CHAPTER 1 – WHAT IS ECONOMICS ALL ABOUT



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Thomson/South-Western’s Resource Integration Guide—A roadmap, designed exclusively for you to use while working through your Principles course. Streamline your studies by accessing section-by-section correlations that integrate the entire print and media text package, as well as several additional, and quite relevant, economics resources.

Access these resources, each available with Arnold, to enhance your learning experience:

• ThomsonNOW for Arnold Concise () is a powerful and fully integrated online learning system designed to help you learn economics, through a variety of resources and tutorials. Benefit by using these excellent resources within ThomsonNow for Arnold Concise:

- Economic Applications EconNews, Policy Debates, EconData, and EconLinks will help you understand theoretical concepts through hands-on exploration and analysis of the latest news stories, political debates, data, and Web links.

- The Graphing Workshop Consisting of tutorials, interactive drawing tools, and exercises that teach how to interpret, reproduce, and explain graphs, this one-stop learning resource will help you master the language of graphs.

- Ask the Instructor Videos Incorporate these videos within your studies--view them on your own to provide clarity for difficult material that you were unable to fully grasp in the classroom.

- Use SketchIt Exercises for extended opportunities to learn about graphing--all tied to the end-of-chapter problems and applications.

• Study Guide, including a wide variety of activities and exercises, all designed to reinforce text concepts and provide additional practice if you wish to fine tune your studies.

• Arnold’s Product Support Web Site () includes access to text supplements, internet activities and exercises, Web links, interactive quizzing, flashcards, key terms and definitions and more.

• How to Think Like an Economist This resource, written by Roger Arnold, provides you with unique insight into the economist’s mind by allowing you to see how interesting issues are approached from an economic perspective. (ISBN: 0-324-01575-5)

• Graphing Exercises, written by Roger Arnold, will provide the practice you need in order to understand how important concepts, principles, and ways of thinking in economics are communicated through graphs. (ISBN: 0-324-32154-6)

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• MarketSim (), by Porter and Schueller, an online microeconomics simulation, designed to help you understand how markets work by providing the opportunity to take on the roles of consumers and producers in a simulated economy. (Student Manual ISBN: 0-324-22205-X)

• Economic Report of the President: Add a dose of reality to your studies and discover how economics can influence the design of public and administration policies. (ISBN: 0-324-32091-4)

• Economics in the Movies (), by Mateer, allows you to bring economic topics to life in a context that you can relate to and truly enjoy. This product consists of clips from recent popular films and classic movies that show economic elements playing a role in the story. (Student Manual ISBN: 0-324-30261-4)

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CHAPTER 1: What Economics Is About

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene |Internet Activity () |

| | | |

|Definitions of | |Internet Activity () |

|Economics | | |

|Economic Categories |Text Self-Test |Internet Activity () |

| |Study Guide* Problem 4 | |

|Key Concepts in |Text Analyzing the Scene (4), “Economics In Everyday Life: Blogging,”|ThomsonNOW for Arnold Concise |

|Economics |“Economics In Popular Culture: Why LeBron James Isn’t in College,” and|() |

| |Self-Test |Economic Applications: EconNews, “SUVs May Become Less |

| |Study Guide* Problems 1, 2, 3, and 5 |Likely to Crack When They Roll Over” (Source: The Wall |

| |How to Think Like an Economist* Ch. 1, “Can You Get Too Much of a Good|Street Journal Online, August 2005) and “How Much is a |

| |Thing,” and Ch. 2, “There is a Right Amount of Everything” |Manatee Worth?” (Source: The Chronicle of Higher |

| |Favorite Ways to Learn Economics* Classroom Experiment 1.A, “Economics|Education, March 2004) |

| |Is All Around Us: Hot Dog Vendors on the Beach,” Problem Set 1.1, |The Graphing Workshop “Working with Graphs” |

| |“Allocating Resources,” Problem Set 1.2, “Calculating Opportunity | |

| |Cost,” Problem Set 1.3, “Marginal Analysis,” and Classroom Experiment | |

| |9.B, “Outguessing the Fed (among others): Internet Stock Market Games”| |

| |Economics in the Movies* Scene 1: “Opportunity Cost: The Family Man”| |

| |and Scene 15: “Efficiency: Along Came Polly” | |

|Economists Build and |Text Self-Test | |

|Test Theories |Study Guide* Theory on a TV Show | |

| |How to Think Like an Economist* Ch. 3, “Have a Question, Build a | |

| |Theory,” and Ch. 5, “Why Is It Harder to Predict than to Explain?” | |

|End-of-Chapter |Text “A Reader Asks: What’s In Store for an Economics Major?” | |

|Resources |Issues in American Economic History* Ch. 1, “Introduction” | |

|Appendix A: Working |Favorite Ways to Learn Economics* Classroom Experiment 4.B, “Learning |ThomsonNOW for Arnold Concise |

|with Diagrams |Graphs the Fun Way: Blind Curve” |() |

| | |SketchIt Exercises 1-1 and 1-2 |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 2: Economic Activities: Producing and Trading

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|The Production |Text Analyzing the Scene (2), “Economics In Everyday Life: |ThomsonNOW for Arnold Concise |

|Possibilities Frontier |Liberals, Conservatives, and the PPF” and Self-Test |() |

| |Study Guide* Problems 3-10 |The Graphing Workshop “Production Possibilities Frontier”|

| |Graphing Exercises* Exercise 1: “The Production Possibilities |SketchIt Exercises 2.1 and 2.2 |

| |Frontier” |Ask the Instructor Video What Does Barbed Wire Have to Do|

| |Favorite Ways to Learn Economics* Classroom Experiment 1.B, |With Externalities? |

| |“Production Possibilities Frontier Experiment: Links and Smiles,” |Internet Activity () |

| |Problem Set 1.4, “Production Possibility Curves,” and Problem Set | |

| |1.5, “Shifting Production Possibility Curves” | |

|Trade or Exchange |Text Analyzing the Scene (2) and Self-Test |ThomsonNOW for Arnold Concise |

| |Study Guide* Problems 1 and 2 |() |

| | |Ask the Instructor Video Does It Sometimes Cost Too Much |

| | |to Save a Life? |

|Production, Trade and |Text Analyzing the Scene, “Economics In Popular Culture: Jerry | |

|Specialization |Seinfeld, the Doorman, and Adam Smith,” “Economics In Popular | |

| |Culture: Elvis, Comparative Advantage, and Specialization,” Thinking| |

| |Like an Economist and Self-Test | |

| |Economics in the Movies* Scene 10: “Comparative Advantage: Babe” | |

|End-of-Chapter |Text “A Reader Asks: How Will Economics Help Me If I’m a History | |

|Resources |Major?” | |

| |Economic Report of the President* “Economic Report of the | |

| |President,” “Annual Report of the Council of Economic Advisers*” and | |

| |“Overview” | |

| |Issues In American Economic History* Ch. 3, “Economic Systems Before| |

| |the Opening of the New World” and Ch. 4, “The Age of Exploration and | |

| |Spanish Colonization” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 3: Supply and Demand

