Business & Money
Boundless Economics
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1: Principles of Economics
1.1: The Study of Economics
1.1.0: The Magic of the Economy
1.1.1: Is Economics a Science?
1.2: Individual Decision Making
1.2.0: Scarcity Leads to Tradeoffs and Choice
1.2.1: Individuals Face Opportunity Costs
1.2.2: Individuals Make Decisions at the Margins
1.2.3: Individuals Respond to Incentives
1.3: Interaction of Individuals, Firms, and Societies
1.3.0: Introducing the Firm
1.3.1: Trade Leads to Gains
1.3.2: Thinking about Efficiency
1.3.3: The Function and Nature of Markets
1.3.4: Markets are Typically Efficient
1.3.5: Government Intervention May Fix Inefficient Markets
1.3.6: Full Economy Interactions
1.4: Basic Economic Questions
1.4.0: Production Outputs
1.4.1: Production Inputs and Process
1.4.2: Production Recipients
1.4.3: Differences Between Centrally Planned and Market Economies
1.4.4: Mixed Economies
1.5: Economic Models
1.5.0: Math Review
1.5.1: Assumptions
1.5.2: Hypotheses and Tests
1.5.3: Economic Models
1.5.4: Normative and Positive Economics
1.6: Differences Between Macroeconomics and Microeconomics
1.6.0: Macroeconomics
1.6.1: Microeconomics
1.6.2: Key Differences
2: The Market System
2.1: Introducing the Market System
2.1.0: Defining a Market System
2.1.1: Gains from Markets
2.1.2: Production Possibility Frontier
2.1.3: The Circular Flow Model
3: Introducing Supply and Demand
3.1: Demand
3.1.0: The Law of Demand
3.1.1: Demand Schedules and Demand Curves
3.1.2: Market Demand
3.1.3: Ceteris Paribus
3.1.4: Changes in Demand and Shifts in the Demand Curve
3.2: Supply
3.2.0: The Law of Supply
3.2.1: Supply Schedules and Supply Curves
3.2.2: Market Supply
3.2.3: Determinants of Supply
3.2.4: Changes in Supply and Shifts in the Supply Curve
3.3: Market Equilibrium
3.3.0: Clearing the Market at Equilibrium Price and Quantity
3.3.1: Impacts of Surpluses and Shortages on Market Equilibrium
3.3.2: Changes in Demand and Supply and Impacts on Equilibrium
3.4: Government Intervention and Disequilibrium
3.4.0: Why Governments Intervene In Markets
3.4.1: Price Ceilings
3.4.2: Price Ceiling Impact on Market Outcome
3.4.3: Price Floors
3.4.4: Price Floor Impact on Market Outcome
3.4.5: Introduction to Deadweight Loss
3.4.6: Arguments for and Against Government Price Controls
3.4.7: Taxes
3.4.8: Taxation Impact on Economic Output
4: Economic Surplus
4.1: Consumer Surplus
4.1.0: Willingness to Pay and the Demand Curve
4.1.1: The Demand Curve and Consumer Surplus
4.1.2: Impacts of Price Changes on Consumer Surplus
4.2: Producer Surplus
4.2.0: Market Power
4.2.1: Defining Producer Surplus
4.2.2: Impact of Changing Price on Producer Surplus
5: Consumer Choice and Utility
5.1: The Demand Curve and Utility
5.1.0: Defining Utility
5.1.1: Theory of Utility
5.1.2: Marginal Utility
5.1.3: Principle of Diminishing Marginal Utility
5.2: Theory of Consumer Choice
5.2.0: Introducing the Budget Constraint
5.2.1: Mapping Preferences with Indifference Curves
5.2.2: Properties of Indifference Curves
5.2.3: Impact of Income on Consumer Choices
5.2.4: Impact of Price on Consumer Choices
5.2.5: Deriving the Demand Curve
5.2.6: Applications of Principles on Consumer Choices
6: Elasticity and its Implications
6.1: Price Elasticity of Demand
6.1.0: Defining Price Elasticity of Demand
6.1.1: Measuring the Price Elasticity of Demand
6.1.2: Interpretations of Price Elasticity of Demand
6.1.3: Determinants of Price Elasticity of Demand
6.2: Other Demand Elasticities
6.2.0: Cross-Price Elasticity of Demand
6.2.1: Income Elasticity of Demand
6.2.2: Calculating Elasticities
6.3: Price Elasticity of Supply
6.3.0: Definition of Price Elasticity of Supply
