time. As the Bring it Home feature just mentioned, making choices is at the heart of what economists study, and your decision to take this course is as much as economic decision as anything else.

Economics is probably not what you think. It is not primarily about money or finance. It is not primarily about business. It is not mathematics. What is it then? It is both a subject area and a way of viewing the world.

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PART ONE: INTRODUCTION TO ECONOMICS AND THE ECONOMY Chapter 1: Limits, Alternatives, and Choices Chapter 2: The Market System and the Circular Flow

PART TWO: PRICE, QUANTITY, AND EFFICIENCY Chapter 3: Demand, Supply, and Market Equilibrium Chapter 4: Market Failures Caused by Externalities and Asymmetric Information Chapter 5: Public Goods, Public Choice, and Government Failure

PART THREE: CONSUMER BEHAVIOR Chapter 6: Elasticity Chapter 7: Utility Maximization Chapter 8: Behavioral Economics

PART FOUR: MICROECONOMICS OF PRODUCT MARKETS Chapter 9: Businesses and the Costs of Production Chapter 10: Pure Competition Chapter 11: Pure Monopoly Chapter 12: Monopolistic Competition Chapter 13: Oligopoly and Strategic Behavior Chapter 14: Internet Oligopoly: Networks and Platforms Chapter 15: Technology, R&D, and Efficiency

PART FIVE: MICROECONOMICS OF RESOURCE MARKETS AND GOVERNMENT Chapter 16: The Demand for Resources Chapter 17: Wage Determination Chapter 18: Rent, Interest, and Profit Chapter 19: Environmental Economics Chapter 20: Public Finance: Expenditures and Taxes

PART SIX: MICROECONOMIC ISSUES AND POLICIES Chapter 21: Antitrust Policy and Regulation Chapter 22: Agriculture: Economics and Policy Chapter 23: Income Inequality, Poverty, and Discrimination Chapter 24: Health Care Chapter 25: Immigration

PART SEVEN: GDP, GROWTH, AND INSTABILITY Chapter 26: An Introduction to Macroeconomics Chapter 27: Measuring Domestic Output and National Income Chapter 28: Economic Growth Chapter 29: Business Cycles, Unemployment, and Inflation

PART EIGHT: MACROECONOMIC MODELS AND FISCAL POLICY Chapter 30: Basic Macroeconomic Relationships Chapter 31: The Aggregate Expenditures Model Chapter 32: Aggregate Demand and Aggregate Supply Chapter 33: Fiscal Policy, Deficits, and Debt

PART NINE: MONEY, INTEREST RATES, AND MONETARY POLICY Chapter 34: Money, the Federal Reserve, and Interest Rates Chapter 35: Monetary Policy, GDP, and the Price Level Chapter 36: Financial Economics

PART TEN: EXTENSIONS AND ISSUES Chapter 37: Extending the Analysis of Aggregate Supply Chapter 38: Current Issues in Macro Theory and Policy

PART ELEVEN: INTERNATIONAL ECONOMICS Chapter 39: International Trade Chapter 40: The Balance of Payments, Exchange Rates, and Trade Deficits Chapter 41: The Economics of Developing Countries 

*Bold Chapters Denote Core Topics

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Campbell McConnell

Cambell R. McConnell earned his Ph.D. at the University of Iowa after receiving degrees from Cornell College and the University of Illinois. He taught at the University of Nebraska–Lincoln from 1953 until his retirement in 1990. He was also coauthor of Contemporary Labor Economics and Essentials of Economics . He was a recipient of both the University of Nebraska Distinguished Teaching Award and the James A. Lake Academic Freedom Award and served as president of the Midwest Economics Association. Professor McConnell was awarded an honorary Doctor of Laws degree from Cornell College in 1973 and received its Distinguished Achievement Award in 1994. He was also a jazz expert and aficionado until his passing in 2019.