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Demand |Text Thinking Like an Economist, Analyzing the Scene, “Economics|ThomsonNOW for Arnold Concise |

| |In the World: U4E (((H)))^5 Yours Forever, Big Hug, High Five,” |() The Graphing Workshop |

| |Thinking Like an Economist and Self-Test |“Demand” |

| |Study Guide* Problems 8 and 10 |Internet Activities () |

| |Graphing Exercises* Exercise 2: “Demand” | and

| |Favorite Ways to Learn Economics* Problem Set 2.2, “Shifting | |

| |Demand Curves” | |

|Supply |Text Self-Test |ThomsonNOW for Arnold Concise |

| |Graphing Exercises* Exercise 3: “Supply” |The Graphing Workshop “Supply” |

| |Favorite Ways to Learn Economics* Problem Set 2.3, “Shifting |Economic Application: EconNews, “It’s Sunny Out. Turn on the |

| |Supply Curves” |Solar Panels, Please…” (Source: The Wall Street Journal, June |

| | |2005) |

|The Market: Putting |Text “Economics In Everyday Life: Getting to Class on Time,” |ThomsonNOW for Arnold Concise |

|Supply and Demand |Analyzing the Scene and Self-Test |The Graphing Workshop “Market Equilibrium” |

|Together |Study Guide* Problems 1-5 |Ask the Instructor Video Do the Terms “Shortage” and |

| |Graphing Exercises* Exercise 11: “Consumers’ Surplus” |“Scarcity” Mean the Same Thing? |

| |Favorite Ways to Learn Economics* Classroom Experiment 2.A, |Economic Applications: EconNews, “Job Growth is Great, but it |

| |“Buying and Selling Snipes in the Pit Market,” Classroom |May Bring an Unwelcome Houseguest: Inflation,” (Source: The |

| |Experiment 2.B, “Penning Supply and Demand Curves,” Problem Set |New York Times Online, August 2005), “Goodbye Y2K, Hello DST” |

| |2.1, “Graphing Supply and Demand,” Problem Set 2.8, “You Don’t |(Source: The USA Today, August 2005) and “Kodak Struggles to |

| |Have To Be Old To Be a Classic,” Problem Set 2.11, “Consumer and |Learn from Its Past Mistakes” (Source: The Economist, May |

| |Producer Surplus,” Problem Set 2.15, “Consumer Surplus” Problem |2005) |

| |Set 2.16, “Producer Surplus” and Classroom 11.A, “Getting into the|Internet Activities () |

| |(Circular) Flow of Things” | and

| |Economics in the Movies* Scene 2: “Gains from Exchange: Out of | |

| |Sight” | |

|Price Controls |Text “Economics In Everyday Life: Supply and Demand on a |ThomsonNOW for Arnold Concise |

| |Freeway,” Thinking Like an Economist, Analyzing the Scene and |The Graphing Workshop “Price Controls” |

| |Self-Test |Economic Application: EconNews, “Defying Historical Lessons, |

| |Study Guide* Problems 6, 7, and 9 |Hawaii sets Gasoline Price Caps…Again!” (Source: The Wall |

| |Favorite Ways to Learn Economics* Problem Set 2.7, “Here Is a |Street Journal Online, August 2005) |

| |Message for Us,” Problem Set 2.9, “Price Floor,” Problem Set 2.10,| |

| |“Price Ceiling,” and Problem Set 2.12, “The Cost of Taxation” | |

|End-of-Chapter |Text “A Reader Asks: How Does Knowing About Supply and Demand | |

|Resources |Help Me?” | |

| |Economic Report of the President* Ch. 8, “Regulating Energy | |

| |Markets” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 4: Macroeconomic Measurements

|Chapter Section |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Macroeconomic Measurements | |ThomsonNOW for Arnold Concise |

| | |() Ask the Instructor |

| | |Video Does New Technology Destroy Jobs? |

|Measuring Prices |Text Analyzing the Scene (2), Thinking Like an Economist, |ThomsonNOW for Arnold Concise |

| |“Economics In Popular Culture: Who Earned More as President: |Economic Applications: EconNews, “Measuring Housing Prices” |

| |John F. Kennedy or George W. Bush?” and Self-Test |(Source: The New York Times Online, June 2005) and “Job |

| |Study Guide* Problems 1-5 |Numbers Down in May” (Source: The New York Times Online, |

| |Favorite Ways to Learn Economics* Classroom Experiment 8.A, |June 2005) |

| |“COLAs and Living Burger-to-Burger on Route 66,” Problem Set 8.1, |Economic Application: EconData, “What Is the Consumer Price |

| |“The Consumer Price Index,” Problem Set 8.2, “Inflation” and |Index?” |

| |Problem Set 8.3, “Benchmarking Inflation” |Internet Activities and |

| | | |

|Measuring Unemployment |Text “Economics In the World: What Explains the Increasing |ThomsonNOW for Arnold Concise |

| |Percentage of Women in the Labor Force?” and Self-Test |Economic Application: Policy Debate, “Is a ‘Jobless |

| |Study Guide* Problems 6-9 |Recovery’ a Necessary Part of the ‘New Economy?’” |

| |Favorite Ways to Learn Economics* Problem Set 8.6, “Calculating |Economic Application: EconData, “What is the Civilian |

| |the Unemployment Rate,” Problem Set 8.7, “Types of Unemployment,” |Unemployment Rate?” |

| |Problem Set 8.8, “The Natural Rate of Unemployment” and Problem |Internet Activities () |

| |Set 8.10, “The Misery Index” | and |

| |Economics in the Movies* Scene 3: “The Great Depression: | |

| |Seabiscuit” | |

|Gross Domestic Product |Text Analyzing the Scene and Self-Test |ThomsonNOW for Arnold Concise Economic Applications: |

| |Study Guide* Problems 10 and 13 |EconNews, “Consumer Confidence Drops” (Source: The New York |

| |Favorite Ways to Learn Economics* Problem Set 8.4, “Gross |Times Online, July 2005) |

| |Domestic Product” | |

| |Economics in the Movies* Scene 9, “Measuring Economic | |

| |Performance: Traffic” | |

|The Expenditure Approach to|Text Self-Test | |

|Computing GDP for a |Study Guide* Problem 11, 12, and 14 | |

|Real-World Economy |Favorite Ways to Learn Economics* Problem Set 11.3, “The | |

| |Aggregate Expenditure Model” | |

|Real GDP |Text “Economics In Everyday Life: Does the State of the Economy |ThomsonNOW for Arnold Concise Economic Application: |

| |Influence How People Vote?” and Self-Test |EconNews, “Is the Recession Really Over?” (Source: Talon |

| |Study Guide* Problems 15-17 |News, July 2003) |

| |Favorite Ways to Learn Economics* Problem Set 8.9, “Real vs. | |

| |Nominal Values” | |

|End-of-Chapter Resources |Text “A Reader Asks: Where Do I Go to Learn the Specifics of | |

| |Jobs and Wages?” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 5: Aggregate Demand and Aggregate Supply

