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human effort; one of four factors of production (p. 7) Congress (p. 260)
Law of Demand rule stating that more will be demanded at margin requirement minimum deposits left with a stock-
lower prices and less at higher prices; inverse relationship broker to be used as partial payment on other securities
between price and quantity demanded (p. 91) (p. 423)
Law of Supply rule stating that more will be offered for marginal analysis decision making that compares the extra
sale at high prices than at lower prices (p. 113) cost of doing something to the extra benefits gained (p. 131)

A46 GLOSSARY
marginal cost multiplier
marginal cost extra cost of producing one additional unit microeconomics branch of economic theory that deals
of production (p. 129) with behavior and decision making by small units such
marginal product extra output due to the addition of one as individuals and firms (p. 89)
more unit of input (p. 124) minimum wage lowest legal wage that can be paid to most
marginal revenue extra revenue from the sale of one addi- workers (p. 152, 216)
tional unit of output (p. 130) misery index unofficial statistic that is the sum of monthly
marginal tax rate tax rate that applies to the next dollar of inflation and the unemployment rate; same as discomfort
taxable income (p. 229) index (p. 438)
marginal utility satisfaction or usefulness obtained from mixed economy see modified private enterprise economy
acquiring one more unit of a product (p. 93) (p. 51)
market meeting place or mechanism allowing buyers and modified free enterprise economy free enterprise system
sellers of an economic product to come together; may be with some government involvement; same as modified
local, regional, national, or global (p. 14) private enterprise economy (p. 560)
market basket representative collection of goods and serv- modified private enterprise economy free enterprise mar-
ices used to compile a price index (p. 351) ket economy where people carry on their economic affairs
market demand curve demand curve that shows the quan- freely, but are subject to some government intervention
tities demanded by everyone who is interested in purchas- and regulation (p. 51)
ing a product (p. 91) modified union shop arrangement under which workers
market economy economic system in which supply, have the option to join a union after being hired
demand, and the price system help people make decisions (p. 201)
and allocate resources; same as free enterprise economy monetarism school of thought stressing the importance of
(p. 36) stable monetary growth to control inflation and stimulate
market equilibrium condition of price stability where the long-term economic growth (p. 453)
quantity demanded equals the quantity supplied (p. 143) monetary policy actions by the Federal Reserve System to
market failure market where any of the requirements for expand or contract the money supply in order to affect
a competitive market”adequate competition, knowledge the cost and availability of credit (p. 415)
of prices and opportunities, mobility of resources, and monetary standard mechanism that keeps a money supply
competitive profits”are lacking (p. 174) durable, portable, divisible, and stable in value; gold stan-
market structure market classification according to number dard, silver standard, fiat money standard (p. 292)
and size of firms, type of product, and type of competition monetary unit standard unit of currency in a country™s
(p. 164) money supply; American dollar, British pound (p. 289)
market supply curve supply curve that shows the quantities monetize the debt process of creating enough additional
offered at various prices by all firms that sell the product money to offset federal borrowing so that interest rates
in a given market (p. 114) remain unchanged (p. 427)
maturity life of a bond or length of time funds are borrowed money anything that serves as a medium of exchange,
(p. 321) a measure of value, and a store of value (p. 286)
measure of value one of the three functions of money that money market market in which financial capital is loaned
allows it to serve as a common denominator to measure and/or borrowed for one year or less (p. 325)
value (p. 286) monopolistic competition market structure having all con-
mediation process of resolving a dispute by bringing in a ditions of pure competition except for identical products;
neutral third party (p. 202) form of imperfect competition (p. 166)
medicaid joint federal-state medical insurance program for monopoly market structure characterized by a single pro-
low-income people (p. 265) ducer; form of imperfect competition (p. 169)
medicare federal health-care program for senior citizens, moral suasion Federal Reserve System™s use of persuasion
regardless of income (p. 233) to accomplish monetary policy; congressional testimony,
medium of exchange money or other substance generally press releases (p. 424)
accepted in exchange; one of the three functions of most favored nation clause trade law allowing a third
money (p. 286) country to enjoy the same tariff reductions the United
member bank bank belonging to the Federal Reserve States negotiates with another country (p. 477)
System (p. 407) multinational corporation producing and selling without
member bank reserves reserves kept by member banks at regard to national boundaries and whose business activities
the Fed to satisfy reserve requirements (p. 418) are located in several different countries (p. 72)
merger combination of two or more business enterprises multiplier change in overall spending caused by a change
to form a single firm (p. 68) in investment spending (p. 448)

GLOSSARY A47
municipal bond par value
municipal bond bond, often tax exempt, issued by state noncompeting labor grades broad groups of unskilled,
and local governments; known as munis (p. 323) semiskilled, skilled, and professional workers who do not
mutual fund company that sells stock in itself and uses compete with one another (p. 206)
the proceeds to buy stocks and bonds issued by other nonmarket transaction economic activity not taking place
companies (p. 316) in the market and, therefore, not included in GDP; serv-
mutual savings bank depositor-owned savings institution ices of homemakers, work around the home (p. 343)
operated for the benefit of depositors (p. 303) nonprice competition competition involving the adver-
tising of a product™s appearance, quality, or design, rather
than its price (p. 166)
nonprofit organization economic institution that operates
like a business but does not seek financial gain; schools,
NAFTA see North American Free Trade Agreement (p. 479) churches, community service organizations (p. 75)
national bank commercial bank chartered by the National nonrecourse loan agricultural loan that carries neither a
Banking System; member of the Fed (p. 295) penalty nor further obligation to repay if not paid back
National Bank note currency backed by government bonds, (p. 153)
issued by national banks starting in 1863 and generally nonrenewable resource resource that cannot be replenished
disappearing from circulation in the 1930s (p. 295) once it is used (p. 546)
national currency see National Bank note (p. 295) North American Free Trade Agreement (NAFTA) agree-
national income net national product less indirect business ment signed in 1993 to reduce tariffs between the United
taxes; measure of a nation™s income (p. 345) States, Canada, and Mexico (p. 479)
national income accounting system of accounts used to NOW Account see Negotiable Order of Withdrawal (p. 303)
track the nation™s production, consumption, savings, and
income statistics (p. 341)
natural monopoly market where average costs are lowest
when all output is produced by a single firm (p. 170)
need basic requirement for survival; includes food, clothing, oligopoly market structure in which a few large sellers dom-
and/or shelter (p. 6) inate and have the ability to affect prices in the industry;
negative externality harmful side effect that affects an form of imperfect competition (p. 167)
uninvolved third party; external cost (p. 175) open market operations monetary policy in the form of
negative income tax tax system that would make cash pay- U.S. treasury bills or bond sales and purchases, or both
ments in the form of tax refunds to individuals when their (p. 420)
income falls below certain levels (p. 400) opportunity cost cost of the next best alternative use of
Negotiable Order of Withdrawal (NOW) type of checking money, time, or resources when one choice is made rather
account that pays interest (p. 303) than another (p. 20)
net asset value (NAV) the market value of a mutual fund option contract giving investors an option to buy or sell
share determined by dividing the value of the fund by the commodities, equities, or financial assets at a specific
number of shares issued (p. 316) future date using a price agreed upon today (p. 333)
net exports of goods and services net expenditures by the options markets markets where options, including put
output-expenditure model™s foreign sector (p. 348) options and call options, are traded (p. 333)
net immigration net population change after accounting output-expenditure model macroeconomic model describ-
for those who leave as well as enter a country (p. 359) ing aggregate demand by the consumer, investment,
net income measure of business profits determined by sub- government, and foreign sectors; GDP = C + I + G + F
tracting all expenses, including taxes, from revenues (p. 68) (p. 348)
net national product (NNP) Gross National Product minus overhead broad category of fixed costs that includes interest,
depreciation charges for wear and tear on capital equipment; rent, taxes, and executive salaries (p. 127)
measure of net annual production generated with labor over-the-counter market (OTC) electronic marketplace for
and property supplied by a country™s citizens (p. 344) securities not listed on organized exchanges such as the
net worth excess of assets over liabilities, usually listed as New York Stock Exchange (p. 331)
a separate summary on a balance sheet; measure of the
value of a business (p. 416)
nominal GDP see current GDP (p. 353)
nonbank financial institution nondepository institution
that channels savings to investors; finance companies, par value principal of a bond or total amount borrowed
insurance companies, pension funds (p. 315) (p. 321)

A48 GLOSSARY
paradox of value productivity
paradox of value apparent contradiction between the price monetary value of a product as established by supply
high value of nonessentials and low value of essentials and demand (p. 137)
(p. 13) price ceiling maximum legal price that can be charged for
partnership unincorporated business owned and operated a product (p. 151)
by two or more people who share the profits and have price discrimination illegal practice of charging customers
unlimited liability for the debts and obligations of the different prices for the same product (p. 179)
firm; same as general partnership (p. 60) price-fixing agreement, usually illegal, by firms to charge a
part-time worker worker who regularly works fewer than uniform price for a product (p. 168)
35 hours per week (p. 216) price floor lowest legal price that can be charged for a
“pay-as-you-go” provision requirement that new spending product (p. 152)
proposals or tax cuts must be offset by reductions price index statistical series used to measure changes in the
elsewhere (p. 277) price level over time (p. 351)
payroll tax tax on wages and salaries to finance Social Secu- price level relative magnitude of prices at a given point in
rity and medicare costs (p. 233) time as measured by a price index (p. 389)
payroll withholding statement document attached to a primary market market in which only the original issuer
paycheck summarizing pay and deductions (p. 242) will repurchase a financial asset; government savings
payroll withholding system system that automatically deducts bonds, IRAs, small CDs (p. 326)
income taxes from paychecks on a regular basis (p. 232) prime rate best or lowest interest rate commercial banks
peak point in time when real GDP stops expanding and charge their customers (p. 427)
begins to decline (p. 376) primitive equilibrium first stage of economic development
pension regular allowance for someone who has worked a during which the economy is static (p. 528)
certain number of years, reached a certain age, or who has principal amount borrowed when getting a loan or issuing
suffered from an injury (p. 316) a bond (p. 64)
pension fund fund that collects and invests income until private enterprise economy see free enterprise economy
payments are made to eligible recipients (p. 316) (p. 24)
per capita per person basis; total divided by population private property rights fundamental feature of capitalism,
(p. 255) which allows individuals to own and control their posses-
perestroika fundamental restructuring of the Soviet econ- sions as they wish; includes both tangible and intangible
omy; policy introduced by Gorbachev (p. 499) property (p. 47)
perfect competition market structure characterized by a private sector that part of the economy made up of private
large number of well-informed independent buyers and individuals and businesses (p. 256)
sellers who exchange identical products (p. 164) privatization conversion of state-owned factories and other
personal income total amount of income going to the property to private ownership (p. 502)
consumer sector before individual income taxes are paid producer price index index used to measure prices
(p. 345) received by domestic producers; formerly called the
picket demonstration before a place of business to protest wholesale price index (p. 352)
a company™s actions (p. 195) product differentiation real or imagined differences
piecework compensation system that pays workers for units between competing products in the same industry
produced, rather than hours worked (p. 498) (p. 166)
pollution contamination of air, water, or soil by the dis- product market market where goods and services are
charge of a poisonous or noxious substance (p. 554) offered for sale (p. 14)
pollution permit federal permit allowing a public utility to production process of creating goods and services
release pollutants into the air; a form of pollution control with the combined use of land, capital, labor, and
(p. 556) entrepreneurship (p. 8)
population density number of people per square mile of production function graphic portrayal showing how a
land area (p. 536) change in the amount of a single variable input affects
population pyramid diagram showing the breakdown of total output (p. 123)
population by age and sex (p. 360) production possibilities frontier diagram representing
portfolio diversification strategy of holding several invest- maximum combinations of goods and/or services an
ments to protect against risk (p. 329) economy can produce when all productive resources
positive externality beneficial side effect that affects an are fully employed (p. 21)
uninvolved third party (p. 176) productivity degree to which productive resources are used
premium monthly, quarterly, semiannual, or annual price efficiently; normally refers to labor, but can apply to all
paid for an insurance policy (p. 315) factors of production (p. 15)