Stanley Brue

Stanley L. Brue did his undergraduate work at Augustana College (South Dakota) and received its Distinguished Achievement Award in 1991. He received his Ph.D. from the University of Nebraska–Lincoln. He is retired from a long career at Pacific Lutheran University, where he was honored as a recipient of the Burlington Northern Faculty Achievement Award. Professor Brue has also received the national Leavey Award for excellence in economics education. He has served as national president and chair of the Board of Trustees of Omicron Delta Epsilon International Economics Honorary. He is coauthor of Economic Scenes , fifth edition (Prentice-Hall); Contemporary Labor Economics , twelfth edition; Essentials of Economics , fourth edition and The Evolution of Economic Thought , eighth edition (Cengage Learning). For relaxation, he enjoys international travel, attending sporting events, and going on fishing trips.

Sean M. Flynn did his undergraduate work at the University of Southern California before completing his Ph.D. at U.C. Berkeley, where he served as the Head Graduate Student Instructor for the Department of Economics after receiving the Outstanding Graduate Student Instructor Award. He teaches at Scripps College (of the Claremont Colleges) and is the author of Economics for Dummies , third edition (Wiley); Essentials of Economics , fourth edition; and The Cure That Works: How to Have the World’s Best Healthcare—at a Quarter of the Price  (Regnery). His research interests include behavioral finance, behavioral economics, and health care economics. An accomplished martial artist, Sean has coached five of his students to national championships and is the author of Understanding Shodokan Aikido . Other hobbies include running, traveling, and cooking.

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5 Things to Know About India’s Economy Under Modi Mon, 01 Apr 2024 04:13:36 +0000 - As Prime Minister Narendra Modi seeks a third term, India’s growth has received the attention of the world’s investors but inequality has deepened. Read more

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Current Macroeconomic Events A Supplementary Chapter to Macroeconomics (W.W. Norton, 2008) Charles I. Jones

This brief supplementary chapter discusses current macroeconomic events, with special emphasis on the U.S. economy. As the economy softens and inflation continues to rise, we study the events that brought us to this point. In particular, we analyze the macroeconomic implications of the rise in the prices of basic commodities such as oil and corn, the collapse of housing prices, and the financial turmoil of the last year. The final section of the note uses the AS/AD framework of Macroeconomics to help us understand these events and what the future may hold.

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A 600-Year-Old Blueprint for Weathering Climate Change

During the Little Ice Age, Native North Americans devised whole new economic, social, and political structures.

Around the year 1300, the Huhugam great chief Siwani ruled over a mighty city near what is now Phoenix, Arizona. His domain included adobe-and-stone pyramids that towered several stories above the desert; an irrigation system that watered 15,000 acres of crops; and a large castle. The O’odham descendants of the Huhugam tell in their oral history that Siwani “reaped very large harvests with his two servants, the Wind and the Storm-cloud.” By Siwani’s time, Huhugam farms and cities had thrived in the Sonoran Desert for nearly 1,000 years. But then the weather refused to cooperate: Drought and flooding destroyed the city, and Siwani lost his awesome power, driven away by an angry mob.

Siwani was one of many leaders across North America in the 13th and 14th centuries who, in part because of climate change, faced destruction of the civilization they ruled. Beginning in the 13th century, the Northern Hemisphere experienced a dramatic climatic shift. First came drought, then a period of cold, volatile weather known as the Little Ice Age. In its depths, the annual average temperature in the Northern Hemisphere may have been 5 degrees colder than in the preceding Medieval Warm Period. It snowed in Alabama and South Texas. Famine killed perhaps 1 million people around the world.

Native North Americans and Western Europeans responded very differently to the changes. Western Europeans doubled down on their preexisting ways of living, whereas Native North Americans devised whole new economic, social, and political structures to fit the changing climate. A common stereotype of Native Americans is that, before 1492, they were primitive peoples who lived in tune with nature. It is true that, in the 1400s, the Indigenous people of what is now the United States and Canada generally lived more sustainably than Europeans, but this was no primitive or natural state. It was a purposeful response to the rapid transformation of their world—one that has implications for how we navigate climate change today.

Both Native North Americans and Western Europeans had taken advantage of the Medieval Warm Period, which began in the 10th century and ended in the 13th century, by farming more intensively. Compared with the preceding centuries, the era brought relatively predictable weather and a longer growing season that allowed new crops and large-scale agriculture to spread into colder climes: from central Mexico to what is now the United States, and from the Levant and Mesopotamia to Western Europe, Mongolia, and the Sahel region of Africa.