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|The Two Sides to an | | |

|Economy | | |

|Aggregate Demand |Text Thinking Like an Economist, “Economics In Everyday Life: |ThomsonNOW for Arnold Concise |

| |Looking at Consumption,” Analyzing the Scene and Self-Test |() |

| |Study Guide* Problems 1, 3, 10, and 11 |SketchIt Exercise 5-1 |

| |Graphing Exercises* Exercise 5: “Aggregate Demand” |Economic Application: EconNews, “Two Keys to Long-Term |

| | |Economic Recovery” (Source: The New York Times Online, July |

| | |2004) |

| | |Economic Application: EconData, “What Is the Interest Rate |

| | |Spread?” |

|Short-Run Aggregate |Text Self-Test | |

|Supply |Study Guide* Problem 2 | |

| |Graphing Exercises* Exercise 6: “Aggregate Supply” | |

|Putting AD and SRAS |Text “Economics In Popular Culture: Aggregate Demand, the Great|ThomsonNOW for Arnold Concise |

|Together: Short-Run |Depression, and Scrabble,” Analyzing the Scene, Thinking Like an |() The Graphing Workshop |

|Equilibrium |Economist, and Self-Test |“Aggregate Demand & Aggregate Supply” |

| |Study Guide* Problems 4, 5, 7, 8, and 9 |Internet Activities () |

| |Graphing Exercises* Exercise 7: “Aggregate Demand and Aggregate | and |

| |Supply: In the Short Run” | |

| |Favorite Ways to Learn Economics* Problem Set 11.4, “Aggregate | |

| |Supply and Aggregate Demand” | |

|Long-Run Aggregate |Text Self-Test | |

|Supply |Study Guide* Problem 6 | |

|End-of-Chapter |Text “A Reader Asks: Do My Job Prospects Depend on AD and SRAS?”| |

|Resources |Issues in American Economic History* Ch. 12, “The Roaring | |

| |Twenties and the Depressed Thirties” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 6: The Self-Regulating Economy

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene |ThomsonNOW for Arnold Concise |

| | |() The Graphing Workshop|

| | |“Self Adjustment to Potential Output” |

|The Classical View |Text Analyzing the Scene (2) and Self–Test |ThomsonNOW for Arnold Concise |

| | |() |

| | |Ask the Instructor Video How Does the Government Affect the |

| | |Economy? |

| | |The Graphing Workshop “Loanable Funds Market” |

| | |Internet Activities () |

| | | and |

|Three States of the |Text Self-Test |ThomsonNOW for Arnold Concise |

|Economy |Study Guide* Problems 1-5 |() SketchIt Exercises |

| |Graphing Exercises* Exercise 8: “Aggregate Demand and Aggregate |6-1 and 6-2 |

| |Supply: In the Long Run” |Internet Activity () |

| | | |

|The Self-Regulating |Text Analyzing the Scene (2), Thinking Like an Economist, |ThomsonNOW for Arnold Concise |

|Economy |“Economics In Technology: The Natural Unemployment Rate, |() |

| |Technology, and Policy Errors” and Self-Test |The Graphing Workshop “Contractionary Gap” and “Expansionary |

| |Study Guide* Problems 6-8 |Gap” |

| | |Ask the Instructor Videos What Is Macroeconomics? and Have |

| | |Computers Affected Worker Productivity? |

|End-of-Chapter |Text “A Reader Asks: Why Don’t All Economists Agree?” | |

|Resources | | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 7: Economic Instability: A Critique of the Self-Regulating Economy

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Questioning the |Text Analyzing the Scene (2) and Self-Test |ThomsonNOW for Arnold Concise |

|Classical Position | |() SketchIt Exercise 7-2 |

|The Simple Keynesian |Text “Economics In Popular Culture: The Multiplier Goes on |ThomsonNOW for Arnold Concise |

|Model |Spring Break,” Analyzing the Scene, and Self-Test |() |

| |Study Guide* Problems 1, 2, 4, and 5 |The Graphing Workshop “Keynesian Cross” |

| |Favorite Ways to Learn Economics* Classroom Experiment 11.B, |Ask the Instructor Videos Can We Make Sense Out of the |

| |“Experimenting with the Marginal Propensity to Consume: Easy |Consumption Function? What Do Economists Mean by the Term |

| |Come, Easy Go” |“Multiplier”? and Does the Multiplier Work in Both Directions? |

| |Economics in the Movies* Scene 11: “Intertemporal Time |Internet Activity () |

| |Management: About a Boy” | |

|The Simple Keynesian |Text Analyzing the Scene, Thinking Like an Economist, and | |

|Model in the AD-AS |Self-Test | |

|Framework |Study Guide* Problem 6 | |

|The Simple Keynesian |Text Thinking Like an Economist and Self-Test |ThomsonNOW for Arnold Concise |

|Model in the TE-TP |Study Guide* Problems 3, and 7-10 |() SketchIt Exercise 7-1 |

|Framework |Graphing Exercises* Exercise 9: “The Income-Expenditure or | |

| |Keynesian Framework” | |

|End-of-Chapter |Text “A Reader Asks: Was Keynes a Revolutionary in Economics?” |Internet Activity () |

|Resources | | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 8: Money, Banking, and The Federal Reserve

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Money: What Is It and|Text Analyzing the Scene and “Economics In the World: English |ThomsonNOW for Arnold Concise |

|How Did It Come To Be?|and Money” |() |

| |Favorite Ways to Learn Economics* Classroom Experiment 10.A, |Ask the Instructor Videos What Has Been Money in the Past and |

| |“Money Creation Experiment: Banks and Borrowers” and Classroom |What is Money Today? and What Are the Principal Functions of |

| |Experiment 10.B, “Barter vs. Money: Appreciating the Dollar” |Money? |

| | |Economic Application: EconNews, “The Midas Factor” (Source: |

| | |The Washington Post, February 2003) |

|Defining The Money |Text Thinking Like An Economist, “Economics In Everyday Life: Is|ThomsonNOW for Arnold Concise |

|Supply |Money the Best Gift?” and Self-Test |() Economic Application: |

| |Study Guide* Problem 2 |EconData, “What Is the Money Supply” |

| | |Internet Activities () |

| | | and |

|The Money Creation |Text “Economics In Popular Culture: Economics on the Yellow |ThomsonNOW for Arnold Concise |

|Process |Brick Road” and Self-Test |() Ask the Instructor |

| |Study Guide* Problems 1 and 3-10 |Video How Are Banks Different From Other Businesses? |

| |Favorite Ways to Learn Economics* Problem Set 10.1, “Bank | |

| |Expansion of Demand Deposits” and Problem Set 10.2, “The Reserve | |

| |Requirement and the Money Multiplier” | |

| |Economics in the Movies* Scene 8: “Banking System: It’s a | |

| |Wonderful Life” | |

|The Federal Reserve |Text Analyzing the Scene and Self-Test |ThomsonNOW for Arnold Concise |

|System |Study Guide* Problems 11 and 12 |() |

| | |Ask the Instructor Video How Do You Calculate a Bank’s Excess |

| | |Reserves? |

| | |Economic Application: EconNews, “Fed Continues to Fight |

| | |Inflation” (Source: The New York Times Online, November 2004) |

| | |Internet Activities () |

| | | and |

| | | |

|End-of-Chapter |Text “A Reader Asks: How Do I Get a Job at the Fed?” | |

|Resources |Issues in American Economic History* Ch. 8, “Secession, War and | |

| |Economic Change” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 9: Money, the Price Level, and Interest Rates

