1  Business and Economics

• Introduction
• Learning Objectives
• Microeconomics, Macroeconomics and International Economics
• Optimal Resource Allocation versus Dynamic Economic Growth?
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 1.1: Leading Economic Thinkers

2 Demand and Supply: The Basics

• Introduction
• Market Price
• Changes in Market Conditions
• The Concept of Elasticity
• Working with Demand Elasticity
• Working with Supply Elasticity
• Other Applications of the Concept of Elasticity
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 2.1: Another Method for Calculating Elasticity

3 The Market Mechanism and the Impact of Regulation and Taxation

• Introduction
• Factor Markets
• Financial and Asset Markets
• The Impact of a “Price Ceiling”
• The Impact of a “Price Floor”
• The Impact of Taxation
• Subsidies
• Chapter Summary
• Problems
• Appendix 3.1: The Relationship between Yields and Financial Asset Prices: An Example

4 The Costs of Production

• Introduction
• Concepts and Definitions
• A Cost Example
• Textbook “U-shaped” Cost Curves and Other Configurations for Cost Curves
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 4.1: More on Costs and Production

5 Two Benchmarks for Business Strategy: Perfect Competition versus Monopoly

• Introduction
• The Firm in a Perfectly Competitive Industry
• The Firm as a Monopolist
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 5.1: Price Discrimination

6 Alternative Market Structures, Business Strategy, and Public Policy

• Introduction
• Monopolistic Competition
• Oligopoly
• An Introduction to “Game Theory”
• Competition Policy
• Externalities, Public Goods, and Natural Monopolies
• Schumpeter’s Defense of Monopoly/Imperfect Competition
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 6.1: Notes on Regulation
• Appendix 6.2: Theory of the Firm
• Appendix 6.3: The Baranti Group – Case Study

7 The Global Economy I: The Debate over Free Trade

• Introduction
• Differing Degrees of Economic Integration
• The Case for Free Trade
• Comparative Advantage and the Gains from Trade
• Demand and Supply under Free Trade
• Tariff and Non-Tariff Barriers to Trade
• The “Compensation Principle” of Welfare Economics as Applied to Free Trade
• Some Arguments Against Free Trade
• Chapter Summary
• Problems
• Case Study Questions

8 Economic Indicators and the Basic Data of the Macroeconomy

• Introduction
• Gross Domestic Product
• Price Indices and Inflation
• The Business Cycle, Inflation, and Unemployment
• Interest Rates
• The Supply of Money
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 8.1: The Yield Curve: A Numerical Example

9 The Simple “Keynesian” Model and an Introduction to Fiscal Policy

• Introduction
• The Theory of Effective Demand and the Investment Multiplier
• Criticisms of “Keynesian Economics”
• The Public Sector
• International Aspects
• The Government Budget Deficit and the National Debt
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 9.1: IS/LM and Aggregate Demand

10 Money and Inflation

• Introduction
• The Equation of Exchange
• Aggregate Demand and Supply
• Potential Criticisms of the Quantity Theory
• The Velocity of Circulation and the Demand for Money
• The Money Multiplier and the Supply of Money
• The Non-Neutrality of Money in the “Short Run”
• Chapter Summary
• Problems
• Appendix 10.1: Money and Banking

11 Is There a Trade-Off between Inflation and Economic Growth?

• Introduction
• The Phillips Curve
• Adaptive Expectations and “Rational” Expectations
• Modern Monetary Economics: The “New Consensus” on Macroeconomic Policy
• Chapter Summary
• Problems
• Appendix 11.1: Interest Rates and Aggregate Demand Growth

12 The Global Economy II: The Balance of Payments and Exchange Rates

• Introduction
• The Balance of Payments and International Flows of Funds
• Exchange Rates
• Alternative Exchange Rate Regimes
• Exchange Rate Determination: Flexible Exchange Rates
• Exchange Rate Determination: Fixed Exchange Rates
• “Classical” Adjustment Mechanisms in the Global Economy
• Chapter Summary
• Problems
• Case Study Questions
• Appendix 12.1: The Mundell-Fleming Model

• Introduction
• Covered Interest Parity
• Uncovered Interest Parity, Purchasing Power Parity, and Real Interest Parity
• Some Problems with Interest Parity and Purchasing Power Parity Assumptions
• Fixed Exchange Rates and the Domestic Rate of Interest
• Chapter Summary
• Problems

14 Economic Growth and Competitiveness: A Macro-Micro Synthesis

• Introduction
• Economic Growth
• Growth Models
• Growth and Business Cycles
• International Competitiveness
• The Porter Model
• Stages of National Competitive Development
• Fundamentals of International Competitiveness
• The Main Social Institutions of Capitalism
• Some Final Remarks
• Chapter Summary
• Problems
• Case Study Questions

The Comeback of Caterpillar Case

Index