6.3.1: Measuring the Price Elasticity of Supply
6.3.2: Applications of Elasticities
7: Market Failure: Externalities
7.1: Introducing Market Failure
7.1.0: Defining Market Failure
7.1.1: Causes of Market Failure
7.1.2: Introducing Externalities
7.1.3: Externality Impacts on Efficiency
7.2: Externalities in Depth
7.2.0: Negative Externalities
7.2.1: Positive Externalities
7.3: Government Policy Options
7.3.0: Regulation
7.3.1: Tax
7.3.2: Quotas
7.4: Private Solutions
7.4.0: Types of Private Solutions
7.4.1: The Coase Theorem
8: Market Failure: Public Goods and Common Resources
8.1: Public Goods
8.1.0: Defining a Good
8.1.1: Private Goods
8.1.2: Public Goods
8.1.3: Optimal Quantity of a Public Good
8.1.4: Demand for Public Goods
8.1.5: Cost-Benefit Analysis
8.2: Common Resources
8.2.0: The Tragedy of the Commons
8.2.1: The Free-Rider Problem
9: Production
9.1: The Production Function
9.1.0: Defining the Production Function
9.1.1: The Law of Diminishing Returns
9.1.2: Inputs and Outputs of the Function
9.2: Production Cost
9.2.0: Types of Costs
9.2.1: Average and Marginal Cost
9.2.2: Short Run and Long Run Costs
9.2.3: Economies and Diseconomies of Scale
9.2.4: Economic Costs
9.3: Economic Profit
9.3.0: Difference Between Economic and Accounting Profit
9.3.1: Sources and Determinants of Profit
10: Competitive Markets
10.1: Perfect Competition
10.1.0: Definition of Perfect Competition
10.1.1: Conditions of Perfect Competition
10.1.2: The Demand Curve in Perfect Competition
10.2: Production Decisions in Perfect Competition
10.2.0: Relationship Between Output and Revenue
10.2.1: Marginal Cost Profit Maximization Strategy
10.2.2: Shut Down Case
10.2.3: The Supply Curve in Perfect Competition
10.2.4: Short Run Firm Production Decision
10.3: Long-Run Outcomes
10.3.0: Long Run Supply Decisions
10.3.1: Long Run Market Equilibrium
10.3.2: Productive Efficiency
10.3.3: Allocative Efficiency
10.3.4: Entry and Exit of Firms
11: Monopoly
11.1: Introduction to Monopoly
11.1.0: Defining Monopoly
11.2: Barriers to Entry: Reasons for Monopolies to Exist
11.2.0: Resource Control
11.2.1: Economies of Scale and Network Externalities
11.2.2: Government Action
11.2.3: Legal Barriers
11.2.4: Natural Monopolies
11.2.5: Other Barriers to Entry
11.3: Monopoly Production and Pricing Decisions and Profit Outcome
11.3.0: Market Differences Between Monopoly and Perfect Competition
11.3.1: Marginal Revenue and Marginal Cost Relationship for Monopoly Production
11.3.2: Profit Maximization Function for Monopolies
11.3.3: Monopoly Production Decision
11.3.4: Monopoly Price and Profit
11.4: Impacts of Monopoly on Efficiency
11.4.0: Reasons for Efficiency Loss
11.4.1: Understanding and Finding the Deadweight Loss
11.5: Price Discrimination
11.5.0: Elasticity Conditions for Price Discrimination
11.5.1: Analysis of Price Discrimination
11.5.2: Examples of Price Discrimination
11.6: Monopoly in Public Policy
11.6.0: Social Impacts of Monopoly
11.6.1: Antitrust Laws
11.6.2: Regulation of Natural Monopoly
12: Monopolistic Competition
12.1: Monopolistic Competition
12.1.0: Defining Monopolistic Competition
12.1.1: Product Differentiation
12.1.2: Demand Curve
12.1.3: Short Run Outcome of Monopolistic Competition
12.1.4: Long Run Outcome of Monopolistic Competition
12.1.5: Monopolistic Competition Compared to Perfect Competition
12.1.6: Efficiency of Monopolistic Competition
12.1.7: Advertising and Brand Management in Monopolistic Competition
13: Oligopoly
13.1: Prerequisites of Oligopoly
13.1.0: Few Sellers
13.1.1: Product Differentiation
13.1.2: Entry Barriers
13.1.3: Price Leadership
13.2: Oligopoly in Practice
13.2.0: Collusion and Competition
