Cooperatives in the United States

Credit Unions

Memorial Societies

Housing

Insurance

Students

Farm Purchasing and Marketing

Preschool Education

Memorial Societies

Farm Purchasing and Marketing

Preschool Education

Consumer Goods (uj] "

Health

Using Charts The cooperative is a voluntary association of people formed to carry on some kind of economic activity that will benefit its members. How do the three kinds of cooperatives differ?

Chapter 3

Figure 3.1

Figure 3.2 Figure 3.3

Figure 3.4

Figure 3.5 Figure 3.6 Figure 3.7

Chapter 4

Figure 4.1

Figure 4.2

Figure 4.3 Figure 4.4 Figure 4.5

Figure 4.6

Chapter 5

Figure 5.1 Figure 5.2

Figure 5.3 Figure 5.4 Figure 5.5 Figure 5.6

Chapter 6

Figure 6.1 Figure 6.2

Figure 6.3

Figure 6.4

Figure 6.5

Figure 6.6

Corporations, Partnerships, and

Sole Proprietorships 58

Stock Ownership 63

Ownership, Control, and Organization of a

Typical Corporation 65

Business Growth Through

Reinvestment 69

Business Combinations 71

Conglomerate Structure 72

Cooperatives in the United States 76

The Demand for Compact

Digital Discs 90

Individual and Market Demand

Curves 92

A Change in Quantity Demanded . . 96

A Change in Demand 98

The Total Expenditures Test for

Demand Elasticity 103

Estimating the Elasticity of Demand 106

Supply of Compact Discs 114

Individual and Market Supply

Curves 115

A Change in Supply 117

Supply Elasticity 119

The Law of Variable Proportions . .124 Production, Costs, and Revenues . .128

Dynamics of the Price

Adjustment Process 145

Factors Affecting Price Changes in Agriculture 146

The Price of Gold When Supply and Demand Change 147

Distorting Market Outcomes with Price Ceilings and

Price Floors 151

Agricultural Price Support Programs 154

Figure 10.2 Government Spending as a

Percent of Total Output, 2000 . . 257 Figure 10.3 The Federal Budget for Fiscal

Year 2000 262

Figure 10.4 Federal Government

Expenditures, 1980-2000 263

Figure 10.5 Expenditures by State and

Local Governments 269

Figure 10.6 The Federal Deficit 273

Figure 10.7 Three Views of the Federal Debt . . 274

Figure 10.8 How Big is the Public Debt? 275

Figure 10.9 The Crowding-Out Effect

Caused by Federal Spending . . . 277

Chapter 7

Figure 7.1 Perfect Competition: Market

Price and Profit Maximization . .165 Figure 7.2 Characteristics of Market

Structures 169

Figure 7.3 Anti-Monopoly Legislation 179

Figure 7.4 Federal Regulatory Agencies . . . . 180 Figure 7.5 Effects of a Pollution Tax 181

Chapter 8

Figure 8.1 Employment and Union

Affiliation 194

Figure 8.2 Union Membership and

Representation by Industry . . . .195 Figure 8.3 Trade (Craft) and Industrial

Unions 197

Figure 8.4 Right to Work, State by State . . .201 Figure 8.5 The Traditional Theory of Wage

Determination 207

Figure 8.6 Median Weekly Earnings by Occupation and Union

Affiliation 208

Figure 8.7 Union Membership 212

Figure 8.8 Median Female Income as a

Percentage of Male Income . . . .213 Figure 8.9 Distribution of Male and

Female Jobs by Occupation . . . .214 Figure 8.10 The Minimum Wage 217

Chapter 9

Figure 9.1 Total Government Receipts Per

Capita, Adjusted for Inflation . . . 224 Figure 9.2 Shifting the Incidence of a Tax . . . 225

Figure 9.3 Three Types of Taxes 228

Figure 9.4 Federal Government Revenues by Source 232

Figure 9.5 Individual Income Tax Rates, 2000 233 Figure 9.6 Average Individual and FICA