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Money and the Price |Text “Economics In the World: The World Money and Inflation,” |ThomsonNOW for Arnold Concise |

|Level |“Economics In Popular Culture: The California Gold Rush, or an |() |

| |Apple for $72” and Self-Test |The Graphing Workshop AD/AS with a Change in the Money Supply|

| |Study Guide* Problems 1 and 2 |Internet Activity () |

| | | |

|Monetarism |Text Analyzing the Scene and Self-Test | |

| |Study Guide* Problems 4, 5, 8, and 9 | |

| |Favorite Ways to Learn Economics* Problem Set 9.3, “Fiscal Policy| |

| |and Monetary Policy” | |

|Money and Interest |Text Analyzing the Scene and Self-Test |ThomsonNOW for Arnold Concise |

|Rates |Study Guide* Problems 3, 6, and 7 |() |

| | |Economic Applications: EconNews, “Tight Money Policy |

| | |Continues” (Source: The New York Times Online, July 2005) and |

| | |“Greenspan’s Long Term Outlook” (Source: New York Times |

| | |Online, February 2004) |

| | |Ask the Instructor Video Why Should We Care How Fast the Money|

| | |Supply Grows? |

|End-of-Chapter |Text “A Reader Asks: How Do We Know What the Expected Inflation | |

|Resources |Rate Equals?” | |

| |Economic Report of the President* Ch. 2, “The Manufacturing | |

| |Sector” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 10: Fiscal and Monetary Policy

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Government Policies | |ThomsonNOW for Arnold Concise |

|and the Economy | |() |

| | |Ask the Instructor Video Why Do People Listen to Alan |

| | |Greenspan? |

|Fiscal Policy |Favorite Ways to Learn Economics* Problem Set 9.1, “Fiscal |ThomsonNOW for Arnold Concise |

| |Policy” |SketchIt Exercises 10.1 and 10.2 |

| | |Economic Applications: EconNews, “Tax Revenues on the Rise” |

| | |(Source: The New York Times Online, July 2005) and “Extending |

| | |the Bush Tax Cuts” (Source: New York Times Online, March 2004)|

|Demand-Side Fiscal |Text Analyzing the Scene (2) and Self-Test |ThomsonNOW for Arnold Concise Economic Application: EconNews,|

|Policy |Study Guide* Problems 1 and 2 |“An Unofficial Economic Indicator” (Source: New York Times |

| | |Online, August 2004) |

|Supply-Side Fiscal |Text “Economics In Everyday Life: JFK and the 1964 Tax Cut,” | |

|Policy |Analyzing the Scene, Thinking Like an Economist and Self-Test | |

| |Study Guide* Problems 3 and 4 | |

|Monetary Policy |Study Guide* Problems 5, 6, and 8 |ThomsonNOW for Arnold Concise |

| | |Ask the Instructor Video Is One Type of Inflation Worse Than |

| | |Another? |

| | |The Graphing Workshop “The Money Market” |

|Monetary Policy and |Favorite Ways to Learn Economics* Problem Set 9.2, “Monetary | |

|the Problem of |Policy” and Problem Set 11.5, “Inflationary and Recessionary Gaps”| |

|Inflationary and | | |

|Recessionary Gaps | | |

|Monetary Policy and |Text “Economics In Everyday Life: How Far Does Monetary Policy | |

|the |Reach? Or, Monetary Policy and Blue Eyes,” Analyzing the Scene, | |

|Activist-Nonactivist |Thinking Like an Economist, and Self-Test | |

|Debate | | |

|Nonactivist Monetary |Text “Economics In Everyday Life: Asset-Price Inflation” | |

|Proposals |Study Guide* Problem 7 | |

|End-of-Chapter |Text “A Reader Asks: Are Americans Overtaxed?” | |

|Resources |Economic Report of the President* Ch. 4, “Tax Incidence: Who | |

| |Bears the Tax Burden?” and Ch. 5, “Dynamic Revenue and Budget | |

| |Estimation” | |

| |Issues in American Economic History* Ch. 13, “Facing Another | |

| |World War” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 11: Expectations Theory and the Economy

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Phillips Curve |Text Self-Test |ThomsonNOW for Arnold Concise |

|Analysis |Study Guide* Problems 2, 3, and 9 |() |

| |Favorite Ways to Learn Economics* Problem Set 8.11, “The Phillips|SketchIt Exercise 11.2 |

| |Curve” |Internet Activities () |

| | | and |

| | | |

|The Controversy |Text Self-Test |ThomsonNOW for Arnold Concise |

|Begins: Are There |Study Guide* Problems 1, 5, 8, 10, and 11 |() |

|Really Two Phillips | |Ask the Instructor Video Is the Phillips Curve a Reliable |

|Curves? | |Basis for Stabilization Policy? |

| | |The Graphing Workshop “Aggregate Demand, Aggregate Supply, and |

| | |the Phillips Curve” and “Short-Run and Long-Run Phillips Curve”|

|Rational Expectations |Text “Economics In Technology: Turning the Unanticipated Into |ThomsonNOW for Arnold Concise |

|and New Classical |the Anticipated,” “Economics In Everyday Life: Rational |() |

|Theory |Expectations in the College Classroom” Analyzing the Scene and |SketchIt Exercise 11.1 |

| |Self-Test |The Graphing Workshop “Expectations” |

| |How to Think Like an Economist* Ch. 14, “Rational Men and Women” |Ask the Instructor Video Can We Count on Monetary and Fiscal |

| |Study Guide* Problems 4, 6, and 7 |Policy to Smooth Out the Business Cycle? |

|New Keynesians and |Text “Economics In Popular Culture: The Boy Who Cried Wolf (and| |

|Rational Expectations |the Townspeople With Rational Expectations)” and Self-Test | |

|Looking at Things From|Text Self-Test | |

|the Supply Side: Real| | |

|Business Cycle | | |

|Theorists | | |

|End-of-Chapter |Text “A Reader Asks: Do Expectations Matter?” | |

|Resources | | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 12: Economic Growth: Resources, Technology and Ideas

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|A Few Basics About |Text Analyzing the Scene |ThomsonNOW for Arnold Concise |

|Economic Growth |Study Guide* Problems 1-7 |() |

| |Favorite Ways to Learn Economics* Problem Set 8.5, “Economic |SketchIt Exercises 12.1 and 12.2 |

| |Growth” |Ask the Instructor Video How Important Is the Rate of Economic|

| | |Growth to You? |

| | |Internet Activity () |

| | | |

|What Causes Economic |Text “Economics In Technology: How Economizing on Time Can |ThomsonNOW for Arnold Concise |

|Growth? |Promote Economic Growth,” Thinking Like An Economist, “Economics |() |

| |In Everyday Life: Religious Beliefs and Economic Growth,” and |Ask the Instructor Video What’s the ‘Rule of 72’ and Why Is It|

| |Self-Test |So Important? |

| |Economics in the Movies* Scene 4: “Growth and Prosperity: The |Economic Application: EconNews, “The Tradeoff Between |

| |Man Who Wasn’t There” |Productivity (Employment) and Inflation” (Source: The New York|

| | |Times Online, August 2005) |

| | |Business & Company Resource Center* |

| | |() “Highlight Tax Incentives Please” |

| | |(Source: Financial Adviser, August 2005) |

|New Growth Theory |Text “Economics In Everyday Life: Professors, Students, and |ThomsonNOW for Arnold Concise |

| |Ideas” and Self-Test |() |

| | |Ask the Instructor Video Why Are Some Nations Rich, But Others|

| | |Are Poor? |

|End-of-Chapter |Text “A Reader Asks: Can An Understanding of How Economies Grow| |