13.2.1: Game Theory Applications to Oligopoly
13.2.2: The Prisoner's Dilemma and Oligopoly
13.2.3: Duopoly Example
13.2.4: Cartel Example
14: Inputs to Production: Labor, Natural Resources, and Technology
14.1: Demand for Labor
14.1.0: Marginal Product of Labor (Physical)
14.1.1: Marginal Product of Labor (Revenue)
14.1.2: Deriving the Labor Demand Curve
14.2: Labor Market Equilibrium and Wage Determinants
14.2.0: Conditions of Equilibrium
14.2.1: The Wage Rate
14.2.2: Compensation Differentials
14.2.3: Performance and Pay
14.2.4: Marginal Revenue Productivity and Wages
14.2.5: Changes in Equilibrium for Shifts in Market Supply and Market Demand
14.2.6: Labor Union Impacts on Equilibrium
14.3: Income Distribution
14.3.0: How Income is Allocated
14.3.1: Current Topics in Income Distribution
14.4: Capital and Natural Resource Markets
14.4.0: Other Factors of Production
14.4.1: The Importance of Factor Prices
14.4.2: Marginal Productivity and Resource Demand
14.4.3: Marginal Productivity and Income Distribution
14.4.4: Capital Market
14.4.5: Natural Resource Market
14.5: Capital, Productivity, and Technology
14.5.0: Capital and Technology
14.5.1: Total Factor Productivity
14.5.2: Changes in Technology Over Time
15: Challenges to Efficient Outcomes
15.1: Sources of Inefficiency
15.1.0: Asymmetric Information: Adverse Selection and Moral Hazard
15.1.1: Principle-Agent Problem
15.1.2: Public Choice: Median Voters and Inefficient Voting Outcomes
15.1.3: Behavioral Economics: Irrational Actions
15.1.4: Government Failure
16: Taxes and Public Finance
16.1: Introduction to Taxes
16.1.0: What Taxes Do
16.1.1: How Taxes Impact Efficiency: Deadweight Losses
16.2: Deploying and Measuring Taxes
16.2.0: How Taxes Work in the United States
16.3: Progressive, Proportional, and Regressive Taxes
16.3.0: Comparing Marginal and Average Tax Rates
16.3.1: Tax Incidence, Efficiency, and Fairness
16.3.2: Tax Incidence and Elasticity
16.3.3: Trading off Equity and Efficiency
16.4: Taxation in the United States
16.4.0: Financing the US Government
16.4.1: Financing State and Local Government
16.5: Personal, Property, and Sales Taxes
16.5.0: Corporate and Payroll Taxes
17: Income Inequality and Poverty
17.1: Defining and Measuring Inequality, Mobility, and Poverty
17.1.0: Defining and Measuring Poverty
17.1.1: Defining and Measuring Income Inequality
17.1.2: Defining and Measuring Economic Mobility
17.1.3: Measurement Problems
17.2: Policies for Reducing Poverty
17.2.0: Social Insurance
17.2.1: Public Assistance
18: Introduction to Macroeconomics
18.1: Key Topics in Macroeconomics
18.1.0: Defining Macroeconomics
18.1.1: The Importance of Aggregate Decisions about Consumption versus Saving and Investment
18.1.2: The Role of the Financial System
18.1.3: The Business Cycle: Definition and Phases
18.1.4: Recessions
18.1.5: Managing the Business Cycle
18.1.6: Long Run Growth
19: Measuring Output and Income
19.1: Measuring Output Using GDP
19.1.0: Defining GDP
19.1.1: Learning from GDP
19.1.2: The Circular Flow and GDP
19.1.3: GDP Equation in Depth (C+I+G+X)
19.1.4: Calculating GDP
19.1.5: Other Approaches to Calculating GDP
19.1.6: Evaluating GDP as a Measure of the Economy
19.2: Other Measures of Output
19.2.0: National Income
19.2.1: Personal Income
19.2.2: Disposable Income
19.2.3: GDP per capita
19.3: Comparing Real and Nominal GDP
19.3.0: Calculating Real GDP
19.3.1: The GDP Deflator
19.4: Cost of Living
19.4.0: Introduction to Inflation
19.4.1: Defining and Calculating CPI
20: Economic Growth
20.1: Comparing Economies
20.1.0: Economic Growth as a Measuring Stick
20.1.1: How to Compare Economies Throughout History
20.1.2: Is Economic Growth a Good Goal?