Taxes, Single Individuals 234

Figure 9.7 Sources of State and Local

Government Revenue 239

Figure 9.8 State and Local Taxes as a

Percentage of State Income . . . .240 Figure 9.9 Biweekly Paycheck and

Withholding Statement 241

Figure 9.10 The Value-Added Tax 247

Chapter 10

Figure 10.1 Total Government Expenditures Per

Capita, Adjusted for Inflation . . 256

Figure 10.2 Government Spending as a

Percent of Total Output, 2000 . . 257 Figure 10.3 The Federal Budget for Fiscal

Year 2000 262

Figure 10.4 Federal Government

Expenditures, 1980-2000 263

Figure 10.5 Expenditures by State and

Local Governments 269

Figure 10.6 The Federal Deficit 273

Figure 10.7 Three Views of the Federal Debt . . 274

Figure 10.8 How Big is the Public Debt? 275

Figure 10.9 The Crowding-Out Effect

Caused by Federal Spending . . . 277

Chapter 11

Figure 11.1 The 50 State Quarter Program . . . 294 Figure 11.2 Number of State and

National Banks 302

Chapter 12

Figure 12.1 Overview of the Financial

System 315

Figure 12.2 The Relationship Between Risk and Return 319

Figure 12.3 The Power of Compound

Interest 320

Figure 12.4 How Much Will You Have at

Retirement? 321

Figure 12.5 Bond Classifications 322

Figure 12.6 Financial Assets and Their

Markets 325

Figure 12.7 The New York Stock Exchange . . 330 Figure 12.8 Tracking Stocks with the DJIA

Chapter 13

Figure 13.1 Estimating Gross Domestic

Product 342

Figure 13.2 The National Income and

Product Accounts 345

Figure 13.3 Circular Flow of Economic

Activity 347

Figure 13.4 Estimating Gross Domestic

Product 351

Figure 13.5 Constructing the Consumer

Price Index 352

Figure 13.6 Projected Distribution of Population by Region, 1988 to 2010 358

Figure 13.7 Distribution of the Population by Age and Gender, 2000 359

Figure 13.8 Projected Change in U.S.

Population by Race and Ethnic Origin,

1990-2050 360

Figure 13.9 Real GDP vs. Real GDP

Per Capita 364

Figure 13.10 Annual Growth Rates of

Real GDP Per Capita 365

Figure 13.11 Labor Productivity, 1959-1999 . . 367

Figure 13.7 Distribution of the Population by Age and Gender, 2000 359

Figure 13.8 Projected Change in U.S.

Population by Race and Ethnic Origin,

1990-2050 360

Figure 13.9 Real GDP vs. Real GDP

Per Capita 364

Figure 13.10 Annual Growth Rates of

Real GDP Per Capita 365

Figure 13.11 Labor Productivity, 1959-1999 . . 367

Chapter 14

Figure

14.1

Phases of the Business Cycle . . . .

376

Figure

14.2

The Index of Leading

Economic Indicators

379

Figure

14.3

The Unemployment Rate

383

Figure

14.4

The Fastest-Growing Occupations,

1998-2008

387

Figure

14.5

The Rate of Inflation

390

Figure

14.6

The Declining Value of the

Dollar

391

Figure

14.7

The Distributions of Income

by Families

395

Figure

14.8

Poverty in the United States:

Total Number and Rate

397

Figure

14.9

Per Capita Personal Income

by State

Figure 15.1 Structure of the Federal

Reserve System 408

Figure 15.2 Clearing a Check 412

Figure 15.3 Balance Sheet Entries for a Hypothetical Commercial

Bank 417

Figure 15.4 Fractional Reserves and the

Money Supply 419

Figure 15.5 The Reserve Requirement as a Tool of Monetary Policy . . . .421 Figure 15.6 Summary of Monetary

Policy Tools 423

Figure 15.7 Short-Run Impact of

Monetary Policy 427

Figure 15.8 Monetizing the Debt 428

Figure 15.9 Major Components of the

Money Supply 430

Chapter 16

Figure 16.1 The GDP Gap and the

Production Possibilities

Frontier 438

Figure 16.2 The Misery Index 439

Figure 16.3 The Aggregate Supply Curve . . . 443 Figure 16.4 The Aggregate Demand Curve . . 444 Figure 16.5 Macroeconomic Equilibrium . . . 445 Figure 16.6 Fiscal Policy and the Aggregate