|Resources |Help Me?” and “Economics In Perspective: Debates in | |

| |Macroeconomics” | |

| |Economic Report of the President* Ch. 1, “Lessons From the Recent| |

| |Business Cycle” | |

| |Issues in American Economic History* Ch. 2, “Economic Growth in | |

| |the Global Economy” and Ch. 9, “Peace and Renewed Progress” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 13: Elasticity

|Chapter Outline | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Elasticity: |Text Analyzing the Scene “Economics In Everyday Life: Drug |ThomsonNOW for Arnold Concise |

|Part 1 |Busts and Crime,” “Economics In Everyday Life: Will High Taxes on|() |

| |Cigarettes Reduce Smoking?” and Self-Test |SketchIt Exercise 13.1 |

| |Study Guide* Problems 1-3 |The Graphing Workshop “Price Elasticity” |

| |How to Think Like an Economist* Ch. 17, “Drug Busts and SUVs or |Ask the Instructor Video Is Price Elasticity of Demand the |

| |the Importance of Thinking in Threes” |Same Thing as Slope? |

| |Favorite Ways to Learn Economics* Problem Set 2.4 “Elasticity,” |Economic Applications: EconNews, “Does Not Smoking Make You |

| |Problem Set 2.5, “Yuppie Scum Bumper Stickers,” Problem Set 2.6, |Fat?” (Source: The New York Times, July 2005), |

| |“A Parking Lot Problem” and Problem Set 2.14, “Elasticity and |“Wireless-Phone-Only Households are Increasing, but not as |

| |Deadweight Loss” |Quickly as Predicted” (Source: The Wall Street Journal, June |

| | |2005), “My French-Mocha-Vanilla-Double-shot-Latte-Espressochino|

| | |with Non-fat Milk and Cinnamon is Going to Cost HOW MUCH?” |

| | |(Source: The Wall Street Journal, September 2004), and “You |

| | |Need a Calculator—and a Second Mortgage, Sometimes—to Go to |

| | |Amusement Parks These Days” (Source: The Wall Street Journal, |

| | |June 2004) |

|Elasticity: |Text Analyzing the Scene, “Economics In Popular Culture: Why Do |Internet Activity () |

|Part 2 |Companies Hire Celebrities?” and Self-Test | |

|Other Elasticity |Text Thinking Like an Economist (2), Analyzing the Scene, and |ThomsonNOW for Arnold Concise |

|Concepts |Self-Test |() |

| |Study Guide* Problems 4-8 |Ask the Instructor Videos Why Are Taxes on Cigarettes So High?|

| | |and Who Really Pays for Social Security? |

| | |The Graphing Workshop “Tax Incidence” |

| | |Business & Company Resource Center* |

| | |() “Is Tomorrow Another Day? The |

| | |Labor Supply of New York City Cab Drivers” (Source: Journal of|

| | |Political Economy, February 2005) |

|End-of-Chapter |Text “A Reader Asks: Is the Type of Thinking Inherent in | |

|Resources |Elasticity Useful?” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 14: Consumer Choice: Maximizing Utility and Behavioral Economics

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene |Internet Activity () |

| |MarketSim* () Read “Overview, | |

| |Strategy, and Program Structure,” pages 16-28 of the MarketSim |MarketSim* () Register for the|

| |student manual to prepare for working through “Jeremy’s Market.” |MarketSim program online by visiting the site. |

|Utility Theory |Text “Economics In the World: Cuban Cigars” and Self-Test |ThomsonNOW for Arnold Concise |

| |Study Guide* Problems 1 and 5 |() |

| |How to Think Like an Economist* Ch. 22, “More than Common Sense |SketchIt Exercises 14.1 and 14.2 |

| |is Needed” |Ask the Instructor Video How Is Weight Gain By First-Year |

| |Graphing Exercises* “Exercise 10: Marginal Utility” |College Students Related to the Law of Diminishing Marginal |

| |Favorite Ways to Learn Economics* Problem Set 1.7, “Marginal |Utility? |

| |Utility Problem,” Classroom Experiment 3.A, “Experimenting with |Economic Application: EconNews, “Who Wouldn’t Want a Fridge |

| |Marginal Utility: Popcorn and Soda-Pop” and Problem Set 3.4, |that Can Hold a Pony Keg?” (Source: The Wall Street Journal, |

| |“Utility Maximization” |July 2005) |

| |Economics in the Movies* Scene 12: “Consumer Choice: The | |

| |Meaning of Life” | |

|Consumer Equilibrium |Text Thinking Like an Economist, “Economics In Everyday Life: |ThomsonNOW for Arnold Concise |

|and Demand |How You Pay for Good Weather,” Analyzing the Scene and Self-Test |The Graphing Workshop Marginal Benefits and Marginal Costs |

| |Study Guide* Problems 2, 3, and 4 |Ask the Instructor Video Why Do Consumers Buy Less of an Item |

| | |When Its Price Rises? |

|Behavioral Economics |Text Self-Test |Internet Activity () |

| | | |

|End-of-Chapter |Text “A Reader Asks: Do People Really Equate Marginal |MarketSim* () Visit this site |

|Resources |Utility-Price Ratios?” |to work the activities and exercises online for “Jeremy’s |

| |MarketSim* () Read activities and |Market.” |

| |exercises for “Jeremy’s Market: A Barter Economy,” pages 29-57 of| |

| |the student manual. | |

|Appendix C: Budget |Favorite Ways to Learn Economics* Classroom Experiment 3.B, |ThomsonNOW for Arnold Concise |

|Constraint and |“Indifference Curve Experiment: Are You Sure?” Problem Set 3.1, |SketchIt Exercise 14.3 |

|Indifference Curve |“Budget Lines,” Problem Set 3.2, “Indifference Curves,” Problem |The Graphing Workshop The Budget Constraint |

|Analysis |Set 3.3, “Budget Lines, Indifference Curves, and Consumer |Business & Company Resource Center* |

| |Satisfaction,” and Problem Set 3.5, “Budget Lines, Indifference |() “High Hopes for Low Prices; Ross |

| |Curves, and Demand Curves” |Appeals to Bargain Hunters with DD’s Discounts.” (Source: San|

| | |Francisco Chronicle, August 2004) |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 15: Production and Costs

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|The Firm’s Objective: |Text Analyzing the Scene and Self-Test |ThomsonNOW for Arnold Concise |

|Maximizing Profit |Study Guide* Problem 1 |() Ask the Instructor |

| | |Videos How Do Businesses Raise Cash to Finance Startups and |

| | |Expansions? and Why Do Economists and Accountants Disagree? |

|Production |Text Self-Test |ThomsonNOW for Arnold Concise |

| |Study Guide* Problems 2-6 and 10 |Economic Application: EconData, “Labor Productivity” |

| |Favorite Ways to Learn Economics* Classroom Experiment 4.A, |Economic Application: Policy Debate, “Is There a New Economy?”|

| |“Diminishing Marginal Product Experiment: The Econville Link |SketchIt Exercise 15.2 |

| |Factory,” Problem Set 4.1, “The Fixed, Variable, and Total Cost of|Business & Company Resource Center* |

| |Production” Problem Set 4.4, “Daphne’s Apparel Shop 2,” Problem |() “A Productivity Primer; Economics|

| |Set 4.9, “Cost Curves—The Un-University,” and Problem Set 5.8, |Focus” (Source: The Economist US, November 2004) |