GLOSSARY A49
professional association saving
professional association nonprofit organization of profes-
sional or specialized workers seeking to improve working
conditions, skill levels, and public perceptions of its
profession (p. 77) ration coupon certificate allowing holder to receive a given
professional labor workers with a high level of professional amount of a rationed product (p. 139)
and managerial skills (p. 206) rationing system of allocating goods and services without
profit extent to which persons or organizations are better prices (p. 139)
off at the end of a period than they were at the beginning; raw materials unprocessed natural resources used in
usually measured in dollars (p. 48) production (p. 123)
profit-maximizing quantity of output level of produc- real dollars see constant dollars (p. 218)
tion where marginal cost is equal to marginal revenue real estate investment trust (REIT) company organized
(p. 131) to make loans to homebuilders (p. 316)
profit motive driving force that encourages people and real GDP Gross Domestic Product after adjustments for
organizations to improve their material well-being; charac- inflation; same as GDP in constant dollars (p. 353)
teristic of capitalism and free enterprise (p. 48) real GDP per capita Gross Domestic Product adjusted for
progressive tax tax where percentage of income paid in inflation and divided by the total population; total dollar
tax rises as level of income rises (p. 229) amount of all final output produced for every person in
property tax tax on tangible and intangible possessions the country after compensating for inflation (p. 363)
such as real estate, buildings, furniture, stocks, bonds, and real rate of interest the market rate of interest minus the
bank accounts (p. 241) rate of inflation (p. 428)
proportional tax tax in which percentage of income rebate partial refund of the original price of a product (p. 140)
paid in tax is the same regardless of the level of income recession decline in real GDP lasting at least two quarters
(p. 229) or more (p. 376)
proprietorship see sole proprietorship (p. 57) regressive tax tax where percentage of income paid in tax
protectionist person who would protect domestic produc- goes down as income rises (p. 229)
ers with tariffs, quotas, and other trade barriers Regulation Z provision extending truth-in-lending disclo-
(p. 474) sures to consumers (p. 411)
protective tariff tax on an imported product designed renewable resources natural resources that can be replen-
to protect less efficient domestic producers (p. 472) ished for future use (p. 366)
public disclosure requirement forcing a business to reveal reserve requirement formula used to compute the amount
information about its products or its operations to the of a depository institution™s required reserves (p. 415)
public (p. 181) revenue tariff tax placed on imported goods to raise
public good economic product that is consumed collec- revenue (p. 473)
tively; highways, national defense, police and fire right-to-work law state law making it illegal to require a
protection (p. 176) worker to join a union (p. 197)
public sector that part of the economy made up of the risk situation in which the outcome is not certain, but the
local, state, and federal governments (p. 255) probabilities can be estimated (p. 318)
public utility company providing essential services such Roth IRA individual retirement account in which contri-
as water and electricity to consumers, usually subject to butions are made after taxes so that no taxes are taken
some government regulations (p. 79) out at maturity (p. 325)
put option contract giving investors the option to sell run on the bank sudden rush by depositors to withdraw all
commodities, equities, or financial assets at a specific deposited funds, generally in anticipation of bank failure
future date using a price agreed upon today (p. 333) or closure (p. 301)
rural population those persons not living in urban areas
(p. 357)


quantity supplied amount offered for sale at a given price;
point on the supply curve (p. 115)
quantity theory of money hypothesis that the supply of S&P 500 see Standard & Poor™s 500 (p. 332)
money directly affects the price level over the long run sales tax general state or city tax levied on a product at the
(p. 427) time of sale (p. 226)
quota limit on the amount of a good that can be allowed saving absence of spending that frees resources for use in
into a country (p. 472) other activities or investments (p. 313)

A50 GLOSSARY
savings strike
savings the dollars that become available for investors to sin tax relatively high tax designed to raise revenue and dis-
use when others save (p. 313) courage consumption of a socially undesirable product
savings account interest-bearing deposit not requiring prior (p. 224)
notice before making a withdrawal (p. 417) skilled labor workers who can operate complex equipment
savings and loan association (S&L) depository institution and require little supervision (p. 206)
that historically invested the majority of its funds in home Social Security federal program of disability and retirement
mortgages (p. 303) benefits that covers most working people (p. 42)
savings bank publicly-held depository institution that com- socialism economic system in which government owns
petes with other banks for customer deposits (p. 303) some factors of production and has a role in determining
savings bond low-denomination, non-transferable bond what and how goods are produced (p. 492)
issued by the federal government, usually through payroll- soft loan loan that may never be paid back; usually involves
savings plans (p. 323) loan to developing countries (p. 535)
scarcity fundamental economic problem facing all societies sole proprietorship unincorporated business owned and
that results from a combination of scarce resources and run by a single person who has rights to all profits and
people™s virtually unlimited wants (p. 5) unlimited liability for all debts of the firm; most
seasonal unemployment unemployment caused by annual common form of business organization in the United
changes in the weather or other conditions that prevail at States (p. 57)
certain times of the year (p. 386) Solidarity independent Polish labor union founded in 1980
seat membership in a stock exchange such as the New York by Lech Walesa (p. 504)
Stock Exchange (p. 330) specialization assignment of tasks so that each worker per-
secondary market market in which all financial assets can forms fewer functions more frequently; same as division
be sold to someone other than the original issuer; corpo- of labor (p. 16)
rate bonds, government bonds (p. 326) specie money in the form of gold or silver coins (p. 288)
secondhand sales sales of used goods; category of activity spending cap limits on annual discretionary spending
not included in GDP computation (p. 343) (p. 278)
securities exchange physical place where buyers and sellers spot market market in which a transaction is made imme-
meet to exchange securities (p. 329) diately at the prevailing price (p. 332)
seizure temporary government takeover of a company stages of production phases of production”increasing,
to keep it running during a labor-management dispute decreasing, and negative returns (p. 125)
(p. 203) stagflation combination of stagnant economic growth and
selective credit controls rules pertaining to loans for specific inflation (p. 437)
commodities or purchases such as margin requirements Standard & Poor™s 500 (S&P 500) statistical series of 500
for common stock (p. 424) stocks used to monitor prices on the NYSE, American
semiskilled labor workers who can operate machines Stock Exchange, and OTC market (p. 332)
requiring a minimum amount of training (p. 206) standard of living quality of life based on ownership of
seniority length of time a person has been on a job necessities and luxuries that make life easier (p. 24, 365)
(p. 208) state bank bank that receives its charter from the state in
service work or labor performed for someone; economic which it operates (p. 293)
product that includes haircuts, home repairs, forms of state farm large farms owned and operated by the state in
entertainment (p. 13) the former Soviet Union (p. 497)
set-aside contract guaranteed contract or portion thereof stock certificate of ownership in a corporation; common or
reserved for a targeted, usually minority, group (p. 215) preferred stock (p. 63)
share draft account checking account offered by a credit stock certificate see stock (p. 63)
union (p. 303) stockbroker person who buys or sells securities for investors
shareholder see stockholder (p. 63) (p. 329)
short run production period so short that only variable stockholder person who owns a share or shares of stock in
inputs can be changed (p. 122) a corporation; same as shareholders (p. 63)
shortage situation where quantity supplied is less than store of value one of the three functions of money allowing
quantity demanded at a given price (p. 144) people to preserve value for future use (p. 286)
signaling theory theory that employers are willing to pay storming Soviet practice of rushing production at month™s
more for people with certificates, diplomas, degrees, and end to fulfill quotas, often resulting in production of
other indicators of superior ability (p. 208) shoddy goods (p. 498)
silver certificate paper currency backed by, and redeemable strike union organized work stoppage designed to gain
for, silver from 1886 to 1968 (p. 295) concessions from an employer (p. 195)

GLOSSARY A51
structural employment Treasury note
structural unemployment unemployment caused by a technological monopoly market situation where a firm has
fundamental change in the economy that reduces the a monopoly because it owns or controls a manufacturing
demand for some workers (p. 385) method, process, or other scientific advance (p. 170)
structures category in the national income and product technological unemployment unemployment caused by
accounts that includes residential structures, apartments, technological developments or automation that make
and commercial buildings (p. 341) some worker™s skills obsolete (p. 386)
subsidy government payment to encourage or protect a cer- theory of negotiated wages explanation of wage rates based
tain economic activity (p. 117) on the bargaining strength of organized labor (p. 208)
subsistence state in which a society produces barely theory of production theory dealing with the relationship
enough to support itself (p. 546) between the factors of production and the output of
substitutes competing products that can be used in place goods and services (p. 122)
of one another; products related in such a way that an thrift institution savings & loan associations, mutual sav-
increase in the price of one increases the demand for the ings banks, and other depository institutions historically
other (p. 98) catering to savers (p. 303)
substitution effect that portion of a change in quantity tight money policy monetary policy resulting in higher
demanded due to a change in the relative price of the interest rates and restricted access to credit; associated
product (p. 96) with a contraction of the money supply (p. 419)
supply schedule of quantities offered for sale at all possible time deposit interest-bearing deposit requiring prior notice
prices in a market (p. 113) before a withdrawal can be made, even though the
supply curve graphical representation of the quantities requirement may not always be enforced (p. 417)
produced at each and every possible price in the market total cost variable plus fixed cost; all costs associated with
(p. 114) production (p. 128)
supply elasticity responsiveness of quantity supplied to a total product total output or production by a firm (p. 123)
change in price (p. 118) total revenue total receipts; price of goods sold times quan-
supply schedule tabular listing showing the quantities pro- tity sold (p. 130)
duced or offered for sale at each and every possible price trade deficit balance of payments outcome when spending
in the market (p. 114) on imports exceeds revenues received from exports (p. 484)
supply-side economics economic policies designed to trade-offs alternatives that must be given up when one is
increase aggregate supply or shift the aggregate supply chosen rather than another (p. 19)
curve to the right (p. 451) trade surplus situation occurring when the value of a
surcharge additional tax or charge added to other charges nation™s exports exceeds the value of its imports (p. 484)
already in place (p. 245) trade union see craft union (p. 195)
surplus situation where quantity supplied is greater than trade-weighted value of the dollar index showing strength
quantity demanded at a given price (p. 144) of the United States dollar against a market basket of
other foreign currencies (p. 484)
traditional economy economic system in which the alloca-
tion of scarce resources and other economic activity is the
result of ritual, habit, or custom (p. 34)
takeoff third stage of economic development during which traditional theory of wage determination explanation
barriers of primitive equilibrium are overcome (p. 528) of wage rates relying on theory of supply and demand
target price agricultural floor price set by the government (p. 207)
to stabilize farm incomes (p. 153) transfer payment payment for which the government
tariff tax placed on an imported product (p. 472) receives neither goods nor services in return (p. 257)
tax assessor person who examines and values property for transparency making business dealings more visible to
tax purposes (p. 241) everyone, especially government regulators (p. 512)
tax base incomes and properties that are potentially subject Treasury bill short-term United States government obliga-
to tax by local, state, or federal governments (p. 366) tion with a maturity of one year or under in denomina-
tax-exempt income from a bond or other investment not tions of $10,000 (p. 324)
subject to tax by federal or state governments (p. 323) Treasury bond United States government bond with matu-
tax loophole exception or oversight in the tax law allowing rity of 10 to 30 years (p. 324)
taxpayer to avoid taxes (p. 226) Treasury coin note paper currency printed from 1890 to
tax return annual report filed with local, state, or federal 1893, redeemable in both gold and silver (p. 296)
government detailing income earned and taxes owed Treasury note United States government obligation with
(p. 232) a maturity of 2 to 10 years (p. 324)

A52 GLOSSARY
trend line zero population growth
trend line growth path the economy would follow if it
were not interrupted by alternating periods of recession
and recovery (p. 376)
trough point in time when real GDP stops declining and value worth of a good or service as determined by the
begins to expand (p. 376) market (p. 13)
trust illegal combination of corporations or companies value-added tax tax on the value added at every stage of
organized to hinder competition (p. 178) the production process (p. 246)
trust fund special account used to hold revenues designated variable cost production cost that varies as output changes;
for a specific expenditure such as Social Security, medicare, labor, energy, raw materials (p. 128)
or highways (p. 275) vertical merger combination of firms involved in different
two-tier wage system wage scale paying newer workers a steps of manufacturing or marketing (p. 71)
lower wage than others already on the job (p. 212) voluntary arbitration see arbitration (p. 202)
voluntary exchange act of buyers and sellers freely and
willingly engaging in market transactions; characteristic
of capitalism and free enterprise (p. 47)

underground economy unreported legal and illegal activi-
ties that do not show up in GDP statistics (p. 343)
unemployed state of working for less than one hour per
week for pay or profit in a non-family owned business, wage-price controls policies and regulations making it ille-
while being available and having made an effort to find gal for firms to give raises or raise prices (p. 454)
a job during the past month (p. 382) wage rate prevailing pay scale for work performed in a
unemployment insurance government program providing given area or region (p. 207)
payments to the unemployed; an automatic stabilizer want way of expressing or communicating a need; a
(p. 449) broader classification than needs (p. 6)
unemployment rate ratio of unemployed individuals wealth sum of tangible economic goods that are scarce, use-
divided by total number of persons in the civilian labor ful, and transferable from one person to another; excludes
force, expressed as a percentage (p. 383) services (p. 14)
union shop arrangement under which workers must join a welfare government or private agency programs that pro-
union after being hired (p. 201) vide general economic and social assistance to needy
unit elastic elasticity where a change in the independent individuals (p. 397)
variable (usually price) generates a proportional change of wholesale price index see producer price index (p. 352)
the dependent variable (quantity demanded or supplied) workfare program requiring welfare recipients to provide
(p. 103) labor in exchange for benefits (p. 398)
United States note paper currency with no backing, first World Bank international agency that makes loans to
printed by the United States government in 1862 to developing countries; formally the International Bank
finance the Civil War (p. 295) for Reconstruction and Development (p. 526)
unlimited liability requirement that an owner is personally World Trade Organization (WTO) international agency
and fully responsible for all losses and debts of a business; that administers trade agreements, settles trade disputes
applies to proprietorships, general partnerships (p. 58) between governments, organizes trade negotiations, and
unrelated individual person living alone or with nonrela- provides technical assistance and training for developing
tives even though that person may have relatives living countries (p. 477)
elsewhere (p. 346)
unskilled labor workers not trained to operate specialized
machines and equipment (p. 205)
urban population those persons living in incorporated
cities, towns, and villages with 2,500 or more inhabitants zero population growth condition in which the average
(p. 357) number of births and deaths balance so that population
user fee fee paid for the use of good or service; form of a size is unchanged (p. 524)
benefit tax (p. 236)
utility ability or capacity of a good or service to be useful
and give satisfaction to someone (p. 13)




GLOSSARY A53
Think about your textbook as a tool that helps you learn more about the world
around you. It is an example of nonfiction writing”it describes real-life events,
people, ideas, and places. Here is a menu of reading strategies that will help you
become a better textbook reader. As you come to passages in your textbook that
you don™t understand, refer to these reading strategies for help.





Set a Purpose
• Why are you reading the textbook?
• How does the subject relate to your life?
• How might you be able to use what you learn in your own life?

Preview
• Read the chapter title to find what the topic will be.
• Read the subtitles to see what you will learn about the topic.
• Skim the photos, charts, graphs, or maps. How do they support the
topic?
• Look for vocabulary words that are boldfaced. How are they defined?