20.2: Assessing Growth
20.2.0: Calculating Economic Growth
20.2.1: Growth in the United States
20.2.2: Growth in the Rest of the World
20.2.3: Catch-Up: Possible, but not Certain
20.3: Productivity
20.3.0: The Importance of Productivity
20.3.1: Measuring Productivity
20.3.2: Impacts of Technological Change on Productivity
20.4: Long-Run Growth
20.4.0: Determinants of Long-Run Growth
20.4.1: Aggregate Production
20.4.2: Changing Worker Productivity
20.4.3: Technological Change
20.4.4: Government Activity
20.4.5: Arguments in Favor and Opposed to Economic Growth
20.5: The Impact of Policy on Growth
20.5.0: Incentivizing Saving and Investment
20.5.1: Improving Education and Health Outcomes
20.5.2: Defining and Defending Property Rights
20.5.3: Promoting Free Trade
20.5.4: Investing in Research and Development
21: Inflation
21.1: Defining, Measuring, and Assessing Inflation
21.1.0: Defining Inflation
21.1.1: Measuring Inflation
21.1.2: Price Indices and the Rate of Change of Prices
21.1.3: The Costs of Inflation
21.1.4: Distribution Effects of Inflation
21.1.5: Deflation
22: Unemployment
22.1: Introduction to Unemployment
22.1.0: Defining Unemployment
22.1.1: Defining Full Employment
22.1.2: Types of Unemployment: Frictional, Structural, Cyclical
22.2: Measuring Unemployment
22.2.0: Measuring the Unemployment Rate
22.2.1: Shortcomings of the Measurement
22.2.2: Typical Lengths of Unemployment
22.3: Understanding Unemployment
22.3.0: Reasons for Unemployment
22.3.1: Impact of Public Policy on Unemployment
22.3.2: Impact of Unions on Unemployment
22.3.3: Efficiency Wage Theory
22.3.4: Job Creation and Destruction
23: Inflation and Unemployment
23.1: The Relationship Between Inflation and Unemployment
23.1.0: The Phillips Curve
23.1.1: The Relationship Between the Phillips Curve and AD-AD
23.1.2: The Long-Run Phillips Curve
23.1.3: The Short-Run Phillips Curve
23.1.4: Relationship Between Expectations and Inflation
23.1.5: Shifting the Phillips Curve with a Supply Shock
23.1.6: Disinflation
24: Aggregate Demand and Supply
24.1: Introducing Aggregate Expenditure
24.1.0: Defining Aggregate Expenditure: Components and Comparison to GDP
24.1.1: Aggregate Expenditure at Economic Equilibrium
24.1.2: Graphing Equilibrium
24.1.3: The Multiplier Effect
24.2: Introducing Aggregate Demand and Aggregate Supply
24.2.0: Explaining Fluctuations in Output
24.2.1: Classical Theory
24.2.2: Keynesian Theory
24.3: Aggregate Demand
24.3.0: Introducing Aggregate Demand
24.3.1: The Slope of the Aggregate Demand Curve
24.3.2: Reasons for and Consequences of Shifts in the Aggregate Demand Curve
24.4: Aggregate Supply
24.4.0: Introducing Aggregate Supply
24.4.1: The Slope of the Short-Run Aggregate Supply Curve
24.4.2: The Slope of the Long-Run Aggregate Supply Curve
24.4.3: Moving from Short-Run to Long-Run
24.4.4: Reasons for and Consequences of Shifts in the Short-Run Aggregate Supply Curve
24.5: The Aggregate Demand-Supply Model
24.5.0: Macroeconomic Equilibrium
24.5.1: Reasons for and Consequences of Shift in Aggregate Demand
24.5.2: Reasons for and Consequences of Shift in Aggregate Supply
25: Major Macroeconomic Theories
25.1: Major Theories in Macroeconomics
25.1.0: Keynesian Theory
25.1.1: Monetarist
25.1.2: Austrian
25.1.3: Alternative Views