| |“Changing Variable Cost and Fixed Cost” | |

|Costs of Production: |Text “Economics In Everyday Life: High School Students, Staying|ThomsonNOW for Arnold Concise |

|Total, Average, |Out Late, and More,” Analyzing the Scene (2), “Economics In the |The Graphing Workshop “Production and Cost” |

|Marginal |World: What Matters to Global Competitiveness?” A Closer Look, |Ask the Instructor Video What Do We Mean by Fixed Versus |

| |“Economics In Everyday Life: ‘I Have to Become an Accountant,’” |Variable Costs |

| |Thinking Like an Economist, and Self-Test |Economic Applications: EconNews, “Hotels Won’t Change the |

| |Study Guide* Problems 7-9 |Sheets Every Night Anymore” (Source: USA Today, July 2005) and|

| |Graphing Exercises* Exercise 12: “Costs” |“Just-in-time Manufacturing May Become Just-as-soon-as-I-can |

| |Favorite Ways to Learn Economics* Problem Set 4.2, “The Average |Manufacturing” (Source: The Wall Street Journal, December |

| |and Marginal Cost of Production” and Problem Sets 4.3, 4.5, 4.6, |2004) |

| |4.7, and 4.8, “Daphne’s Apparel Shop” |Internet Activities () |

| | |, and |

| | | |

|Production and Costs |MarketSim* () Read “Introduction”|ThomsonNOW for Arnold Concise Ask the Instructor Video Why |

|in the Long Run |and “Overview, Strategy Tips, and Program Structure” in the |Can’t We Feed the World From a Flower Pot? |

| |MarketSim student manual, pages 59-100, to familiarize yourself |MarketSim* () Visit the |

| |with “Adam’s Market: A Monetary Economy.” |product site and complete Learning Activities and Exercises for|

| | |“Adam’s Market: A Monetary Economy” |

|Shifts in Cost Curves |Text Self-Test |ThomsonNOW for Arnold Concise Economic Application: Policy |

| | |Debate, “Shifts in Cost Curves” |

|End-of-Chapter |Text “A Reader Asks: Will A Knowledge of Sunk Cost Help Prevent| |

|Resources |Me From Making a Mistake in the Stock Market?” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 16: Perfect Competition

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|The Theory of Perfect |Text Analyzing the Scene and Self-Test |ThomsonNOW for Arnold Concise |

|Competition |Study Guide* Problems 1-3 |() |

| |Favorite Ways to Learn Economics* Problem Set 4.10, “Perfect |Economic Application: EconData, “What is the S&P 500?” |

| |Competition Consultants” |The Graphing Workshop Firm and Market in Perfect Competition |

| | |(Short-Run Profit Maximization) |

| | |Ask the Instructor Video Is the Used Car Market Perfectly |

| | |Competitive? |

| | |Internet Activities () |

| | | and |

|Perfect Competition in|Text Analyzing the Scene (2) and Self-Test |ThomsonNOW for Arnold Concise |

|the Short Run |Study Guide* Problems 4 and 7 |() |

| |Graphing Exercises* Exercise 13: “Perfect Competition” |SketchIt Exercise 16.1 |

| |Favorite Ways to Learn Economics* Problem Set 4.11, “Perfectly |The Graphing Workshop “Short-Run Supply Decision” |

| |Competitive Markets and Firms” and Problem Set 4.12, “Perfect | |

| |Competition: Reading the Graphs” | |

|Perfect Competition in|Text “Economics In Popular Culture: What Do Audrey Hepburn, |ThomsonNOW for Arnold Concise |

|the Long Run |Lucille Ball, and Bugs Bunny Have in Common?” “Economics In |() |

| |Everyday Life: Do Churches Compete?” Analyzing the Scene (2), and|SketchIt Exercise 16.2 |

| |Self-Test |Ask the Instructor Video Do Competitive Firms Earn Economic |

| |Study Guide* Problems 5 and 6 |Profit in the Long Run? |

| |Economics in the Movies* Scene 20: “Auctions: The River” | |

|End-of-Chapter |Text “A Reader Asks: Does Job Security Have Anything to do With| |

|Resources |Fixed and Variable Costs?” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 17: Monopoly

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|The Theory of Monopoly |Text Self-Test |ThomsonNOW for Arnold Concise |

| | |() Economic Application: |

| | |Policy Debate, “Is Microsoft a Monopoly?” |

|Monopoly Pricing and |Text “Economics In Everyday Life: Monopoly and the Boston Tea|ThomsonNOW for Arnold Concise |

|Output Decisions |Party” and Analyzing the Scene (2) |() |

| |Study Guide* Problems 1, 4, and 5 |SketchIt Exercise 17.1 |

| |Graphing Exercises* Exercise 14: Monopoly |The Graphing Workshop “Output Determination in Monopoly” |

| |Favorite Ways to Learn Economics* Classroom Experiment 5.C, “A|Ask the Instructor Videos Why Are Cable Rates So High? and Why|

| |Monopoly Making Dough,” Problem Set 5.1, “Daphne’s Apparel Shop|Do Professions Try to Limit Entry? |

| |as a Monopoly,” Problem Set 5.2, “Monopoly Consultant,” Problem| |

| |Set 5.3, “Monopoly,” Problem Set 5.4, “Total Revenue, Marginal | |

| |Revenue, and Average Revenue” and Problem Set 5.5, “Marginal | |

| |Revenue and Elasticity” | |

| |Economics in the Movies* Scene 13: “Monopoly: Being John | |

| |Malkovich” | |

|Perfect Competition and |Text Self-Test |ThomsonNOW for Arnold Concise |

|Monopoly |Study Guide* Problem 2 |() |

| | |SketchIt Exercise 17.2 |

| | |The Graphing Workshop “Monopoly: Demand and Marginal Revenue”|

|The Case Against Monopoly|Text Thinking Like an Economist |Internet Activity () |

| |Study Guide* Problem 3 | |

|Price Discrimination |Text Analyzing the Scene, “Economics In Everyday Life: | |

| |Amazon and Price Discrimination,” “Economics In Everyday Life: | |

| |Why Do District Attorneys Plea Bargain?” and Self-Test | |

|End-of-Chapter Resources |Text “A Reader Asks: Do Colleges and Universities Price | |

| |Discriminate?” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 18: Monopolistic Competition, Oligopoly, and Game Theory