Draw From Your Own Background
• What have you read or heard about concerning new information on
the topic?
• How is the new information different
from what you already know?
• How will the information that
you already know help you understand the new
information?




xxvi READING FOR INFORMATION

Question LOOK FOR CLUES
• What is the main idea?
AS YOU READ
• How do the photos, charts, graphs,
and maps support the main idea? • Comparison-and-Contrast
Sentences:
Connect
• Think about people, places, and Look for clue words and phrases that
events in your own life. Are there signal comparison, such as similarly,
any similarities with those in your just as, both, in common, also, and
textbook? too.
• Can you relate the textbook informa-
Look for clue words and phrases that
tion to other areas of your life?
signal contrast, such as on the other
Predict hand, in contrast to, however, differ-
• Predict events or outcomes by using ent, instead of, rather than, but, and
clues and information that you unlike.
already know.
• Cause-and-Effect Sentences:
• Change your predictions as you read
and gather new information. Look for clue words and phrases such
Visualize as because, as a result, therefore, that
• Pay careful attention to details and is why, since, so, for this reason, and
descriptions. consequently.
• Create graphic organizers to show
• Chronological Sentences:
relationships that you find in the
information. Look for clue words and phrases such
as after, before, first, next, last, during,
finally, earlier, later, since, and then.





Summarize
• Describe the main idea and how the details support it.
• Use your own words to explain what you have read.
Assess
• What was the main idea?
• Did the text clearly support the main idea?
• Did you learn anything new from the material?
• Can you use this new information in other school subjects or at home?
• What other sources could you use to find more information about the topic?


READING FOR INFORMATION xxvii
Cover i Aaron Haupt; iv Mark Segal/Tony Stone Images; vi Pat O™Hara/Tony Stone Images; Gupton/Tony Stone Images; 196 CORBIS; 198 FPG; 199 Hazel Hankin/Stock Boston; 200
vii (l)Mark Segal/Tony Stone Images, (r)Michael Paras/International Stock; viii (Lucas)James Ezra O. Shaw/AllSport; 202 John Feingersh/The Stock Market; 203 Rob Crandall/Stock
Wilson/Woodfin Camp & Associates, (Qui-Gon Jinn & Darth Maul)Evan Agonstini/Liaison Boston; 204 (Chavez)Tim Kelly/Black Star, (coal)Larry Mayer/Liaison Agency, (farm
Agency, (Star Wars logo)Liaison Agency, (stars bkgd)Kim Westerskov/Tony Stone Images, worker)Mark Richards/PhotoEdit, (grapes”t)Eric Sander/Liaison Agency, (grapes”br)Andrew
(Stock Exchange)John Riley/Tony Stone Images, (Stormtroopers & Boba Fett)Michael Klapatiuk/Liaison Agency, (Lewis)FPG, (miner)Hulton Getty/Tony Stone Images,
Newman/PhotoEdit, (Winfrey)Mitchell Gerber/CORBIS; ix (t)Wesley Boxce/Photo (tools)William Whitehurst/The Stock Market; 205 Ron Chapple/FPG; 210 (t)Pat
Researchers, (b)Orde Eliason/Link Picture Library; x Rob Lewine/The Stock Market; xi (tl)Jose O™Hara/Tony Stone Images, (b)Michael Newman/PhotoEdit; 211 Sam Sargent/Liaison
Peleaz/The Stock Market, (tr)Bob Daemmrich/Tony Stone Images, (br)Mark Burnett; xvi“xxv Agency; 219 Ron Chapple/FPG; 221 Reprinted by permission”Atlantic Feature Syndicate;
Illustration by Guy Crittendon; xxvi StudiOhio; 2 SuperStock; 4 Bruce Forster/Tony Stone 222 Elizabeth Simpson/FPG; 223 Zigy Kaluzny/Tony Stone Images; 227 (l)Roy Morsch/The
Images; 5 Jose Pelaez/The Stock Market; 7 Tom & Dee Ann McCarthy/The Stock Market; 8 Stock Market, (r)Richard Hutchings/PhotoEdit; 230 Terry Vine/Tony Stone Images; 231
(cl)Lester Lefkowitz/The Stock Market; 8 (l)Kirk Anderson/International Stock, (cr)Charlie Christie™s Images; 235 Bob Daemmrich/Tony Stone Images; 237 (bkgd)Brian Allen/The Stock
Westerman/International Stock, (r)George Ancona/International Stock; 11 (t)Alexis Market, (Federal Reserve)John Neubauer/PhotoEdit, (Rivlin)Terry Ashe/Liaison Agency, (Yellen
Duclos/Liaison Agency, (b)Steven Peters/Tony Stone Images; 12 Scottish National Portrait notes)Amanita Pictures, (Yellen)Diana Walker/Liaision Agency; 238 Steve Elmore/The Stock
Gallery, Edinburgh, Scotland/Bridgeman Art Library,New York/London; 14 Gerald Market; 243 (t)John Mellott/Uniphoto Pictor, (b)Arthur Holeman/International Stock; 244
French/FPG; 18 (l)Art Resource, NY, (tr)North Wind Picture Archive, (br)North Wind Picture Bob Daemmrich/Tony Stone Images; 245 THE BORN LOSER reprinted by permission of
Archive; 19 Don Smetzer/Tony Stone Images; 21 By permission of Johnny Hart and Creators Newspaper Enterprise Association, Inc.; 249 Jim Craigmyle/Masterfile; 251 Richard
Syndicate, Inc.; 22 Ross Harrison Koty/Tony Stone Images; 24 Jose Peleaz/The Stock Market; Hutchings/PhotoEdit; 254 Chad Ehlers/Tony Stone Images; 255 Photoworld/FPG; 259
26 Phil Degginger/Tony Stone Images; 27 (l)Kirk Anderson/International Stock, (r)Charlie David Young-Wolff/Tony Stone Images; 260 Terry Ashe/Liaison Agency; 265 Keith
Westerman/International Stock; 30 Mark Burnett; 31 Aaron Haupt; 32 Joseph Nettis/Tony Wood/Tony Stone Images; 266 (tl)Randy Masser/International Stock, (tr)Hulton-Getty/Tony
Stone Images; 33 Milind Ketkar/Dinodia Picture Agency; 34 Margaret Gowan/Tony Stone Stone Images, (bl)Hulton-Getty/Tony Stone Images, (br)New York Times Co./Archive Photos;
Images; 37 Robert S. Semeniuk/The Stock Market; 40 John Lamb/Tony Stone Images; 41 267 Vladimir Pcholkin/FPG; 268 Robert Frerck/Woodfin Camp & Associates; 270 Bill
David Young-Wolff/Tony Stone Images; 42 Steven Peters/Tony Stone Images; 43 Tom Tucker/International Stock; 271 (t)Stephen Simpson/FPG, (b)Richard Laird/FPG; 272 Richard
Uhlman/Liaison Agency; 45 Michael Paras/International Stock; 46 Underwood & Hutchings/Photo Researchers; 276 Tribune Media Services, Inc. All Rights Reserved. Reprinted
Underwood/CORBIS; 48 Chuck Savage/The Stock Market; 49 (l)Cynthia Johnson/Liaison with permission; 279 (l)David Young-Wolff/Tony Stone Images, (r)Richard Hutchings/Photo
Agency, (r)Bob Daemmrich/Tony Stone Images; 50 Alan Levenson/Tony Stone Images; 52 Researchers; 283 (t)Robert Shafer/Tony Stone Images, (b)Telegraph Colour Library/FPG; 284
(castle)Dallas & John Heaton/Stock Boston, (Disney)Y. Karsh/Woodfin Camp & Associates, International Stock; 285 Hulton Getty/Tony Stone Images; 286 Chuck O™Rear/Woodfin
(Lucas)James Wilson/Woodfin Camp & Associates, (Qui-Gon Jinn & Darth Maul)Evan Camp & Associates; 287 Michael Newman/PhotoEdit; 288 Reprinted by permission News
Agostini/Liaison Agency, (Snow White & Dopey)Bill Bachmann/PhotoEdit, (stars bkgd)Kim America Syndicate; 289 Michael J. Howell/International Stock, (br)file photo; 291 Mark
Westerskov/Tony Stone Images, (Star Wars logo)Liaison Agency, (Stormtroopers & Boba Burnett, (Mohajer)courtesy Hard Candy; 292 William Whitehurst/The Stock Market; 293
Fett)Michael Newman/PhotoEdit; 53 (t)Michael Paras/International Stock, (b)Steven Amanita Pictures; 294 Geoff Butler; 299 Aaron Haupt; 300 Georgina Bowater/The Stock
Peters/Tony Stone Images; 56 Andy Sacks/Tony Stone Images; 57 Michael Nelson/FPG; 59 60 Market; 301 (l)John Elk III/Stock Boston, (r)Doug Armand/Tony Stone Images; 304 David
Bob Daemmrich/Stock Boston; 61 Geoff Butler; 62 Dick Luria/FPG; 63 file photo; 65 Peter Young-Wolff/PhotoEdit; 306 (t)Rob Crandall/The Image Works, (b)Tony Freeman/PhotoEdit;
Langone/International Stock; 67 (bkgd)Mark Burnett, (l)Amilcar/Liaison Agency, (c)Phil 307 Doug Armand/Tony Stone Images; 311 Aaron Haupt; 312 Nadia MacKenzie/Tony Stone
Schermeister/Tony Stone Images, (tr)David Young-Wolff/PhotoEdit; 68 Zigy Kaluzny/Tony Images; 313 SuperStock; 317 (bkgd”Hayes)Alan Schein/The Stock Market, (bkgd”
Stone Images; 72 Aaron Haupt; 73 C.R. Rathe/FPG; 74 Bojan Brecelj/CORBIS; 75 George Lewis)Robert Brenner/PhotoEdit, (dress)A. Benainous/Liaison Agency, (Hayes)Larry Lazlo,
Ancona/International Stock; 77 David Young-Wolff/PhotoEdit; 79 Bob Daemmrich/Tony courtesy Janus, (Lewis)Liaison Agency, (stock-Hayes bkgd)file photo, (stock-tl)Cobalt
Stone Images; 80 Rob Lewine/The Stock Market; 81 (l)Michael Nelson/FPG, (r)Zigy Productions; 318 David Young-Wolff/Tony Stone Images; 324 William Taufic/The Stock
Kaluzny/Tony Stone Images; 85 VCG/FPG; 86 Mark Segal/Tony Stone Images; 88 Mark Market; 326 Courtesy Harley L. Schwadron; 327 Wolfgang Spunburg/PhotoEdit; 328 Geoff
Richards/PhotoEdit; 89 Mark Burnett; 91 Powerstock/Zefa/Index Stock; 94 (bkgd)John Butler; 332 From The Wall Street Journal”Permission, Cartoon Features Syndicate; 334 Tim
Riley/Tony Stone Images, (Winfrey”bl)Mitchell Gerber/CORBIS; 95 Mark Burnett; 97 Joseph Flach/Tony Stone Images; 335 (l)David Young-Wolff/Tony Stone Images, (r)William
Pobereskin/Tony Stone Images; 100 (t)David Wade/FPG, (b)David Travers/The Stock Market; Taufic/The Stock Market; 338 Chad Ehlers/International Stock; 340 John Madere/The Stock
101 Mark Burnett; 104 Karen Moskowitz/Corbis Outline; 108 Mark Ferri/The Stock Market; Market; 341 Larry Dale Gordon/The Image Bank; 343 Tribune Media Services, Inc. All Rights
109 Mark Burnett; 112 Bohdan Hrynewych/Stock Boston; 113 Geoff Butler; 116 Michael Reserved. Reprinted with permission; 350 Ed Bock/The Stock Market; 354 From The Wall Street
Busselle/Tony Stone Images; 118 Jeff Isaac Greenberg/Photo Researchers; 120 Courtesy Journal”Permission, Cartoon Features Syndicate; 355 (Alvarado)courtesy Alvarado
Sidney Harris; 121 (candy)Steven Needham/Envision, (catalog)Bettmann/CORBIS, Construction, (bkgd)William R. Sallaz/Duomo, (tools)Don Mason/The Stock Market; 356
(Hershey)Bettmann/CORBIS, (Johnson)Johnathan Kirn/Liaison Agency, (magazine)Cynthia Ben Simmons/The Stock Market; 358 Michelle Bridwell/PhotoEdit; 362 (t)Elliot Varner
Johnson/Liaison Agency, (watch)Mark Harwood/Tony Stone Images; 122 Phil Smith/International Stock, (b)Stan-Pak/International Stock; 363 Bruce Rogovin/Tony Stone
Hunt/Masterfile; 123 Ulrike Welsch/PhotoEdit; 126 (l)Jose Pelaez/The Stock Market, (r)Mark Images; 369 Michelle Bridwell/PhotoEdit; 372 Mark Segal/Tony Stone Images; 373 Aaron
Burnett; 127 Robert W. Slack/International Stock; 132 Donald C. Johnson/The Stock Market; Haupt; 374 Terry Qing/FPG; 375 Sandra Baker/Tony Stone Images; 381 (Lewis)courtesy
133 Ulrike Welsch/PhotoEdit; 136 Geoff Butler; 137 Doug Pensinger/Allsport; 139 Ford George Mason University, (students”bkgd)Beatriz Schiller/International Stock, (students”
Motor Co./FPG; 141 (Becker)Springer-Liaison/Liaison Agency, (bills”tl)Larry Gilpin/Tony tr)Ulrike Welsch/PhotoEdit, (bills)Doug Martin; 382 Gabe Palmer/The Stock Market; 384
Stone Images, (bills”br)Uli Degwert/International Stock, (coins”bkgd)Matthew Michael Keller/The Stock Market; 386 From The Wall Street Journal”Permission, Cartoon
Borkoski/Stock Boston, (coins”tr)Walter Schmid/Tony Stone Images, (Friedman)Chuck Features Syndicate; 388 (t)Mitch Kezar/Tony Stone Images, (b)William Taufic/The Stock
Nacke/Woodfin Camp & Associates; 142 J. Bourg/Liaison Agency; 144 David Young- Market 389 Don Smetzer/Tony Stone Images; 393 Geoff Butler; 394 Laima Druskis/Stock
Wolff/PhotoEdit; 149 Bob Daemmrich/Stock Boston; 150 Chad Slattery/Tony Stone Images; Boston; 398 Paul Barton/The Stock Market; 401 Sandra Baker/Tony Stone Images; 404 John
152 Chuck Savage/The Stock Market; 153 Jeff Greenberg/PhotoEdit; 156 Charles Henley/The Stock Market; 406 P. Aventurier/Liaison Agency; 407 Liaison Agency; 409 Terry
Gupton/Tony Stone Images; 157 Bob Daemmrich/Stock Boston; 161 Aaron Haupt; 162 Ashe/Liaison Agency, (br)Louis Psihoyos/Matrix; 410 By permission of Johnny Hart and
Berenholz/The Stock Market; 163 Geoff Butler; 164 Paul Chesley/Tony Stone Images; 166 Creators Syndicate, Inc.; 411 From The Wall Street Journal”Permission, Cartoon Features
Bob Daemmrich/Tony Stone Images; 168 Courtesy Bozell Worldwide; 170 CALVIN AND Syndicate; 414 (tr)Jeffery Titcomb/Liaison Agency, (bl)Christoph Wilhelm/FPG,
HOBBES ©1992 Watterson. Reprinted with permisson of UNIVERSAL PRESS (Greenspan)Steffen Casteel/FPG; 415 Tony Freeman/PhotoEdit; 418 Jon Feingersh/The Stock
SYNDICATE. All rights reserved.; 171 Barbara Leslie/FPG; 172 (t)Yann Layma/Tony Stone Market; 422 ©1999 Bill Ammend. Distributed by Universal Press Syndicate; 424 Topham/The
Images, (l)Claudio Edinger/Liaison Agency, (br)Milind Ketkar/Dinodia Picture Agency; 173 Image Works; 425 (t)Chuck Savage/The Stock Market, (b)David Young-Wolff/PhotoEdit 426
Larry Williams/Masterfile; 175 Etienne de Malglaive/Liaison Agency; 177 (t)Hiroyuki Carlos Spaventa/FPG; 429 Greg Pease/Tony Stone Images; 431 Mike Thompson, The State
Matsumoto/Tony Stone Images, (b)Berenholtz/The Stock Market; 178 Evan Agostini/Liaison Journal Register, Copley News Service; 432 Bruce Ayres/Tony Stone Images; 433 (l)Liaison
Agency; 182 King Features Syndicate. All rights reserved; 184 Phil Schofield/Tony Stone Agency, (r)Chuck Savage/The Stock Market; 436 International Stock; 437 Richard Laird/FPG;
Images; 185 (l)Paul Chesley/Tony Stone Images, (r)Etienne de Malglaive/Liaison Agency; 188 440 Jon Riley/Tony Stone Images; 441 Victor Ramos/International Stock; 442 Bruce
Don Smetzer/Tony Stone Images; 189 David Young-Wolff/Tony Stone Images; 190 Ralph Forster/Tony Stone Images; 446 (tl)Lester Lefkowitz/The Stock Market, (tr)Aaron Haupt,
Mercer/Tony Stone Images; 192 Bryan F. Peterson/The Stock Market; 193 Charles (bills”bkgd)Larry Gilpin/Tony Stone Images, (Du Pont)Bettmann/CORBIS, (Heinz)Bettmann/