Demand Curve 449

Figure 16.7 Supply-Side and Demand-Side

Economics 450

Figure 16.8 The Laffer Curve 451

Figure 16.9 Supply-Side Policies and the

Aggregate Supply Curve 452

Chapter 17

Figure 17.1 United States Merchandise

Trade by Area 468

Figure 17.2 The Gains from Trade 469

Figure 17.3 The North American Free

Trade Agreement 478

Figure 17.4 Foreign Exchange Rates 482

Figure 17.5 Flexible Exchange Rates 483

Chapter 18

Figure 18.1 The Spectrum of Economic

Systems 493

Figure 18.2 New and Emerging Stock

Markets 503

Chapter 19

Figure 19.1 Gross National Product and Gross National Product

Per Capita 522

Figure 19.2 The European Union 536

Chapter 20

Figure 20.1 World Population Growth Rates . . 547 Figure 20.2 The Most Dangerous

Nuclear Reactors 549

□oKphic Reference Atlas

SOCIETY

World Political A2

United States Political A4

World Land Use A6

United States Land Use A8

World GDP Cartogram A10

World Population Cartogram A12

STANDARD

&POOR'S

Databank

The American People

U.S. Population Projections, 2000-2050 A15

Civilian Labor Force, 1950-2000 A15

Hours and Earnings in Private Industries, 1960-1999 A16

The U.S. Economy

Gross Domestic Product, 1950-2000 A17

Annual Changes in Consumer Price Indexes,

1940-2000 A17

Personal Consumption Expenditures,

1960-2000 A18

Personal Consumption Expenditures,

Nondurable Goods, 1960-2000 A18

Average Prices of Selected Goods, 1989-1999 . A19 Business Sector: Changes in Productivity &

Related Data A20

Inflation in Consumer Prices, 1915-2000 . . . . A20

The Government Sector

Federal Government Expenditures,

1949-1999 A21

Total Government Expenditures,

1949-1999 A21

Federal Government Net Receipts and Net

Outlays, 1950-2000 A22

Federal Debt, Total Outstanding, 1960-2000 . A22

National Debt Per Capita, 1940-2000 A22

Federal Budget Receipts, 1980-1999 A23

The Financial Sector

Interest Rates, 1929-2000 A24

Consumer Credit Outstanding, 1980-2000 . . A24

Personal Saving, 1960-2000 A25

Money Stock, 1970-2000 A25

The Global Economy

Economic Groups: Population, Exports, and GDP, 1998 A26

Growth Rates in Real GDP, 1980-1998 A26

World Population by Age, 2000-2050 A27

Countries Ranked by Population,

2000 and 2050 A27

Aging Index in Selected Nations of the Americas, 1997 and 2025 A28

Median Age, World, 1975-2025 A28

U.S. Exports and Imports, 1950-2000 A29

Employment and Unemployment, Selected Economies A29

Percentage of Total Receipts

I I Individual Income Taxes I I Employment Taxes □ Corporate Income Taxes I Other Receipts

19SG 199G 1999

19SG 199G 1999

I I Individual Income Taxes I I Employment Taxes □ Corporate Income Taxes I Other Receipts

Basic Concepts in Economics

Economics: Principles and Practices incorporates the 21 basic concepts established in A Frameworkfor Teaching Basic Economic Concepts, published by the National Council on Economic Education.

FUNDAMENTAl ECONOMIC CONCEPTS

1. Scarcity and Choice Scarcity is the universal problem that faces all societies because there are not enough resources to produce everything people want. Scarcity requires people to make choices about the goods and services they use.

2. Opportunity Cost and Trade-Offs Opportunity cost is the foregone benefit of the next best alterna tive when scarce resources are used for one purpose rather than another. Trade-offs involve choosing less of one thing to get more of something else.

3. Productivity Productivity is a measure of the amount of output (goods and services) produced per unit of input (productive resources) used.

4. Economic Systems Economic systems are the ways in which people organize economic life to deal with the basic economic problem of scarcity.

5. Economic Institutions and Incentives Economic institutions include households and families and formal organizations such as corporations, government agencies, banks, labor unions, and cooperatives. Incentives are factors that motivate and influence human behavior.