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|The Theory of |Text Self-Test |ThomsonNOW for Arnold Concise |

|Monopolistic |Study Guide* Problems 1 and 2 |() |

|Competition |Favorite Ways to Learn Economics* Problem Set 5.7, “Monopolistic |SketchIt Exercises 18.1 and 18.2 |

| |Competition” |The Graphing Workshop “The Monopolistically Competitive Firm |

| | |in the Short Run” |

| | |Economic Applications: EconNews, “Circuses: It’s Not About |

| | |Fun and Games Anymore,” (Source: The Wall Street Journal, |

| | |August 2005), and “Now French Muslims Can Have it Their Way |

| | |Too” (Source: The Associated Press, August 2005) |

| | |Internet Activity () |

| | | |

|Oligopoly: Assumptions|Study Guide* Problem 4 |Internet Activity () |

|and Real-World | | |

|Behavior | | |

|Price and Output Under|Text “Economics In Everyday Life: How Is a New Year’s Resolution|ThomsonNOW for Arnold Concise |

|Three Oligopoly |Like a Cartel Agreement?” Thinking Like an Economist and Self-Test|() |

|Theories |Study Guide* Problems 3 and 5 |The Graphing Workshop “Short-Run Equilibrium in Monopolistic |

| |Favorite Ways to Learn Economics* Classroom Experiment 5.B, “A |Competition” and “Long-Run Equilibrium in Monopolistic |

| |Cartel Growing Bananas” |Competition” |

|Game Theory, |Text “Economics In Everyday Life: An Economic Theory of the |ThomsonNOW for Arnold Concise |

|Oligopoly, and |Mafia” and “Economics In Technology: The Industry Standard Path |() Economic Application: |

|Contestable Markets |to Monopoly” |EconNews, “Cheaters Sometimes Win, and Winners Sometimes Cheat”|

| |How to Think Like an Economist* Ch. 12, “Winners and Losers” |(Source: The New York Times Online, August 2005) |

| |Favorite Ways to Learn Economics* Classroom Experiment: 5.A, |Business & Company Resource Center* |

| |“Game Theory and the Prisoner’s Oligopoly” and Problem Set 5.6, |() “To Sort Out Best O’Hare Result, |

| |“Game Theory” |Turn to Game Theory” (Source: Crain’s Chicago Business, |

| |Economics in the Movies* Scene 16: “Game Theory: In the Name of|September 2004) |

| |the Father” | |

|A Review of Market | |ThomsonNOW for Arnold Concise Ask the Instructor Video What |

|Structures | |Are the Differences Among the Four Market Structures? |

|Applications of Game |Text Analyzing the Scene | |

|Theory |How to Think Like an Economist* Ch. 24, “Right for Me, Right for | |

| |You, but Wrong for US” | |

|End-of-Chapter |Text “A Reader Asks: Are Some Prisoner’s Dilemmas Good and | |

|Resources |Others Bad?” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 19: Factor Markets: With Emphasis on the Labor Market

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Factor Markets |Text Analyzing the Scene (2), Thinking Like an Economist (2), and|ThomsonNOW for Arnold Concise |

| |Self-Test |() |

| |Study Guide* Problems 1-3 and 5-6 |SketchIt Exercises 19.1 and 19.2 |

| |Graphing Exercises* Exercise 15: “Factor Markets” |The Graphing Workshop “Demand for Labor” |

| |Favorite Ways to Learn Economics* Problem Set 6.5, “The Optimum | |

| |Resource Mix” | |

|The Labor Market |Text Analyzing the Scene (2), “Economics In the World: Why Jobs |ThomsonNOW for Arnold Concise |

| |Don’t Always Move to the Low-Wage Country,” “Economics In |() |

| |Technology: How May Crime, Outsourcing, and Multitasking Be |Economic Application: EconData, “What Is the Labor Cost Per |

| |Related?” “Economics In Everyday Life: What Is the Wage Rate for |Unit of Output—Manufacturing?” |

| |a Street-Level Pusher in a Drug Gang?” and Self-Test |Economic Application: EconNews, “Costco’s Business Model |

| |Study Guide* Problem 4 |Proves Successful” (Source: The New York Times, July 2005) |

| |Favorite Ways to Learn Economics* Classroom Experiment 6.A, |Economic Application: Policy Debate, “Are Americans |

| |“Deriving the Labor Supply Curve: Put Your Hands Up,” Problem Set|Overworked?” |

| |6.1, “Total Product and Marginal Product,” Problem Set 6.2, “More |The Graphing Workshop “Competitive Labor Market” |

| |on Marginal Product,” Problem Set 6.3, “Derived Demand” and |Ask the Instructor Videos Why Do LanguageTeachers Earn Less? |

| |Problem Set 6.4, “Changing Marginal Physical Product and Product |and What Would Happen If Everyone Were Paid the Same? |

| |Price” |Internet Activity () |

| | | |

|Labor Markets and |Text Analyzing the Scene |ThomsonNOW for Arnold Concise |

|Information | |() |

| | |Economic Application: Policy Debate, “Is a College Education a|

| | |Good Investment?” |

| | |Ask the Instructor Videos Have Computers Affected Worker |

| | |Productivity? and Should You Have Gone to College? |

|End-of-Chapter |Text “A Reader Asks: Does Education Matter to Income?” | |

|Resources |Economic Report of the President* Ch. 10, “Health Care and | |

| |Insurance” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 20: Interest, Rent, and Profit

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Interest |Text Analyzing the Scene, Thinking Like an Economist, “Economics|ThomsonNOW for Arnold Concise |

| |In Popular Culture: Lotteries, Art, and Old Age,” “Economics In |() |

| |Everyday Life: Is the Car Worth Buying?” and Self-Test |Ask the Instructor Video Why Do Interest Rates Vary? |

| |Study Guide* Problems 1 and 2 | |

|Rent |Text “Economics In Everyday Life: What Does Present Value Have |ThomsonNOW for Arnold Concise |

| |to Do With a Divorce?” Analyzing the Scene and Self-Test |() |

| |Study Guide* Problems 3-5 |SketchIt Exercise 20.1 |

| |How to Think Like an Economist* Chapter 18, “Is it the Same |The Graphing Workshop “Opportunity Cost and Economic Rent” |

| |Everywhere? Is it the Same All the Time?” |Internet Activity () |

| | | |

|Profit |Text Thinking Like an Economist and Self-Test |Internet Activity () |

| | | |

|End-of-Chapter |Text “A Reader Asks: Are There Calculators To Help Me Plan My | |

|Resources |Life?” | |

| |Favorite Ways to Learn Economics* Classroom Experiment 6.B, | |

| |“Learning from Teaching: The Anti-REM Game” | |

| |Economic Report of the President* Ch. 3, “The Year in Review and | |

| |the Years Ahead” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 21: The Distribution of Income and Poverty

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Some Facts about |Text Analyzing the Scene, Thinking Like an Economist, and |ThomsonNOW for Arnold Concise |

|Income Distribution |Self-Test |() |

| |Study Guide* Problems 1, 2, and 5 |Ask the Instructor Video How Does Income Distribution in the |

| |Economics in the Movies* Scene18: “Income: Parenthood” |U.S. Compare? |

| | |Business & Company Resource Center* |

| | |() “In Manhattan, Poor Make 2cents |

| | |for Each Dollar To the Rich.” (Source: The New York Times, |

| | |September 2005) |

|Measuring Income |Text Self-Test |ThomsonNOW for Arnold Concise |

|Equality |Study Guide* Problem 4 |() |

| | |SketchIt Exercise 21.1 |

| | |Ask the Instructor Video Will There Always be Poverty? |

| | |The Graphing Workshop “The Lorenz Curve” |

| | |Economic Applications: EconNews, “Minorities and Whites are |

| | |Growing Apart, Not Together” (Source: The Wall Street Journal,|

| | |October 2004) and “In Its Move to Capitalism, China Discovers |

| | |Income Inequality” (Source: The New York Times, December 2004)|

| | |Internet Activity () |

| | | |

|Why Income Inequality |Text “Economics In Everyday Life: Winner-Take-All Markets” and |Business & Company Resource Center* |

|Exists |Self-Test |() “2 Black Truckers Sue, Accusing |

| | |Wal-Mart of Hiring Bias” (Source: The New York Times, July |

| | |2005) |

|Normative Standards of| | |

|Income Distribution | | |

|Poverty |Text “Economics In Everyday Life: Monks, Blessings, and Free |Business & Company Resource Center* |