A106 ACKNOWLEDGMENTS
CORBIS; 447 Mark Reinstein/FPG; 448 Bob Daemmrich/Uniphoto Pictor; 455 (l)Brian Ball/The Stock Market; 509 Frank Wing/Stock Boston; 510 Fujifotos/The Image Works; 513
Bhar/AllSport, (r)Jonathan Daniel/AllSport; 456 Bob Daemmrich/Tony Stone Images; 457 Chad Ehlers/Tony Stone Images; 515 David Ball/The Stock Market; 519 Aaron Haupt; 520
Jiang Jin/SuperStock; 459 Tribune Media Services, Inc. All Rights Reserved. Reprinted with Keren Su/Tony Stone Images; 521 Sean Sprague/Stock Boston; 525 Bernard Pierre
permission; 461 (l)Richard Laird/FPG, (r)Mark Reinstein/FPG; 464 John Zoiner/International Wolff/Photo Researchers; 527 (Lewis)courtesy Princeton University, (market)Bruno De
Stock; 466 Peter Christopher/Masterfile; 467 Roger M. Smith/International Stock; 471 Hogues/Tony Stone Images, (school)Thomas W. Friedmann/Photo Researchers; 528 Bruno De
(br)Michael Grecco/Stock Boston, (Microsoft campus aerial)Brunner Burke/Tony Stone Hogues/Tony Stone Images; 529 John Olson/The Stock Market; 531 John Moss/Photo
Images, (Gates)Mark Richards/PhotoEdit, (mouse)Jim Cummins/FPG, (Public Market & Sapce Researchers; 532 Milind Ketkar/Dinodia Picture Agency; 533 John V. Cotter/D. Donne
Needle)Ron Chapple/FPG, (Windows logo)R. Ramirez/PhotoEdit; 472 Steven Bryant Stock Photo; 535 Simon Jauncy/Tony Stone Images; 537 Mark Segal/Tony Stone
Needham/Envision; 473 James Wilson/Woodfin Camp & Associates; 475 Gary Payne/Liaison Images; 538 Alan Oddie/PhotoEdit; 539 (l)Bernard Pierre Wolff/Photo Researchers, (r)Mark
Agency; 477 Joseph Nettis/Stock Boston; 480 Douglas Engle/Liaison Agency; 481 George Segal/Tony Stone Images; 542 Orde Eliason/Link Picture Library; 543 Wesley Bocxe/Photo
Hunter/Tony Stone Images; 484 Michael Newman/PhotoEdit; 485 Andy Hernandez/Liaison Researchers; 544 John Mead/Science Photo Library/Photo Researchers; 545 Wesley
Agency; 486 Robert Brenner/PhotoEdit; 487 (l)James Wilson/Woodfin Camp & Associates, Boxce/Photo Researchers; 548 Hans Peter Merten/Tony Stone Images; 551 (crops)Gregg
(r)Michael Newman/PhotoEdit; 490 Domenico Ruzza/Envision; 492 Courtesy Electrolux IT Mancuso/Stock Boston, (crowd)VCG/FPG, (Malthus)Hulton Getty/Tony Stone Images; 552
Solutions AB; 495 David Young-Wolff/PhotoEdit; 496 Liaison Agency; 498 Bob Ruth Dixon/Stock Boston; 553 Simon Fraser/Science Photo Library/Photo Researchers; 554
Daemmrich/Tony Stone Images; 500 (t)Tony Stone Images, (br)Tony Stone Images, Ryan Williams/International Stock; 555 Phil Borden/PhotoEdit; 557 (t)James Balong/Tony
(Manifesto)Mark Burnett, (Marx)AKG London; 501 Chuck Nacke/Woodfin Camp & Stone Images, (b)Peter Menzel/Stock Boston; 559 Glen Allison/Tony Stone Images; 561
Associates; 504 Robert Frerck/Woodfin Camp & Associates; 505 Jose Pelaez/The Stock Roberto Arakaki/International Stock; 562 Michael Scott/Tony Stone Images; 563 (l)Ryan
Market; 506 (t)Paul S. Howell/Liaison Agency, (b)Jason P. Howe/South American Pictures; Williams/International Stock, (r)James Balong/Tony Stone Images; A34 Uli Degwert/
507 D.E. Cox/Tony Stone Images; 508 (t)Andrew Holbrooke/The Stock Market, (b)David International Stock.




ACKNOWLEDGMENTS A107
ability and income inequality benefit principle
The following abbreviations are fig399; growth of real per capita Association of Southeast Asian
used in the index: crt = cartoon; personal income, fig399 Nations (ASEAN), 535
fig = figure, chart, graph; m = map; Alaska, as right-to-work law state, Atlanta, growth in population of,
p = photograph; q = quote m201; per capita personal income, 356, p356
fig399; growth of real per capita AT&T, 70, 84
personal income, fig399 automatic stabilizers, 449“50
Albertson™s, 68 automation, 386
allocations without prices, 139“40 automobile industry: parts produc-
ability and income inequality, 396 alternative minimum tax, 245 tion in, p349; specialization in, 16
ability-to-pay principle, 228“29, fig228, Alvarado, Linda, 355, p355 average per capita personal income,
p227 Alvarado Construction Company, 355 fig399
absolute advantage, 469, fig469 Amazon.com, 104“5, 163, 168 average tax rate, 229
accelerator, 448“49 American Bar Association (ABA), 77
acid rain, 554 American Express, 67, 202
actuary as career, 429 American Federation of Labor
advertising, truth in, 182, crt182 (AFL), 198
affirmative action, 381 American Federation of Labor and baby boom, 361
Africa: stabilizing efforts in, 452; trade Congress of Industrial Organiza- baby-sitting co-ops, 75
routes in, 102 tions (AFL-CIO), 77, 198 balanced budget, 273
African American population, 361; American Medical Association Balanced Budget Agreement (1997),
projections through 2050, fig360 (AMA), 77 278
age: distribution of population by, American Stock Exchange (AMEX), balanced budget amendment, 267
fig358; population projections 330 Balanced Budget and Emergency
by, fig359 American Stores Co., 68 Deficit Control Act (1985), 277
agency shops, 201“2 Americans with Disabilities Act balance of payments, 478
aggregate demand, 444“45; and fiscal (1990), 210 balance sheet, 416, fig417
policy, 451, fig449 analysis, 9“10; cost-benefit, 19, 24, Bankers Trust Corporation, 84
aggregate demand curve, 444“45, 560; economic, 9“10, 141; marginal, bank holding companies, 410
fig444; and fiscal policy, fig449 131, 560, fig128 bank holiday, 301, 376
aggregate supply, 442“43; and supply- antipoverty programs: enterprise zones, banking: abuses in, 293; crisis and
side policies, 453, fig452; see also 398; general assistance, 397“98; reform in 1980s, 303“5; during
Gross Domestic Product (GDP) income assistance, 397; negative Great Depression, 301; Internet,
aggregate supply curve, 443, fig443 income tax, 400; social service, 398; 300; revising system of, 300
agriculture: and bioinvasion, 557; and tax credits, 398; workfare, 398 Banking Act (1933), 301
biotechnology, 550; collective farms antitrust legislation, 178“79, 196, fig179 bankruptcy, 62
in, 497“98; deficiency payments in, antiunion legislation, 197“98 banks: central, 301; commercial, 303,
153“54, fig154; factors affecting aquifers, 550 413; dealing with failed, 305;
price changes in, fig146; genetically- arbitration, 202 disclosure regulations for, 181;
modified crops in, 524; land in, Argentina, capitalism in, 506 Federal Reserve District, 409; frac-
550; loan supports in, 153, fig154; Arizona, as right-to-work law state, tional reserves for, 415“16; mem-
price supports in, 150, 153“55, 258, m201; per capita personal income, ber, 407“9; mergers of, 411, 425,
fig154; in Soviet Union, 497“98; fig399; growth of real per capita crt411; national, 295, 408, fig302;
specialization in, 16 personal income, fig399 operation of, 416“17; organizing,
Agriculture, U.S. Department of, Arkansas, as right-to-work law state, 416; state, 293, 296, 410, fig302
Commodity Credit Corporation m201; per capita personal income, bank teller as career, 304
in, 153“54 fig399; growth of real per capita Barnesandnoble.com, 163, 168
Aid to Families with Dependent personal income, fig399 barter, 377
Children (AFDC), 397, 458 Armey, Dick, 249“50 barter economy, 285, crt288
air traffic controllers, firing of arms supply, 467 base year, 218, 351
striking, 203 Ash, Mary Kay, 49 bear market, 332
AirTran Holdings Corporation, 70 Asian American population, 361; Becker, Gary, 141, 205, p141
AirWays, 70 projections through 2050, fig360 behavior: effect of taxes on, 224“25;
Alabama, as right-to-work law state, assets, 416; financial, 314, 320, 325“26, interdependent, 168; pricing, 168
m201; per capita personal income, fig325 benefit principle, 227“28