In both North America and Western Europe, agricultural expansion allowed population growth and urbanization. Native Americans built grand cities on the scale of those in Europe. Their ruins still stand across the continent: the stone structures of Chaco Canyon, in New Mexico; the complex irrigation systems of the Huhugam, in Arizona; the great mounds of Cahokia and other Mississippian cities on rivers across the eastern half of the United States. Many groups formed hierarchical class systems and were ruled by powerful leaders who claimed supernatural powers—not unlike kings who ruled by divine right in Europe.

But then the climate reversed itself. In response, Native North American societies developed a deep distrust of the centralization, hierarchy, and inequality of the previous era, which they blamed for the famines and disruptions that had hit cities hard. They turned away from omnipotent leaders and the cities they ruled, and built new, smaller-scale ways of living, probably based in part on how their distant ancestors lived.

From the May 2021 issue: Return the national parks to the tribes

The oral histories of many Native nations tell of revolutions against and flights from cities. Cherokee oral history recalls how “the people rose up” and destroyed “a hereditary secret society, since which time, no hereditary privileges have ever been tolerated among the Cherokees.” Descendants of Chaco Canyon narrate how wizards corrupted some leaders, so their people fought against the rulers or simply left to establish more egalitarian societies. O’odham oral tradition tells that after their ancestors revolted, they built smaller settlements and less centralized irrigation systems throughout what today are the Phoenix and Tucson basins.

The cities that Native Americans left behind during the Little Ice Age—ruins such as those at Chaco Canyon and Cahokia—led European explorers and modern archaeologists alike to imagine societal collapse and the tragic loss of a golden age. But oral histories from the generations that followed the cities’ demise generally described what came later as better. Smaller communities allowed for more sustainable economies. Determined not to depend on one source of sustenance, people supplemented their farming with increased hunting, fishing, and gathering. They expanded existing networks of trade, carrying large amounts of goods all across the continent in dugout canoes and on trading roads; these routes provided a variety of products in good times and a safety net when drought or other disasters stressed supplies. They developed societies that encouraged balance and consensus, in part to mitigate the problems caused by their changing climate.

To support their new economies, Native North Americans instituted decentralized governing structures with a variety of political checks and balances to prevent dictatorial leaders from taking power and to ensure that all members of a society had a say. Power and prestige lay not in amassing wealth but in assuring that wealth was shared wisely, and leaders earned support in part by being good providers and wise distributors. Many polities established councils of elders and balanced power by pairing leaders, such as the war chief and the peace chief; setting up male and female councils; and operating under family-based clans that had members in multiple towns. In the Haudenosaunee (Iroquois) Confederacy, for example, female clan leaders chose male representatives to the Confederacy Council and could replace them if they didn’t do right by the people. In most societies across North America, all of the people—women as well as men—had some say in important decisions such as choosing a new leader, going to war, or making peace. As the Anishinaabe historian Cary Miller wrote in her book Ogimaag: Anishinaabeg Leadership, 1760–1845 , Native American nonhierarchical political systems “were neither weak nor random but highly organized and deliberate.”

Underlying the structural changes was an ideological shift toward reciprocity, an ideal of sharing and balance that undergirded economics, politics, and religion across much of the continent. The Sonoran Desert–living O’odham, for example, developed a himdag , or “way of life,” that taught that people are supposed to share with one another according to what they have, especially the necessities of food, water, and shelter. Reciprocity is not merely generosity; giving away a surplus is an investment, insurance that others will help in your own time of need. “Connection to others improved the chances of overcoming some calamity or disaster that might befall the individual or group,” the Lumbee legal scholar Robert A. Williams Jr. wrote in his book Linking Arms Together: American Indian Treaty Visions of Law and Peace, 1600–1800 .

By the late 1400s, the civilizations of what today is the United States, Canada, and northern Mexico were more different from Western Europe than one would have predicted during the Medieval Warm Period. From Russia to England, Europe moved in the opposite direction in response to the changing climate. When the period of droughts and then the Little Ice Age hit, hundreds of thousands of Europeans starved to death, and the famines left people more susceptible to the Black Death, which hit especially hard in the cities. Western Europeans, like North Americans, searched for a ruling system that could best keep the people fed and safe, but they opted for the opposite approach.