| |Riders” and Self-Test |() “Effort to Reduce Poverty and |

| |Study Guide* Problem 3 |Hunger in Brazil Falls Short of Its Goals.” (Source: The New |

| | |York Times, May 2005) |

|End-of-Chapter |Text “A Reader Asks: Are There Degrees of Poverty?” | |

|Resources |Issues in American Economic History* Ch. 14, “Issues in the | |

| |Postwar Decades” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 22: Market Failure: Externalities and Public Goods

|Chapter Section |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Externalities |Text Analyzing the Scene (2), Thinking Like an Economist (2), |ThomsonNOW for Arnold Concise |

| |and Self-Test |() |

| |Study Guide* Problem 1 |SketchIt Exercise 22.1 |

| |Graphing Exercises* Exercise 16: “Externalities” |Ask the Instructor Video Why Does Asymmetric Information Create|

| |Favorite Ways to Learn Economics* Classroom Experiment 7.B, |Problems |

| |“Externality Experiment: The Ecomedy Club,” Problem Set 7.4, |The Graphing Workshop “Externalities” |

| |“Positive Externalities,” and Problem Set 7.5, “Negative |Economic Application: EconNews, “Salmon Are Just Going to Have|

| |Externalities” |to Deal with Those Dams!” (Source: The New York Times, |

| | |December 2004) |

|Internalizing |Text “Economics In Technology: Software, Switching Costs and |ThomsonNOW for Arnold Concise |

|Externalities |Benefits, and Market Failure” and Self-Test |() SketchIt Exercise 22.2|

| |Study Guide* Problems 2-4 | |

| |Favorite Ways to Learn Economics* Problem Set 7.1, “Tax | |

| |Incidence” and Problem Set 7.6, “Congested Parks—A Pricing | |

| |Dilemma” | |

|Dealing with a Negative |Text Analyzing the Scene and Self-Test |ThomsonNOW for Arnold Concise Economic Application: Policy |

|Externality in the |Economics in the Movies* Scene 19: “Environmental Economics: |Debate, “Should Anti-Pollution Standards be Strengthened?” |

|Environment |Erin Brockovich” |Internet Activities () |

| | | and |

| | |Business & Company Resource Center* |

| | |() “Environmental Economics” |

| | |(Source: Environmental Encyclopedia) |

|Public Goods: Excludable |Text “Economics In Everyday Life: Finding Economics in College |Business & Company Resource Center* |

|and Nonexcludable |Life,” Analyzing the Scene and Self-Test |() “Call It Protection Money” |

| |Favorite Ways to Learn Economics* Classroom Experiment 7.A, “Free|(Source: U.S. News & World Report, November 2003) |

| |Rider Experiment: Show Me the Money” | |

|End-of-Chapter Resources |Text “A Reader Asks: Are Houses and Shopping Centers a Sign of | |

| |‘Progress’?” | |

| |Economic Report of the President* Ch. 6, “Restoring Solvency to | |

| |Social Securiy” and Ch. 9, “Protecting the Environment” | |

| |Issues in American Economic History* Ch. 11, “The Great War” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 23: Public Choice: Economic Theory Applied to Politics

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene | |

|Public Choice Theory | |ThomsonNOW for Arnold Concise |

| | |() Ask the Instructor |

| | |Video Why Do We Keep the Income Tax If It Is So Unpopular? |

|The Political Market |Text Analyzing the Scene and Thinking Like an Economist |Internet Activity () |

| | | |

| | |Business & Company Resource Center* |

| | |() “Watching America: Will It |

| | |Listen to Foreigners, or Do as It Pleases?” (Source: The New |

| | |York Times, January 2005) |

|Voters and Rational |Text “Economics In Everyday Life: Are You Rationally Ignorant?” | |

|Ignorance |Analyzing the Scene (2) and Self-Test | |

|Special Interest |Text “Economics In Everyday Life: Inheritance, Heirs, and Why |Internet Activity () |

|Groups |the Firstborn Became King or Queen,” and Self-Test | |

|Government Bureaucracy| | |

|End-of-Chapter |Text “A Reader Asks: What Is the Significance of Public | |

|Resources |Choice?” | |

| |Issues in American Economic History* Ch. 5, “Opening Up North | |

| |America” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

CHAPTER 24: International Trade and Finance

|Chapter Section | | |

| |Print Study Resources |Media Study Resources |

|Introduction |Text Setting the Scene |Internet Activities () |

| | | and |

|International Trade |Text Analyzing the Scene, “Economics In Everyday Life: Dividing |ThomsonNOW for Arnold Concise |

|Theory |Up the Work” and Self-Test |() |

| |Study Guide* Problem 1 |Economic Application: Policy Debate, “Does the U.S. Economy |

| |Favorite Ways to Learn Economics* Classroom Experiment 12.A, “The|Benefit from Foreign Trade?” |

| |Benefits from Trade: Utility Gains from a Lunch Sack,” Classroom |Business & Company Resource Center ()|

| |Experiment 12.B, “Comparative Advantage Experiment: To Everyone’s|“A 21st Century U.S. Trade Policy” (Source: National Review, |

| |Advantage,” and Problem Set 12.6, “Comparative and Absolute |February 2004) |

| |Advantage” | |

|Trade Restrictions |Text Analyzing the Scene (2), “Economics In Popular Culture: |ThomsonNOW for Arnold Concise |

| |Offshore Outsourcing or Offshoring,” Thinking Like an Economist |The Graphing Workshop “Effects of a Tariff” and “Effects of a |

| |and Self-Test |Quota” |

| |Study Guide* Problems 2-8 |Ask the Instructor Video What Are the Arguments For Trade |

| | |Restrictions?” |

| | |Economic Application: EconNews, “CAFTA Becomes Reality” |

| | |(Source: The New York Times Online, July 2005) |

| | |Internet Activities () |

| | | and |

|The Foreign Exchange |Text Thinking Like an Economist |ThomsonNOW for Arnold Concise |

|Market |Study Guide* Problems 9-11 |SketchIt Exercises 24.1 and 24.2 |

| | |The Graphing Workshop “Foreign Exchange Market” |

| | |Ask the Instructor Video How Do We Pay for Imports? |

|Flexible Exchange |Graphing Exercises* Exercise 17: “Exchange Rates” |ThomsonNOW for Arnold Concise |

|Rates |Study Guide* Problem 12 |Ask the Instructor Video What Causes the Demand for Foreign |

| |Text Analyzing the Scene and Self-Test |Exchange Rates |

| |Favorite Ways to Learn Economics* Problem Set 12.1, “Exchange |Economic Application: Policy Debate, “Will the European |

| |Rates” |Monetary Union Succeed?” |

|Fixed Exchange Rates |Text Self-Test | |

|Versus Flexible |L | |

|Exchange Rates | | |

|End-of-Chapter |Text “A Reader Asks: Why Does the Government Impose Tariffs and| |

|Resources |Quotas?” | |

| |Economic Report of the President* Ch. 12, “International Trade | |

| |and Cooperation,” Ch. 13, “International Capital Flows,” and Ch. | |

| |14, “The Link Between Trade and Capital Flows” | |

*These resources are available for expanded coverage. You may learn more about these resources, as well as purchase them, by visiting .

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