INDEX A91
Better Business Bureau collective farms
Better Business Bureau, 78 business regulation, 66 cash flows: defined, 69; estimating,
Bezos, Jeff, 104“5, p104 buyer as career, 73 68“69; reinvesting, 69
bill consolidation loans, 315 cause and effect, 108
billing, electronic, 306 cease and desist order, 179
bioinvasion, 557 Celebrity Cruise Lines, 70
biomass, 549 census, 356“57, 358; decennial, 357
biotechnology, 550 California, as right-to-work law state, Census Bureau, 346, 357, 358, 360, 396
black market, 505 m201; per capita personal income, center of population, 357
Black Tuesday, 376 fig399; growth of real per capita central bank, 301
Bloom, Sabina, 350 personal income, fig399 central planning, complexities of, 497
Boeing-McDonnell Douglas, 84 call option, 333 certificates of deposit, 314, 322
Boldin, Michael, 375 Canada, market economy in, 36 chamber of commerce, 78
bonds, 64; Brady, 534; classifications, capital: as factor of production, 7“8, change: in demand, 96“99, 147, fig98,
322, fig322; components, 321; cor- 10; flight of, as obstacle to eco- fig147; in expectations, 98“99; in
porate, 322“23; as financial assets, 320; nomic development, 525; forma- quantity demanded, 95, fig96; in
government savings, 323“24; inter- tion of, and saving, 313“14; quantity supplied, 115, fig114; in
national, 498, 512; municipal, 323; human, 16“17; influence on supply, 116, 146“47, fig117, fig147
prices, 321; ratings, 321“22; yield, 321 economic growth, 367 charter, 63
Borders.com, 163, 168 capital expenditures, 378 Chase Manhattan corporation, 69
bottom line, 69 capital gains, 246 Chavez, Cesar, 204
Boulding, Kenneth, 558 capital goods, 12“13 check, clearing, 412, fig412
boycott, 195 capital-intensive industries, 510 Chenault, Kenneth I., 67, p67
Brady bonds, 534 capitalism, 46, 491, fig47; advantages Chernobyl, 548
branding, global, 74 of, 492; defined, 492; disadvantages child labor, 197, 542“43, p542, p543
break-even point, 131, fig128 of, 492; discipline of, 503; and eco- Chile, capitalism in, 506
Breedlove, Sarah, 46 nomic freedom, 46“51, fig47, p48, China, People™s Republic of: as com-
Bright, Christopher J., 557 p49, p50; in Hong Kong, 512; in mand economy, 35, 506“7, p507;
British East India Company, 85 Japan, 509“12, p510; in Singapore, Internet in, 508; marketing in, 167;
British Petroleum, 72 513; in South Korea, 513; in Swe- as most favored nation, 478
budget; See federal budget den, 513“14, p513; in Taiwan, 513; Chirac, Jacques, 528
budget analyst as career, 268 teaching, in Russia, 35; transition Chrysler Corporation, 84
Budget Enforcement Act (1990), 277 to, 501“7; triumph of, 560“61, circular flow of economic activity,
bull market, 332 p561; See also market economy 14, 346, fig15, fig347
Bureau of Labor Statistics, 383 Capitalism and Freedom (Friedman), citizenship, economics for, 25
Burger King, 168 141 civic organizations, 75“76
Bush, George, 458; and the economy, capital markets, 325 civilian labor force, 193
344; in election of 1992, 439; and capital-to-labor ratio, 367 Civil Rights Act (1964), 215; Title VII
taxes, 231; and trade barriers, 473 card catalogs, 230 of, 215
business associations, 78, p79 careers: actuary, 429; bank teller, 304; Clayton Antitrust Act (1914), 179, 196
business cycles, 24; cause of, 378“79; budget analyst, 268; buyer, 73; credit Clinkscales, Keith, 89, 90
defined, 375, 378; phases of, 376, manager, 457; economist, 24; labor Clinton, Bill, 458; and the economy,
fig376; predicting, 379“80; since relations specialist, 202; law enforce- 344; election of, 231, 439; and
World War II, 378, fig379; in United ment officer, 49; market researcher, labor relations, 203; and minimum
States, 375“78 166; Peace Corps volunteer, 529; wage, 41
business development, 66 public accountant, 249; real estate closed shops, 200“201
business fluctuations, 375 agent, 117; region planners, 398; coal, 547“48
business growth: and multinationals, sales clerk, 152; sociologist, 484; Coca-Cola Company, 167, 177
72“73; through mergers, 69“70; statistician, 97; stockbroker, 324; coins: maintaining, 413; new Saca-
through reinvestment, 68“69, fig69 urban planners, 398 gawea, 407, 413, p407; See also
business inventories, 59 Carlquist, Stephan, 491, p491 currency
business organization: comparison of, Carroll, Christopher D., 327 Coke, 168
57, fig58; corporations, 62“65, fig65, cartels, 536, 553 collateral, 511
p63, p64; partnerships, 60“62, p63; Carter, Jimmy, and size of govern- collective bargaining, 77, 202“3
sole proprietorships, 57“59, p59 ment, 452 collective farms, 497“98

A92 INDEX
collectivization deflation
collectivization, 497 Congress of Industrial Organizations crime and economic instability, 440
college, creative financing for, 271 (CIO), 198 critical thinking skills: distinguishing
collusion, 168 Connecticut, as right-to-work law fact from opinion as, 334; drawing
Colorado, as right-to-work law state, state, m201; per capita personal inferences and conclusions as, 486,
m201; per capita personal income, income, fig399; growth of real per p486; evaluating primary and
fig399; growth of real per capita capita personal income, fig399 secondary sources as, 199; finding
personal income, fig399 constant dollars, 218 main idea as, 184; making com-
command economies, 35“36, 491, Consumer Advisory Council, 410 parisons as, 40; making general-
p37; advantages, 35“36; disadvan- Consumer Confidence Index, 155 izations as, 432, p432; making
tages, 36; examples, 35; savings in, consumer cooperatives, 76, fig76 predictions as, 562; sequencing
534; simulating trade in, 519 consumer finance companies, 315 and categorizing information as,
Commerce, U.S. Department of: consumer goods, 12; production of, 26; summarizing information as,
business inventories report of, 498 538; synthesizing information
59; report on durable goods consumer legislation, enforcing, 413 as, 149; understanding cause
orders, 13 consumer price index (CPI), 352, 389; and effect as, 108
commercial banks, 303, 413 constructing, fig352 crowding-out effect, 277, fig277
Committee for Industrial Organiza- Consumer Product Safety Commis- crude birthrate, 524
tions, 198 sion (CPSC) (1972), fig180 Cuba: as command economy, 35, 393;
Commodity Credit Corporation, consumers, 13; income of, and demand, playing baseball in, 137
153“54 97; number of, and demand, 99; culture and communication, 474
commodity money, 287 role of, 49, p50; tastes of, and currency: in global economy, 297;
common stock, 63, fig63 demand, 97 maintaining, 413; national, 295;
communication and culture, 474 consumer sector, 346, fig347 notches in, 296; problems with,
communism, 491, 493“94; advan- consumer sovereignty, 50, p50 293“94; valuation of, in compari-
tages of, 494; defined, 493; Continental dollars, 288, 292 son to Big Mac, 216; weight in, 39;
disadvantages of, 494; rise and contracts, set-aside, 215 See also coins
fall of, 496“99 cooperatives, 76, fig76; p77 baby-sit- current dollars, 218
The Communist Manifesto (Marx), 500 ting, 75; producer, 76; service, 76 current GDP, 353
community organizations, 75“76 copyrights, 170 current yields, 321
company union, 195 corporate bonds, 322“23 customs duties, 235
Compaq, 126 corporate income taxes, 234“35 customs union, 535
comparable worth, 215 corporations, 62“65, fig63, fig65, p63, cybercurrency, 286“87
comparative advantage, 469“70, fig469 p64; advantages, 64“65; corporate cyclical unemployment, 386
comparisons, making, 40 structure, 63; disadvantages, 65; Czech Republic, economy in, 505
competition, 48; and free enterprise, forming, 63; multinational,
46“48, p47; imperfect, 166, 183; 72“73, 100
inadequate, 174; in the market- corruption as obstacle to economic
place, 167; and market structures, development, 525
163“71, crt170, fig165, fig169, p164, cost-benefit analysis, 19, 24, 560 Daewoo, 72
p168, p171; monopolistic, 166“67; costs: applying principles of, 129“30; Daimler-Benz AG, 84
nonprice, 166“67, crt170; perfect, fixed, 127“28, 129; and informa- Danbury Hatters case, 196
164“66, fig165 tion goods, 129; marginal, 129; Das Kapital (Marx), 500
competitive price theory, 148 measures of, 127“29, fig128; total, database, using, 495, p495
complements, 98 128; variable, 128, 129 death taxes, 238, 246
compound interest, power of, fig320 Council of Economic Advisers (CEA), debt: easing burden, 528; monetizing,
compressed work schedule, 78 237, 459“60 427“28, fig428; public versus private,
Computer Associates International, coupon, 321; ration, 139 275“76
172 courts, attitude of, towards labor decennial census, 357
computer databases, 230 unions, 196 decision making, framework for,
conclusions, drawing, 486, p486 craft unions, 195, fig197 558“60
Conference Board, 375 credit manager as career, 457 default, 525
conglomerates, 71“72, fig72 creditor, 305 deficiency payments, 153“54
Congressional Budget Office (CBO), credit unions, 76, 303 deficit spending, 272
237, 261 creeping inflation, 390 deflation, 390, 481

INDEX A93
Delaware economists
Delaware, as right-to-work law state, dividend, 63 historical record, 364“65, fig365;
m201; per capita personal income, division of labor, 16 importance of, 365“66; measuring,
fig399; growth of real per capita dollar: declining value of, 392, fig391; 363“64, fig364; and productivity,
personal income, fig399 international value of, 484; origins 15“17, 368, fig16, fig367
Dell, Michael, 60, p60 of, 289 economic incentives and pollution,
Dell Computer, 60 dollarization, 533 554“56, 555
Del Monte, 72 domestic jobs, protecting, 477“78 economic instability, cost of, 437“40
demand, 89“93; changes in, 95, 96“99 domestic problems, 366 economic interdependence, 17
fig96, 147“48, fig98, fig147; defined, double taxation, 65 economic literacy, 456
89; elastic, 101“5; factors affecting, Dow-Jones Industrial Average (DJIA), economic models, 142“43, fig143;
95“99; forecasting, 89; graphs for, 331“32, fig331; growth of, 442; and building simple, 23, fig15, fig23
90, fig90; individual, 90“91, fig90, inflation, 437 economic performance, evaluating,
fig92; inelastic, 102, fig103; law of, dumping, 474 41“44
91“92, p91; and marginal utility, DuPont, E. I., 446, p446 economic policy, changing nature of,
93; market, 91“92, fig92; and substi- durable goods, 13; orders on, 13 456“58
tution effect, 107; unit elastic, 103 economic politics, 459“60
demand curve, 91 economic products, 12
demand deposit accounts (DDAs), Economic Recovery Tax Act (1981),
303 244
demand elasticity, 101“2, crt120; Earned Income Tax Credit (EITC), economics: American interest in, 5;
determinants of, 106“7, fig106 398 basic questions in, 7, p7; for citizen-
demand schedule, 90 Eastern Europe, transition to capital- ship, 25; consumers in, 13; defined,
demand-side policies, 447“51, fig449 ism in, 504“5 6; description in, 9; explanation in,
Democracy in America (Tocqueville), 11 easy money policy, 419 10; factors of production in, 7“9,
demographers, 358 eBay, 61, 127 fig8; fundamental problems in, 5“6;
dependency ratio, 361 e-commerce, 60“61, 104, 105, 113, goods in, 12“13; Keynesian, 266,
deposits, accepting, 416, fig417 126, 129“30, 163, 6104, p61; in 448“49; needs and wants in, 6;
depreciation, 69, 127; accelerated, 245 Latin America, 504“5, p504, p505 prediction in, 10; scarcity in, 5“6,
depression, 376 econometric model, 379 545, fig6; scope of, 9“10; services
depression scrip, 377 economic activity, circular flow of, in, 13; utility in, 13; value in, 13;
deregulation, 304, 454, 558 14, fig15 wealth in, 14
Deutsche Bank, 84 economic analysis, 9“10, 141 economic sectors, 346, fig347; con-
developing countries, 521; assistance economic choices, crt21; making sumer, 346, fig347; foreign, 348,
to, 522; education in, p525; popu- rational, 25; opportunity cost in, fig347; government, 347, fig347;
lation explosion in, 529; priorities 20, p22; production possibilities in, investment, 346“47, fig347
for, 530“31 21“22, fig23; trade-offs in, 19“20, economic security, 42, 43
diminishing marginal utility, 93 crt21, fig20 economic systems, 491, fig493;
diminishing returns, 125, fig124 economic costs of economic capitalism as, 46, 492, fig47; com-
DirectWeb, 126 instability, 437“38 munism as, 493“94; comparing,
disabled and the marketplace, 210, economic development: financing, fig38; defined, 33; incentives in,
p210 533“37; interest in, 521“22; obsta- 552“56; simulating trade in vari-
discomfort index, 438 cles to, 522, 524“26; stages of, ous, 518“19; socialism as, 492“93;
discount rate, 422 528“30 See also capitalism; communism;
discretionary fiscal policy, 457 economic efficiency, 42, 116 socialism
discretionary spending, 260 economic equity, 42 economies: command, 35“36, 491,
discrimination: and income inequal- economic espionage, 482 p37; growing, 340; market, 36“39;
ity, 395“96; labor, 214“15 economic forecasts, 560 modified enterprise, 560; traditional,
diseconomies of scale, 11 economic freedom, 41“42, 46“47, 48, 33“37, p34; underground, 343, crt343
Disney, Walt, 52, p52 381; and capitalism, 46“51, fig47, economies of scale, 170
disposable personal income, 346, p48, p49, p50 economists: as career, 24; differing
fig345 economic goals, 41“44, p42, p43 views of, 459“60; profiles of: Adam
distribution channels, and the economic growth, 15, 22, 42, 363, Smith, 14, 18, 163, p18; Alan
Internet, 144 fig23; effect of taxes on, 225; fac- Greenspan, 404, p414; Gary Becker,
diversification, 72 tors influencing, 366“68, fig367; 141, p141; John Maynard Keynes,