In general, as Western Europe recovered from the devastation of the Black Death and the end of the Medieval Warm Period, it became more centralized under the rule of hereditary absolute monarchs. Rulers in Europe amassed military power at home and abroad, building large armies and investing in new military technologies, including firearms. Militarization decreased the status of women’s labor, and unlike the complementary gender structures that developed in Native North America, patriarchy was the basis of power in Western Europe, from the pope and kings to lords and priests, down to husbands within households. Through mercantilism and colonization, Europeans sought natural resources abroad in order to increase their power at home. That impulse brought them into contact with Native North Americans, whose history of adaptation they could not see. Nor could they see how intentionally Native Americans had decentralized their systems of governance.

From the March 2002 issue: 1491

Native Americans who visited European cities or even colonial towns were shocked at the inequality and lack of freedom. The Muscogee Creek headman Tomochichi, for example, visited London in 1734 and expressed surprise that the British king lived in a palace with an unnecessarily large number of rooms. An Englishman recorded that Tomochichi observed that the English “knew many things his Country men did not” but “live worse than they.” In turn, there were Europeans who wondered how North American societies could exist with dramatically fewer strictures—and have less poverty—than their own. They generally labeled Native American societies primitive rather than recognizing them as complicated adaptations. Yet human choices had created these striking contrasts in reaction to the same changed climate.

The descendants of North America’s great cities came to see value in the very act of trying to get along better. What if, instead of doubling down on the ways we have been living, we were to do what 13th- and 14th-century Native North Americans did, and develop more balanced and inclusive economic, social, and political systems to fit our changing climate? What if we put our highest priority on spreading prosperity and distributing decision making more broadly? It sounds unprecedented, but it has happened before.

This article has been adapted from Kathleen DuVal’s upcoming book, Native Nations: A Millennium in North America .

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David Brooks

The Great Struggle for Liberalism

By David Brooks

Opinion Columnist

In 1978, the Russian dissident Aleksandr Solzhenitsyn gave a commencement address at Harvard, warning us about the loss of American self-confidence and will. “A decline in courage may be the most striking feature that an outside observer notices in the West today,” he declared.

Today, those words ring with disturbing force. The enemies of liberal democracy seem to be full of passionate intensity — Vladimir Putin, Xi Jinping, Donald Trump, campus radicals. Meanwhile, those who try to defend liberal norms can sometimes seem like some of those Republicans who ran against Trump in the 2016 primaries — decent and good, but kind of feckless and about to be run over.

Into this climate emerges Fareed Zakaria’s important new book, “Age of Revolutions: Progress and Backlash From 1600 to the Present.” One of the powerful features of this book is that Zakaria doesn’t treat liberal democratic capitalism as some set of abstract ideas. He shows how it was created by real people in real communities who wanted richer, fuller and more dynamic lives.

His story starts in the Dutch Republic in the 16th century. The Dutch invented the modern profit-seeking corporation. The Dutch merchant fleet was capable of carrying more tonnage than the fleets of France, England, Scotland, the Holy Roman Empire, Spain and Portugal combined. By the 18th century, Amsterdam’s per capita income was four times that of Paris.

Dutch success wasn’t just economic. There was a cultural flowering (Rembrandt, Vermeer). There was urbanization — the building of great towns and cities. There was a civic and political stability built around decentralized power. There was a relatively egalitarian culture — until the 19th century, there were no statues of heroes on horseback in Holland. There was also moral restraint. Dutch Calvinism was on high alert for the corruption that prosperity might bring. It encouraged self-discipline and norms that put limits on the display of wealth.

The next liberal leap forward occurred in Britain. In the Glorious Revolution of the late 1680s, a Dutchman, William of Orange, became King of England and helped import some of the more liberal Dutch political institutions, ushering in a period of greater political and religious moderation. Once again, you see the same pattern: Technical and economic dynamism goes hand in hand with cultural creativity, political reform, urbanization, a moral revival and, it must be admitted, vast imperialist expansion.