6. Exchange, Money, and Interdependence Exchange is a voluntary transaction between buyers and sellers. It is the trading of a good or service for another good or service, or for money. Money is anything that is generally accepted as final payment for goods and services, and thus serves as a medium of exchange. Interdependence means that decisions or events in one part of the world or in one sector of the economy affect decisions and events in other parts of the world or sectors of the economy.

MICROECONOMIC CONCEPTS

7. Markets and Prices Markets are arrangements that enable buyers and sellers to exchange goods and services. Prices are the amounts of money that people pay for a unit of a particular good or service.

8. Supply and Demand Supply is defined as the different quantities of a resource, good, or service that will be offered for sale at various possible prices during a specific time period. Demand is defined as the different quantities of a resource, good, or service that will be purchased at various possible prices during a specific time period.

9. Competition and Market Structure Competition is the struggle between businesses that strive for the same customer or market. Competition depends on market structure—the number of buyers and sellers, the extent to which firms can control price, the nature of the product, the accuracy and timeliness of information, and the ease with which firms can enter and exit the market.

10. Income Distribution Income distribution refers to the way the nation's income is distributed by function—to those who provide productive resources—and by recipient, primarily individuals and families.

xxviii BASIC CONCEPTS IN ECONOMICS

Market Failures Market failures occur when there is inadequate competition, lack of access to reliable information, resource immobility, externalities, and the need for public goods.

12. The Role of Government The role of government includes establishing a framework of law and order in which a market economy functions. The government plays a direct and an indirect role in the economy as both a producer and a consumer of goods and services.

MACROECONOMIC CONCEPTS

13. Gross Domestic Product Gross Domestic Product (GDP) is defined as the market value of the total output of all final goods and services produced within a country's boundaries during one year.

14. Aggregate Supply and Aggregate Demand Aggregate supply is the total amount of goods and ser vices produced by the economy during a period of time. Aggregate demand is the total amount of spending on goods and services in the economy during a period of time.

15. Unemployment Unemployment is defined as the number of people without jobs who are actively seeking work. This is also expressed as a rate when the number of unemployed is divided by the number of people in the labor force.

16. Inflation and Deflation Inflation is a sustained increase in the average price level of the entire econ omy. Deflation is a sustained decrease in the average price level of an entire economy.

17. Monetary Policy Monetary policy consists of actions initiated by a nation's central bank that affect the amount of money available in the economy and its cost (interest rates).

18. Fiscal Policy Fiscal policy consists of changes in taxes, in government expenditures on goods and services, and in transfer payments that are designed to affect the level of aggregate demand in the economy.

INTERNATIONAL ECONOMIC CONCEPTS

19. Absolute and Comparative Advantage and Barriers to Trade Absolute advantage and comparative advantage are concepts that are used to explain why trade takes place. Barriers to trade include tariffs, quotas, import licenses, and cartels.

20. Exchange Rates and the Balance of Payments An exchange rate is the price of one nation's cur rency in terms of another nation's currency. The balance of payments of a country is a statistical accounting that records, for a given period, all payments that the residents, businesses, and governments of one country make to the rest of the world as well as the receipts that they receive from the rest of the world.

21. International Aspects of Growth and Stability International aspects of growth and stability are more important today than in the past because all nations are much more interdependent.

BASIC CONCEPTS IN ECONOMICS 1

UNIT

Fundamental Economic

CHAPTER 1

What Is Economics?

CHAPTER 2

Economic Systems and Decision Making

CHAPTER 3

Business Organizations

Why It's important

As you read this unit, learn how the study of economics helps answer the following questions:

How do you make the decision between buying gas for your car or taking your friend out for pizza?

Why is your friend from Russia stunned by all the shoes available at your local shoe store?

Why is an item at a department store less expensive than that same item at a specialty shop?

Land Labor Capital

The factors of production—land, labor, capital, and entrepreneur-ship—make production possible.

2 UNIT 1 FUNDAMENTAL ECONOMIC CONCEPTS

Economics Concepts

Economics & You

CThe study of economics " ® will help you become a better decision maker—it helps you develop a way of thinking about how to make the best choices for you. To learn more about the scope of economics, view the Chapter 2 video lesson:

What Is Economics?

IHI r

What Is Economics?

IHI r

1 se

SECTIO RI iL

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