A94 INDEX
economy, free enterprise Federal Trade Commission Act
266, p266; Karl Marx, 500, p500; p291; Edward T. Lewis, 317, p317;
Milton Friedman, 141, p141; E.I. Du Pont, 446, p446; George
Thomas Malthus, 551, p551; W. Lucas, 52, p52; Helen Hayes, 317,
fact, distinguishing from opinion, 334
Arthur Lewis, 527, p527; Walter E. p317; Henry John Heinz, 446,
fact-finding, 202
Williams, 381, p381; thinking like p446; John Johnson, 121, p121;
factor markets, 14
an, 23“24 Kenneth I. Chenault, 67, p67;
factors of production, 7“9, 372“73,
economy, free enterprise, 24 Linda Alvarado, 355, p355; Michael
fig8; capital, 7“8, 10; entrepreneurs,
education: and income inequality, Dell, 60, p60; Milton Hershey, 121,
8, 9; labor, 8; land, 7, 550; produc-
395; investing in, 16“17, fig16; as p121; Oprah Winfrey, 94, p94;
tion, 8“9
obstacle to economic development, Richard Sears, 121, p121; Walt
Fair Labor Standards Act (1938), 196
524; state spending for, 268, p270 Disney, 52, p52; role of, 11, 48“49,
family, 346; values and economic
Efficient Market Hypothesis (EMH), p48; in United States, 9, fig9
instability, 440, p440
329 environment, case study of, 282“83
farms: collective, 497“98; state, 497
e-filing, 236 Environmental Protection Agency
fastest-growing occupations, crt387
elastic demand, 102, fig103 (EPA) (1970), 555“56, fig180
Federal Advisory Council, 409
elasticity, 101; of demand, 101“5, fig; Equal Employment Opportunity
Federal Agricultural Improvement and
importance of, 147, fig147; and Commission (EEOC) (1964), 215,
Reform (FAIR) Act (1996), 154
profits, 105; of supply, 118“20, fig180
Federal Aviation Administration
crt120, fig119; total expenditure test Equal Pay Act (1963), 214“15
(FAA) (1958), fig180
in determining, 103“5, fig103 equilibrium price, 144, 146, fig165
federal budget, 260, crt265; balanced,
electronic billing, 306 equilibrium wage rate, 207
273; establishing, 260“62; for fiscal
Electronic Data Gathering Analysis equities, 328; prices of, 328“29
year 2000, fig262; major spending
and Retrieval (EDGAR) system, Escarce, Jose J., 156
categories, 261, 264“65, fig263;
181 Eskin, Marlene, 74
size of, 278; surplus, 261
electronic “kiosks,” 261 Essay on the Principles of Population
Federal Communications Commis-
Electronic Numerical Integrator and (Malthus), 545“46
sion (FCC) (1934), fig180
Computer (ENIAC), 17 estate tax, 235
federal debt, 273, fig274, fig275, 276“77,
emachines Inc., 126 Estonia, economy in, 505
crt276; impact of, 276; size of, 273, 275
e-mail, 107, 169, 259 ethanol, 549
federal deficit, 261, 272“73, 276,
embargo, 546“47 ethnic origin: population projections
fig273; attempts to control, 277“78
emigrants, 361 by, 361; projected change in
federal deposit insurance, 301“2
employers, resistance to unions, 195 United States population by,
Federal Deposit Insurance Corpora-
employment: concept of full, 387; fig360
tion (FDIC), 181, 301“2, 376, 411
decline of union influence, euro, 420, 535
Federal Energy Regulatory Commis-
211“11“213, fig212; fastest growing European Union (EU), 472, 535, fig536
sion (FERC) (1977), fig180
jobs, fig387; full, 42; impact of excess reserves, 416
federal government; See government
lay-offs, 388, p388; and job out- exchange rates: fixed, 482“83; flexible,
Federal Home Loan Bank Board,
look, 44; and the minimum wage, 483“84, fig483
303, 305
216, 218, fig217; of part-time work- excise taxes, 235, p235
Federal Reserve notes, 301
ers, 216; time spend working, 215; expansion, 376
Federal Reserve System, 181, 301“2;
trends, 386; of women, 212“15, expectations, and supply curve, 117;
advisory committees, 409“10;
fig213, fig214; See also labor force; change in, 98“99
Board of Governors of, 408“9, 414,
unemployment explanation, 10
430, fig408, p409; concerns over
Employment Report, 449 exports, defined, 467
inflation, 426; creation of, 407, 408;
energy sources: nonrenewable, expropriation, 534
district banks, 409; Federal Open
546“48; renewable, 548“49 external debt as obstacle to economic
Market Committee in, 409, 420,
Engraving and Printing, Bureau of, development, 524“25
413 external funds, development with, 422, 426; and interest rates, 415;
enterprise zones, 398 534“35, p535 regulatory responsibilities, 410“11;
entitlements, reforming, 278 externalities, 175“76, p175; internal- services of, 411, 413, crt410, crt411,
entrepreneurs, 8, 9; influence on eco- izing, 181; negative, 173, 175“76; fig412; structure of, 407“10, fig408
nomic growth, 368; profiles of: Bill positive, 176 Federal Savings and Loan Insurance
Gates, 471, p471; Charles Wang, external shocks, 379 Corporation (FSLIC), 303
172, p172; Dineh Mohajer, 291, Exxon-Mobil Corp., 84“85 Federal Trade Commission Act, 179

INDEX A95
Federal Trade Commission (FTC) (1914) Great Britain, market economy in
Federal Trade Commission (FTC) free enterprise, modified, 183 264; income spent on food, 206;
(1914), 179, fig180 free enterprise economy, 24, 561; investments in, 323; and new mar-
fertility rate, 358 and competition, 46“48, fig47 kets, 130; Peace Corps in, 530;
fiat money, 287, fig293 Free-PC, 126 profits in, 70; and tax burdens,
FICA taxes, 233“34 free-trade area, 535 248; trading gold for salt, 102;
finance company, 315 free trade movement, 478“79 urban areas in, 502
financial assets, 314; bonds as, 320; free traders, 475 globalization, 558
characteristics of, 322; markets for, free trade versus protectionism, p477 global population, 545“50
325“26, fig325 frictional unemployment, 384“85 global role model, 366
financial institutions, nonbank, Friedman, Milton, 141, 286, p141 global stock exchanges, 330
315“16 fringe benefits, 59 global warming, 556
Financial Institutions Reform full employment, 42, 386 glut, 553
Recovery and Enforcement Act fully employed resources, 21 Gobi, 126
(FIRREA) (1989), 304“5 future goals, 42“44 gold certificates, 295“96
financial intermediaries, 315; non- futures contract, 332 Gold Reserve Act (1934), 297
bank, 315“16 futures markets, 332 gold standard, 296, 482; abandoning,
financial system, 314“15, fig315 292, 297“98; advantages of, 296;
fiscal conservatism, 404 disadvantages of, 296“97
fiscal policies, 447; and aggregate Gold Standard Act, 296
demand, 450, fig449; and aggregate Gold Star, 72
demand curve, fig449; decline of galloping inflation, 390 goods, 12“13; capital, 12“13; con-
discretionary, 457; importance gasohol, 549 sumer, 12; durable, 13; government
of passive, 457“58; limitations of, Gates, Bill, 49, 471, p471 spending for, 256; information,
451; structural, 458 gender, distribution of population by, 129; luxury, 235; nondurable, 13;
fiscal year, 260 fig359 public, 176, 183
Five-Year Plan, 497 gender pricing, 153 Gorbachev, Mikhail, 498“99
fixed costs, 127“28, 129 General Agreement on Tariffs and Gosplan, 497
fixed exchange rates, 482“83, fig483 Trade (GATT) (1947), 478“79 government, 78, 179; and business
fixed income, 42 general assistance, 397“98 regulation and growth, 66; direct
flat tax, 248“50 generalizations, making, 432, p432 role of, 78“79; indirect role of, 79;
flexible exchange rates, 483“84, fig483 General Motors, 72 internalizing externalities, 181; in
Florida, as right-to-work law state, general partnership, 60 Japan, 510“11; in Keynesian eco-
m201; per capita personal income, The General Theory of Employment, nomics, 449; as monopoly, 170“71;
fig399; growth of real per capita Interest, and Money (Keynes), 266 providing financial services to, 413;
personal income, fig399 genetic engineering, 550 receipts of, per capita, fig224; regu-
food, percent of income spent on, geographic monopoly, 170, p171 lations of, 117“18, 179, 181, fig180;
fig206 Georgia, as right-to-work law state, revenue by source, 232, fig232;
Food and Drug Administration m201; per capita personal income, revenue collected by, 223, fig224;
(FDA) (1906), fig180 fig399; growth of real per capita role of, 50“51, 178“83; savings
food stamps, 397 personal income, fig399 bonds, 323“24; size of, 452
Forbes, Steve, 248, 249, 458 Gephardt, Dick, 250 government officials, profiles of:
Ford, Henry, 16 Germany, market economy in, 36 Alice Rivlin, 237, p237; Janet
Ford Motor, 122 Gibson Guitar Company, 61, p61 Yellen, 237, p237
foreign exchange, 481“82, fig482 gift tax, 235 government sector, 347, fig347
foreign exchange rate, 482, fig482 Gillette Corporation, 98 government spending, 255“56, 366;
foreign sector, 348 giveback, 212 global comparison of, fig264; for
401(k) plans, 318, 320, fig321 glass ceiling, 214 goods and services, 256“57; impact
Fourteenth Amendment, 458 Glass-Steagall Act (1933), 301 of, 257“58; per capita, 256, fig256;
fractional bank reserves, 415“16 global economy: barter in, 377, fig377; as percent of total output, 256,
fractional reserves and monetary branding in, 74, p74; communica- fig257; transfer payments as, 257
expansion, 418, fig419 tion in, 474; comparing food graduation clauses, 215
France, market economy in, 36 prices, 138; currencies in, 297; Gramm-Rudman-Hollings, 277
franchise, 170 entrepreneurship in, 9, fig9; Euro grant-in-aid, 257
Franklin, Benjamin, 289 in, 420; government spending in, Great Britain, market economy in, 36

A96 INDEX
Great Depression injunction
Great Depression, 376“77, 390, 503; Hershey, Milton, 121, p121 spent on food, fig206; personal,
banking during, 301; causes of, Heublein, 72 209; redistributing, 258; taxable, 226
377“78; labor during, 196 high development, 529“30 income assistance, 397
Great Leap Forward, 506 highway construction and road income effect, 96
greenbacks, 295 improvement, state spending for, income gap, 396
greenback standard, 295“96 268 income inequality, 404“5; reasons for,
Greenberg, Jack, 100 Hispanic American population, 361; 395“96
Greenspan, Alan, 389, 414, 533, p414 projections through 2050, fig360 income statement, 68
gridlock, 447 home, buying, 310“11 inconvertible fiat money standard, 297
grievance procedure, 202 Hong Kong: capitalism in, 512; reuni- Incorporation, 63
Gross Domestic Product (GDP), fication with, 507; value of dollar independent unions, 198
9, 59, 248, 264, 275, 341“42, 344, in, 481 indexing, 232“33
fig345; and changes in price level, Hoover Dam, 548 index of leading indicators, 380, fig379
350“54; comparing, in different horizontal merger, 71 India: McDonald™s in, 33, p33; poverty
years, 354; computing, 342, fig342; household, 346 in, 546
in constant dollars, 353; convert- House of Representatives, U.S., Indian Institutes of Technology (IIT),
ing, to real dollars, 353; current, budget action by, 261 532, p532
353; defined, 341; differences housing starts, 93 Indiana, as right-to-work law state,
between Gross National Product human capital, investing in, 16“17 m201; per capita personal income,
(GNP) and, 344; estimating, 351, Hungary, economy in, 505 fig399; growth of real per capita
fig351; exclusions from, 343; Hunt, H. L., 327 personal income, fig399
limitations of, 344; as measure of hydroelectric power, 548“49 individual demand curve, 91, 92,
national output, 341“44; and pop- hyperinflation, 390 fig90, fig92
ulation, 356“61, real, 353, 376, individual demand schedule, 90, fig90
fig353; see also aggregate supply individual income taxes, 226, 231“33,
Gross Domestic Product (GDP) gap, 240, fig233, fig234
438, fig438 Individual Retirement Accounts
Gross National Product (GNP), Idaho, as right-to-work law state, m201; (IRAs), 324
344“46, fig345, fig522; defined, per capita personal income, fig399; individual supply curve, 114, fig114, fig115
344; differences between Gross growth of real per capita personal industrialized nations, priorities for,
Domestic Product (GDP) and, 344; income, fig399 530“31
exclusion from, 343, crt343; as Illinois, as right-to-work law state, industrial unions, 195, fig197
measure of national income, m201; per capita personal income, Industry associations, 78, p79
344“46; real, per capita, 363“64 fig399; growth of real per capita inelastic demand, 102, fig103
growth triangle, 364“65, fig365 personal income, fig399 infant industries, promoting, 475, 477
imitation, 378 inferences, drawing, 486, p486
immigrants, 361; and job market, 362; inflation, 42, 350“51, p354; adjusting
problem of illegal, 546 minimum wage for, 218; causes
immigration, net, 359 of, 391“92; consequences of, 392;
Hamilton, Alexander, 289 imperfect competition, 166; costs of, defined, 350; degrees of, 390; and
Hang Seng stock index, 481 183 Dow-Jones Industrial Average
Hanssens, Catherine A., 210 implicit GDP price deflator, 352, 389 (DJIA), 437; Fed concern over,
Harpo Productions, Inc., 94 imports, 468 426; impact on investment deci-
Harris Poll, economic interests in, 5 inadequate competition, 174 sions, 429; and interest rates,
Hastert, J. Dennis, 260, 261, p260 inadequate information, 174“75 453“54; and labor market, 389;
Hawaii, as right-to-work law state, income: alteration of distribution of, measuring, 389“90; rate of, 390,
m201; per capita personal income, 392; consumer, 97; and demand fig390; taming, 428“29
fig399; growth of real per capita elasticity, 107; distribution of, 258, information: inadequate, 174“75;
personal income, fig399 394“95, fig395, fig399; fixed, 42; sequencing and categorizing, 26;
Hayes, Helen Young, 317, p317 Gross Domestic Product (GDP) as summarizing, 538; synthesizing, 149
Health Management Organizations measure of national, 341“44; Gross information goods, 129
(HMOs), 156 National Product (GNP) as measure, Information Revolution, 559
Heinz, Henry John, 446, p446 344“46; net, 68“69; per capita, infrastructure, 510
Helms, Jesse, 193, 197, p193 fig399; 522, fig522“23; percent of, injunction, 202“3