British inventors and tinkerers like James Watt perfected the steam engine. From 1770 to 1870 real British wages rose by 50 percent, and over the first half of the 19th century British life expectancy increased by about 3.5 years.

The great reform acts in the 1800s gave more people the right to vote and reduced political corruption. The rise of, for example, the evangelical Clapham Sect in the early 19th century was part of a vast array of social movements led by people who sought to abolish the slave trade, reduce child labor, reform the prison system, reduce cruelty to animals, ease the lives of the poor and introduce codes of propriety into Victorian life. America was next, and the pattern replicated itself: new inventions like the telephone and the electric lightbulb. People flooding into the cities. During the 20th century, American culture dominated the globe. Thanks in part to the postwar American liberal order, living standards surged. As Zakaria notes, “Compared to 1980, global G.D.P. had nearly doubled by 2000, and more than tripled by 2015.”

And yet for all its benefits, liberalism is ailing and in retreat in places like Turkey, India, Brazil and, if Trump wins in 2024, America itself. Zakaria’s book helped me develop a more powerful appreciation for the glories of liberalism, and also a better understanding of what’s gone wrong.

I’m one of those people who subscribes to the Austrian psychiatrist Viktor Frankl’s doctrine: “Man’s search for meaning is the primary motivation in his life.” To feel at home in the world, people need to see themselves serving some good — doing important work, loving others well, living within coherent moral communities, striving on behalf of some set of ideals.

The great liberal societies that Zakaria describes expanded and celebrated individual choice and individual freedom. But when liberalism thrived, that personal freedom lay upon a foundation of commitments and moral obligations that precede choice: our obligations to our families, to our communities and nations, to our ancestors and descendants, to God or some set of transcendent truths.

Over the past few generations, the celebration of individual freedom has overspilled its banks and begun to erode the underlying set of civic obligations. Especially after World War II and then into the 1960s, we saw the privatization of morality — the rise of what came to be known as the ethos of moral freedom. Americans were less likely to assume that people learn values by living in coherent moral communities. They were more likely to adopt the belief that each person has to come up with his or her own personal sense of right and wrong. As far back as 1955, the columnist Walter Lippmann saw that this was going to lead to trouble: “If what is good, what is right, what is true, is only what the individual ‘chooses’ to ‘invent,’ then we are outside the traditions of civility,” he wrote.

Trust is the faith that other people will do what they ought to do. When there are no shared moral values and norms, then social trust plummets. People feel alienated and under siege, and, as Hannah Arendt observed, lonely societies turn to authoritarianism. People eagerly follow the great leader and protector, the one who will lead the us/them struggle that seems to give life meaning.

During our current moment of global populism, the liberal tradition is under threat. Many people have gone economically nationalist and culturally traditionalist. Around the world, authoritarian moralists promise to restore the old ways, the old religion, national greatness. “There are certain things which are more important than ‘me,’ than my ego — family, nation, God,” Viktor Orban declared. Such men promise to restore the anchors of cultural, moral and civic stability, but they use brutal and bigoted strongman methods to get there.

President Biden tried to win over the disaffected by showering them with jobs and economic benefits. It doesn’t seem to have worked politically because the real absence people are feeling is an absence of meaning, belonging and recognition.

This election year, in the United States and around the globe, will be about whether liberalism can thrive again. Zakaria’s book will help readers feel honored and grateful that we get to be part of this glorious and ongoing liberal journey. He understands that we liberals can’t just offer economic benefits; we also have to make the spiritual and civic case for our way of life. He writes: “The greatest challenge remains to infuse that journey with moral meaning, to imbue it with the sense of pride and purpose that religion once did — to fill that hole in the heart.”

There’s glory in striving to add another chapter to the great liberal story — building a society that is technologically innovative, commercially daring, with expanding opportunities for all; building a society in which culture is celebrated, families thrive, a society in which the great diversity of individuals can experience a sense of common purpose and have the space and energy to pursue their own adventures in living.

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David Brooks has been a columnist with The Times since 2003. He is the author, most recently,  of “How to Know a Person: The Art of Seeing Others Deeply and Being Deeply Seen.” @ nytdavidbrooks