INDEX A97
innovation Legal Tender Act (1862)
innovation, 378 Iowa, as right-to-work law state, m201; 197; skilled, 206; unskilled, 205; as
inputs, cost of, and supply curve, 116 per capita personal income, fig399; variable cost, 128
An Inquiry into the Nature and Causes growth of real per capita personal Labor, U.S. Department of, quarterly
of the Wealth of Nations (Smith), income, fig399 employment cost index of, 43
163 labor force: children in, 542“43, p542,
interdependence, economic, 17 p543; civilian, 193; entrance of col-
interest, 64; compound, fig320; real lege graduates into, 386; women in,
rate of, 428“29 346, 384“85, p384; See also labor
interest rates, 303; and inflation, Japan: capitalism in, 509“12, p510; force; unemployment
453“54; politics of, 430“31 preparing to do business in, 130; labor leaders, profiles of: Cesar
intergovernmental expenditures, profits in, 70 Chavez, 204, p204; John L. Lewis,
state spending for, 268, fig269 job market, immigrants and, 362 204, p204
intergovernmental revenues, 238, 241 job outlook, 44 Labor-Management Relations Act
intermediate products, 343 job skills in Information Age, 385 (1947), 197
internal funds, development with, job trends, 384“85 Labor Management Reporting and
533“34 Johnson, John, 49, 121, p49, p121 Disclosure Act (1959), 197
internalizing externalities, 181 Johnson Publishing Co., 49 labor market and inflation, 389
Internal Revenue Service (IRS), 232 labor mobility, 209
international agencies, 526 labor productivity, 368, fig367
International Bank for Reconstruction labor relations specialist as career,
and Development, 534 202
international bonds, 498, 512 Kadokawa, Yoshihiko, 70 Labor Statistics, Bureau of, 352
International Development Associa- Kansas, as right-to-work law state, labor unions, 76“77; activities, 195,
tion (IDA), 535 m201; per capita personal income, fig197, p79; affiliation with, 194,
International Finance Corporation fig399; growth of real per capita fig194, fig195; attitude of courts,
(IFC), 535 personal income, fig399 196; and collective bargaining,
International Monetary Fund (IMF), Kasriel, Paul L., 243 202“3; decline of influence, 211“13,
526, 535 keiretsu, 510 fig212; early development, 194“95;
international operations, 411 Kemp, Jack, 458 employer resistance to, 195; inde-
international trade; See world trade Kennedy, John F., 530 pendent, 198; industrial, fig197;
International Union of Electronic Kentucky, as right-to-work law state, kinds of arrangements, 200“203;
Workers, 213 m201; per capita personal income, renegotiating wages, 212“13; trade,
Internet: banking on, 300; in China, fig399; growth of real per capita fig197; types of, 195; and wage
508; consumer protection informa- personal income, fig399 level, fig208
tion on, 179; and distribution Kentucky Fried Chicken, 72 Laffer curve, fig451, 452
costs, 144; e-commerce on, 60“61, Keynes, John Maynard, 266, p266 laissez-faire, 18, 163
104, 105, 113, 126, 129“30, 163, Keynesian economics, 266, 448“49, land: as factor of production, 7, 550;
p61; and e-filing of tax returns, fig448 influence on economic growth,
236; and electronic billing, 306; knowledge and intellectual property, 366“67
e-mail on, 107, 169, 259; govern- 10 Latin America: Internet users in,
ment support for, 182; job outlook Kroger Co., 68 504“5, p504, p505; transition to
information on, 44; in Latin capitalism in, 504“6, p506
America, 504“5, p504, p505; Latvia, economy in, 505
researching stocks on, 328; and law: of demand, 91“92, p91; of sup-
right of privacy, 45; stock trading ply, 113; of variable proportions,
on, 330; using, 393, p393 labor: categories of, 205“6; costs of, 122“23, fig124
Inuits, p34, 34 and inflation, 391; division of, 16; law enforcement officer as career, 49
inventory, 59; adjustments, 378 as factor of production, 8; during lay-offs, impact of, 388, p388
investments: global, 323; in human Great Depression, 196; importance leading economic indicators, 375;
capital, 16“17, fig16; objectives, of, 205; influence on economic index of, 380, fig379
319“20; risk-return relationship growth, 367“68, fig367; noncom- leading indicators, 93
in, 318“19, fig319, fig326 peting grades, 206; productivity of, Leary, Kathryn, 130
investment sector, 346“47, fig347 368, fig367; professional, 206; semi- legal tender, 295
investment tax credit, 245 skilled, 206; since World War II, Legal Tender Act (1862), 295

A98 INDEX
legislation modified enterprise economy
legislation, 201; antitrust, 178“79, fig399; growth of real per capita McDonald™s, 33, 100, 168, p33
196, fig179; antiunion, 197“98; personal income, fig399 measure of value, money as, 286
consumer, 413; minimum wage, Malthus, Thomas, 545“46, 551, p551 mediation, 202
41, p41; pro-union, 196; right- mandatory spending, 260 medicaid, 265, 397“98
to-work, 193, 197, 201, m201; manufacturing wages, 218 medicare, 43, 233“34, 264
wage and salary discrimination, Mao Zedong, 506“7 medium of exchange, money as, 286
214“15 Marcos, Ferdinand, 525 megamergers, 84“85
Lentner, Johnelle, 127, 130 marginal analysis, 131, 560, fig128 Meiji, Emperor, 509
Lewis, Edward T., 317, p317 marginal cost, 129 Melton, Scott, 57, 62
Lewis, John L., 198, 204, p204 marginal product, 124, fig124 member bank reserve (MBR), 418
Lewis, W. Arthur, 527, p527 marginal revenue, 130, fig128 member banks, 407“9; mergers of, 411
liabilities, 416; unlimited, 58 marginal tax rate, 229 mergers, 68, fig71, 163; banks, 411,
library resources, using, 230 marginal utility, 93; and demand, 93 425, crt411; and competition, 174;
life expectancy, 358, 524 margin requirements, 422“23, p424 horizontal, 71; problem of
life insurance company, 316 market basket, 351 mega-, 84“85; reasons for, 69“70;
limit, 536 market demand curve, 91“92, fig92 vertical, 71
limited life, 59 market economy, 36“39, 491; advan- methane gas, 549
limited partnerships, 60, 62 tages, 36“38; advantages of, 560; Mexico: multinationals in, 72; North
line-item veto, 278 disadvantages, 39; examples, 36; American Free Trade Agreement
liquidity, 417 prices in, 138; savings in, 534; (NAFTA) and change in, 479“480,
Lithuania, economy in, 505 simulating trade in, 519; See also p480
loans: bill consolidation, 315; making, capitalism Meyer, Fred, Co., 68
416“17; and monetary growth, 418; market efficiency, 328“29; social Michigan, as right-to-work law state,
non-recourse, 153; soft, 535 goals versus, 150“55, fig151, p153 m201; per capita personal income,
loan supports, 153 market equilibrium, 143, fig145 fig399; growth of real per capita
local government: expenditures, 270, market failures, 174; externalities as, personal income, fig399
fig269; revenue sources, 241“42, 175“76, p175; inadequate competi- microeconomics, defined, 89
fig239; services provided by, 78“79 tion as, 174; inadequate information micropayment systems, 287
Lockheed Martin, 84 as, 174“75; resource immobility Microsoft, 49, 471; and privacy rights
lockout, 195, 203 as, 175 on the Internet, 45
long run, 122 marketing in China, 167 Microworks Computer Corp., 126
L™Or©al, 74 market outcomes, distorting, 151“52 minimum wage, 41, 44, 152, 216, 218,
Lorenz curve, 394“95, fig395 market researcher as career, 166 fig217
lotteries, state, 241“42 markets, 14; defined, p164; factor, 14; Minnesota, as right-to-work law state,
Louisiana, as right-to-work law state, for financial assets, 325“26, fig325; m201; per capita personal income,
m201; per capita personal income, product, 14; structure of, 164 fig399; growth of real per capita
fig399; growth of real per capita market structures, fig169; monopolistic personal income, fig399
personal income, fig399 competition, 166“67; monopoly, Mint, Bureau of, 413
Lowell, Francis, 115 169“71, p171; oligopoly, 167“69; miscellaneous fees, 235“36
Lucas, George, 52, 122, p52 perfect competition, 164“66, fig165 misery index, 438, fig439
luxury goods, 235 market supply curve, 114, 118, fig114 Mississippi, as right-to-work law state,
luxury tax, 224 Marx, Karl, 500, 561, p500 m201; per capita personal income,
Mary Kay Cosmetics, 49 fig399; growth of real per capita
Maryland, as right-to-work law state, personal income, fig399
m201; per capita personal income, Missouri, as right-to-work law state,
fig399; growth of real per capita m201; per capita personal income,
M1, 429 personal income, fig399 fig399; growth of real per capita
M2, 430 Massachusetts, as right-to-work law personal income, fig399
macroeconomic equilibrium, 445, state, m201; per capita personal Mitsubishi, 72
fig445 income, fig399; growth of real per mixed economy, 51; simulating trade
macroeconomics, defined, 193 capita personal income, fig399 in, 519
main idea, finding, 184 Mattel, 178 Mladentsev, Andrei, 501
Maine, as right-to-work law state, maturity, 321 Mobil, 84
m201; per capita personal income, Maybelline, 74 modified enterprise economy, 560

INDEX A99
modified free enterprise nonmarket transactions
modified free enterprise, 183, 560 multimedia presentations, developing, natural resources, 14, fig14, p14; and
modified private enterprise economy, 299 geography as obstacle to economic
51 multinational companies, 72“73, 100; development, 524; wise use of, 556
modified union shops, 201 and Euro, 420 NBA, lockout by, 200
Mohajer, Dineh, 291, p291 multiplier, 448 Nebraska, as right-to-work law state,
monetarism, 141, 453, 459 municipal bonds, 323 m201; per capita personal income,
monetary expansion and fractional Murphy, Vaughn, 210 fig399; growth of real per capita
reserves, 418 mutual fund, 316 personal income, fig399
monetary factors, 379 mutual savings bank (MSB), 303 need, 6
monetary growth: as cause of inflation, negative externalities, 173, 175“76
391; and loans, 418 negative income tax, 400
monetary policies, 415“20, 453“54, negotiated wages, theory of, 208,
crt431; defined, 415; defining fig208
money, 429“30, fig430; dominance Nabisco, 72 net asset value (NAV), 316
of, 458; historical precedents, National Association of Securities net exports of goods and services,
427; long-run impact, 427“29; Dealers (NASD), 330 348
monetizing debt, 427“28, fig428; National Association of Security net immigration, 359
present versus future allocation, Dealers Automated Quotation net income, 68“69
429; short-run impact, 426“27, System (NASDAQ), 330“31 net national product (NNP), 344,
fig427; timing and burden, 429; National Banking System (NBS), 295 fig345
tools of, 419“24, fig421, fig423; National Bank notes, 295 net worth, 416
and unemployment, 454 national banks, 295, 408 Nevada, as right-to-work law state,
monetary standard, 292 National Commission on Social m201; per capita personal income,
monetary unit, 289 Security Reform, 414 fig399; growth of real per capita
money: characteristics of, 289“90, National Council on Economic personal income, fig399
298, p289; in Colonial America, Education, xxviii, 5, 559 New Economics, 266
287“89; commodity, 287; defined, national currency, 295 New Hampshire, as right-to-work law
286; in early societies, 287; fiat, national debt; See federal debt state, m201; per capita personal
287, p293; future of, 286“87; ori- national defense, 475 income, fig399; growth of real per
gins of the dollar, 289; release of, National Education Association for capita personal income, fig399
by United States Mint, fig294; Teachers, 77 New Jersey, as right-to-work law state,
varieties of, p284 National Federation of Independent m201; per capita personal income,
money markets, 325 Businesses, 41 fig399; growth of real per capita
money supply: components of, fig430; National Highway Traffic Safety personal income, fig399
and reserves, 418“19, fig419 Administration (NHTSA) (1970), New Mexico, as right-to-work law
monopolistic competition: interde- fig180 state, m201; per capita personal
pendent behavior, 168; nonprice, national income accounting, 341 income, fig399; growth of real per
166“67; pricing behavior, 168; National Income and Product capita personal income, fig399
product differentiation, 166; profit Accounts (NIPA), 341 New York, as right-to-work law state,
maximization, 168“69, fig169; and national income (NI), 345, 560, m201; per capita personal income,
profit maximization, 167 fig345; and product accounts, fig399; growth of real per capita
monopoly, 169; and antitrust legisla- fig345 personal income, fig399
tion, 178“79; geographic, 170, National Labor Relations Act New York Stock Exchange (NYSE),
p171; government, 170“71; natural, (NLRA), 196 329“30, fig330
170; power and income inequality, National Labor Relations Board Neyolov, Yuri, 377
396; profit maximization, 171; (NLRB) (1935), 196, fig180 Nixon, Richard: and gold standard,
technological, 170; types of, 170 National Market System (NMS), 483; and unemployment, 382
Montana, as right-to-work law state, 330 nonbank financial institutions,
m201; per capita personal income, National Right to Work Committee, 315“16
fig399; growth of real per capita 193 nonbank financial intermediaries,
personal income, fig399 Native American population, 361; 315“16
Montgomery Ward, 104 projections through 2050, fig360 noncompeting labor grades, 206
moral suasion, 423“24, 424 natural gas, 547 nondurable good, 13
most favored nation clause, 477 natural monopoly, 170 nonmarket transactions, 343

A100 INDEX
nonprice competition price index
nonprice competition, 166, 168, crt170 opinion, distinguishing from fact, 334 petroleum, 546“47; and OPEC,
nonprofit organization, 75 opportunity costs, 20, 22, p22 553“54
non-recourse loans, 153 options markets, 333 picket, 195, p198
nonrenewable energy sources, 546“48 Oregon, as right-to-work law state, piecework, 498
Norris-LaGuardia Act (1932), 196 m201; per capita personal income, Piper, Jonathan, 271
North American Free Trade Agree- fig399; growth of real per capita Poland, economy in, 504“5
ment (NAFTA), 479, m478; in personal income, fig399 political instability, 439“40
Latin America, 505“6; in Mexico, organization, nonprofit, 75 pollution, 554; controlling, 554“55;
479, 480, p480 organized stock exchanges, 329“30 and economic incentives, 554“56,
North Carolina, as right-to-work law outlining, 132 555; effect of tax on, fig183; permits,
state, m201; per capita personal output-expenditure model, 348 555“56
income, fig399; growth of real per overhead, 127 population: center of, 357, m358;
capita personal income, fig399 over-the-counter market, 330“31 counting, 357; distribution of, by
North Dakota, as right-to-work law Owen-Jones, Lindsay, 74 age and gender, 2000, fig359; explo-
state, m201; per capita personal sion of, in developing countries,
income, fig399; growth of real per 529; factors affecting growth,
capita personal income, fig399 358“59; global, 545“50; Gross
North Korea, as command economy, Domestic Product (GDP) and, 356“61,
35, 493 Packard Bell NEC Inc., 126 fig357; growth of, as obstacle to
note, taking, 80 Panasonic, 72 economic development, 522, 524;
Noumenon Corporation, 101, 105 paper currency, 288, p289 historical growth of, 357“58;
NOW accounts, 303 paradox of value, 13 Malthus™ theories on, 545“46,
NuAction, 126 partnerships, 60“62, fig58, p62; advan- 551; projected distribution of,
nuclear energy, 548, m549 tages, 61“62; disadvantages, 62; fig358; projected trends, 358“61,
Nuclear Regulatory Commission forming, 60; limited, 62; types fig358, fig360; projections by age,
(NRC) (1974), fig180 of, 60 359; projections by ethnic origin,
part-time workers, 216 361, fig360; projections by gender,
par value, 321 359; projections by race, 361,
passive fiscal policies, importance of, fig360; regional change in, 358“59;
457“58 rural, 357; trends in world, 546,
Occupational Outlook Handbook, 44 patents, 170 m547; in United States, 356“59;
Occupational Safety and Health pay-as-you-go provision, 277 urban, 357
Administration (OSHA), 265, payroll deductions, 232, 319 population centers, 366
fig180 payroll taxes, 233 population density, 536
Office Depot, 70 payroll withholding system, 232, 242, population pyramid, 361
Office of Management and Budget fig241 portfolio diversification, 329
(OMB), 261 Peace Corps, 530; as career, 529 positive externality, 176
Ogallala Aquifer, 550 peak, 376 Post Office Department, 78
Ohio, as right-to-work law state, m201; Pennsylvania, as right-to-work law poverty, 396; guidelines, 396; people
per capita personal income, fig399; state, m201; per capita personal in, 396, fig397
growth of real per capita personal income, fig399; growth of real per The Power of a Laughing Face
income, fig399 capita personal income, fig399 (Kadokawa), 70
Oklahoma, as right-to-work law state, pension, 316 predictions, 10; making, 562
m201; per capita personal income, pension fund, 316 preferred stock, 63, fig63
fig399; growth of real per capita PepsiCo Inc., 167, 168, 177 premium, 316
personal income, fig399 per capita, 255 presidential intervention, 203
oligopolistic price wars, 168 per capita income, 522, fig522“23 President™s Council of Economic
oligopoly, 167“68 perestroika, 499 Advisors, 182, 213, 414
Omnibus Budget Reconciliation Act perfect competition, 164; necessary price ceilings, 151“52
(1993), 246, 277 conditions, 164; profit maximiza- price discrimination, 179
online auctions, 61 tion, 164“65, fig165 price-fixing, 168
OPEC, 536, 553 periodical guides, 230 price floors, 152
open market operations, 409, 420, personal income (PI), 209, 345“46, price index, 352“53; constructing,
422, 426 fig345 351“52; defined, 351; producer, 352

INDEX A101
price level, Gross Domestic Product (GDP) and changes in run on the bank
price level, Gross Domestic Product profit maximization, 164“65, 167, real dollars, 218
(GDP) and changes in, 350“54 fig165; and monopolistic competi- real estate agent as career, 117
price maker, 171 tion, 167; and monopoly, 171, p171; real estate investment trust (REIT),
prices: adjusting, 142“46, fig143, and oligopoly, 168“69, fig169; and 316
fig145, p144; advantages of, 137“39; output, 131, 166, p128; and perfect real Gross Domestic Product (GDP),
allocations without, 139“40; com- competition, 164“65, fig165 353, 376, fig353; versus Gross
paring, 138; defined, 137; effect of, profit motive, 48 Domestic Product (GDP) per
on supply, p115; equilibrium, 144, profits, 48, 70; and elasticity, 105 capita, fig364
146, fig145, fig165; explaining and progressive flat tax, 248 real Gross Domestic Product (GDP)
predicting, 146“48; flexibility in, progressive income tax, 229, 232, 450 per capita, 363“64; annual growth
138; impact on resources, 552“54; property, private, 458, 501“2 rates of, fig365; real Gross Domes-
in market economy, 138; reforming property rights, private, 47“48 tic Product (GDP) versus, fig364
support system, 154“55; and property taxes, 241“42 real rate of interest, 428“29
resource allocation, 560; setting, proportional tax, 229 rebate, 140
101; stability, 42; as system, 140; proportions, law of variable, 122“23, recession, 376, 390; in Japan, 511“12
target, 153; traditional theory of fig124 Reciprocal Trade Agreements Act, 478
determining, fig207 proprietorships; See sole proprietor- reference books, 230
price taker, 171 ships regional cooperation, 535“36
primary markets, 326 protectionism, 475, p473; versus free regional stock exchanges, 330
primary sources, evaluating, 199 trade, p477 regional wage differences, 209
prime rate, 428; defined, 427 protective tariff, 472“73 regressive tax, 229
primitive equilibrium, 528“29 pro-union legislation, 196 Regulation Z, 411
principal, 64 public accountant as career, 249 reinvestment, business growth
privacy, Internet and right of, 45 public debt, 275“76, fig275
through, 68“69, fig69
private debt, 275“76, fig275 public disclosure, 181“82
renewable energy sources, 548“49
privately issued bank notes, 292“94 public goods, 176, 183
renewable resources, 366“67
private property, 47“48, 458, 501“2 public sector, spending in, 255
reserve requirements, 415, 419“20,
private sector, 256; government com- public utilities, 79
fig421
petition with, 258 public welfare, state spending for, 268
reserves and money supply, 418“19,
privatization, 501“2; in Russia, 504 put option, 333
fig419
producer cooperatives, 76
resources: allocation of, 224, 258;
producer price index, 352, 389
cost of idle, 22; immobility of, 175;
product: differentiation, 166, p168;
inefficent allocation of, 174; renew-
economic, 12; intermediate, 343;
able, 366“67; wasted, 439; working
marginal, 124, fig124; total, 123“24, quantity demanded, change in, 95,
with scarcity of, 30“31, p31
p124 fig96
retirement, planning for, 320, fig321
product accounts, 560, fig345 quantity supplied, 115
revenue, measures of, 130, fig128
production, 6“7, 8“9; in command quantity theory of money, 427
revenue tariff, 473
economics, 35; factors of, 7“9, fig8; Quayle, Dan, 458
Reynolds, R. J., 72
in market economies, 36; possi- quotas, 472“74
Rhode Island, as right-to-work law
bilities in, 21“22, fig23; quotas in
state, m201; per capita personal
Soviet Union, 498; stages of, 125,
income, fig399; growth of real per
fig124; theory of, 122“25; in tradi-
capita personal income, fig399
tional economies, 34
right-to-work legislation, 193, 197,
production function, 123, p123 race, population projections by, 361,
201, m201
production possibilities frontier, 21, fig360
risk, 318, fig319
23, fig23 Railway Labor Relations Act, 203
Rivlin, Alice, 237, p237
productivity, 15“16; and economic rational choice, making, 25
Robinson-Patman Act (1936), 179
growth, 15“17, fig16; effect of rationing, 139
Roebuck, Alvah C., 121
taxes on, 225; and supply curve, raw materials, 123
Roth IRA, 325
116“17 Reagan, Ronald: and air controllers
Royal Caribbean Cruises, 70
product markets, 14 strike, 203; and supply-side policies,
Royal Dutch Shell, 72
professional associations, 77“78 451“53; and tax cuts, 231; and tax
run on the bank, 301
professional labor, 206 reform, 244; and trade barriers, 473

A102 INDEX
rural population subsidies
rural population, 357 shareholders, 63 economy in, 35“36, 493, 496“99;
Russia: barter in, 377, fig377; economy shell out, 99 communism in, 496“99; perestroika
in, 501; privatization in, 504; teach- Sherman Antitrust Act (1890), 179, in, 498“99; transition to capitalism
ing capitalism in, 35; See also 196 in, 501“4
Soviet Union shortage, 144, fig145 specialization, 12, 16, 467, fig12
short run, 122 specie, 288“89
Siberia, 497 speculation, increases, 392
signaling theory, 208 spending caps, 278
silver certificates, 296 spending habits, changes in, 392
safety net, 474 Singapore: capitalism in, 513; market spot markets, 332
sales clerk as career, 152 economy in, 36 spreadsheets, using, 349
sales tax, 226, 239, m240 sin tax, 224“25 stabilization policies, 447“54;
Samsung, 72 Sixteenth Amendment, 231, 243 demand-side, 447“51, fig449; mon-
Sandys, Edward, 285 skilled labor, 206 etary, 453“54; supply-side, 451“53,
savings: and capital formation, Small Business Association, 78 fig450, fig452
313“14; in command economy, smart cards, 286“87 stagflation, defined, 437
534; defined, 313; in market Smith, Adam, 14, 18, 163, 558, p18 stagnation in Japan, 511“12
economy, 534 Smoot-Hawley Tariff, 478 Stalin, Joseph, 497
savings accounts, 417 social costs of economic instability, standard of living, 24, 365“66
savings and loan association (S&L), 439“40 Standard & Poor™s 500 (S&P 500),
303 social goals, 41“44, p42, p43; versus 332, fig331
savings and loan crisis, 304 market efficiency, 150“55, fig151, staples, 70, 138
savings banks, 303 p153 state banks, 295, 410; growth of, 293
savings bonds, government, 323“24 socialism, 492“93; advantages of, 492; state farms, 497
scarcity, 5“6, 545, fig6; working with, countries under, 491; disadvantages state government: and balanced
30“31, p31 of, 492“93 budget amendments, 267“68; and
Sea-Land, 72 Social Security, 42, 43, 51; future of, business development, 67; expendi-
Sears, Richard, 121, p121 188“89, p188, p189 tures, 268, fig269; revenue sources,
Sears, Roebuck and Company, 121 Social Security Act (1935), 188“89 238“41, fig239, m240; services
seasonal unemployment, 386 Social Security taxes, 233 provided by, 78“79
seats, 330 social service programs, 398 state sales tax, m240
Seattle, p254 sociologist as career, 484 Statistical Abstract of the United States,
secondary markets, 326 soft loans, 535 182
secondary sources, evaluating, 199 solar energy, 549 statistician as career, 97
secondhand sales, 343 sole proprietorships, 57“59, fig58, stockbroker, 329; as career, 324
Securities and Exchange Commis- p59; advantages, 58; disadvantages, stock exchange, p312
sion (SEC), 65, 181, 182, fig180 58“59; forming, 57“58 stockholders, 63
securities exchanges, 329“30; global, Solidarity, economy in, 504 stock markets: crash of, 376; new and
330; over-the-counter, 330“31; Solow, Robert, 363 emerging, fig503
regional, 330 Sony, 72 stock ownership, 63, fig63
security, economic, 42 South Carolina, as right-to-work law stocks, 63, crt329; common, 63; meas-
seizure, 203 state, m201; per capita personal ures of performance, 331“32, fig330,
selective credit controls, 423“24, 424 income, fig399; growth of real per fig331; ownership statistics, 333; pre-
sellers, number of, 118 capita personal income, fig399 ferred, 63; trading of, on Web, 330
semidevelopment, 529 South Dakota, as right-to-work law store of value, money as, 286
semiskilled labor, 206 state, m201; per capita personal storming, 498
Senate, U.S., budget action by, 261 income, fig399; growth of real per Strategic Petroleum Reserve, 474
seniority, 208 capita personal income, fig399 strike, 195, p198
service cooperatives, 76 South Korea: capitalism in, 513; econ- structural fiscal policies, 458
services, 13; government spending omy in, 536“37, p537; market structural unemployment, 385“86
for, 256 economy in, 36 study and writing skills: library
set-aside contracts, 215 Soviet Union: collapse of commu- resources, 230; note taking, 80; out-
Shaheen, Jeanne, 267 nism, 496“98, 525, 561; collapse of lining, 132; writing process, 441

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