26: Fiscal Policy
26.1: Introduction to Fiscal Policy
26.1.0: Defining Fiscal Policy
26.1.1: How Fiscal Policy Relates to the AD-AS Model
26.1.2: Expansionary Versus Contractionary Fiscal Policy
26.1.3: Fiscal Levers: Spending and Taxation
26.1.4: How Fiscal Policy Can Impact GDP
26.1.5: Fiscal Policy and the Multiplier
26.2: Evaluating Fiscal Policy
26.2.0: Automatic Stabilizers
26.2.1: Automatic Stabilizers Versus Discretionary Policy
26.2.2: The Role of the Federal Budget
26.2.3: Arguments for and Against Balancing the Budget
26.2.4: Long-Run Implications of Fiscal Policy
26.2.5: Problems of Long-Run Government Debt
26.2.6: Limits of Fiscal Policy
26.2.7: Difficulty in Getting the Timing Right
26.2.8: Crowding-Out Effect
26.2.9: Evaluating the Recent United States Stimulus Package
27: The Monetary System
27.1: Introducing Money
27.1.0: The Definition of Money
27.1.1: The Functions of Money
27.1.2: Measuring the Money Supply: M1
27.1.3: Measuring the Money Supply: M2
27.1.4: Other Measurements of the Money Supply
27.2: Introducing the Federal Reserve
27.2.0: Introduction to Monetary Policy
27.2.1: The Creation of the Federal Reserve
27.2.2: Structure of the Federal Reserve
27.2.3: The Federal Open Market Committee and the Role of the Fed
27.2.4: The Federal Reserve and the Financial Crisis of 2008
27.2.5: The Structure and Function of Other Banks
27.3: Creating Money
27.3.0: The Fractional Reserve System
27.3.1: Example Transactions Showing How a Bank Can Create Money
27.3.2: The Money Multiplier in Theory
27.3.3: The Money Multiplier in Reality
28: Monetary Policy
28.1: Introduction to Monetary Policy
28.1.0: The Demand for Money
28.1.1: Shifts in the Money Demand Curve
28.1.2: The Equilibrium Interest Rate
28.2: Monetary Policy Tools
28.2.0: The Reserve Ratio
28.2.1: The Discount Rate
28.2.2: The Federal Funds Rate
28.2.3: Open Market Operations
28.2.4: Setting and Achieving the Interest Rate Target
28.2.5: Executing Expansionary Monetary Policy
28.2.6: Executing Restrictive Monetary Policy
28.2.7: The Taylor Rule
28.3: Impacts of Federal Reserve Policies
28.3.0: The Impact of Monetary Policy on Aggregate Demand, Prices, and Real GDP
28.3.1: The Effect of Expansionary Monetary Policy
28.3.2: The Effect of Restrictive Monetary Policy
28.3.3: Limitations of Monetary Policy
28.3.4: Using Monetary Policy to Target Inflation
28.4: Historical Federal Reserve Policies
28.4.0: Volcker Disinflation
28.4.1: Greenspan Era
28.4.2: Bernanke Era
29: The Financial System
29.1: Introducing the Financial System
29.1.0: Institutions, Markets, and Intermediaries
29.1.1: Role in Matching Savings and Investment Spending
29.1.2: Role in Providing a Market for Loanable Funds
29.2: Tools of Finance
29.2.0: Present Value and the Time Value of Money
29.2.1: Measuring and Managing Risk
29.2.2: The Value of Diversification
29.2.3: The Relationship Between Risk and Return and the Security Market Line
30: Current Topics in Macroeconomics
30.1: Questions for Debate
30.1.0: Arguments For and Against Discretionary Monetary Policy
30.1.1: Arguments For and Against Fighting Recession with Expansionary Monetary Policy
30.1.2: Arguments For and Against Fighting Recession with Expansionary Fiscal Policy
30.1.3: Arguments For and Against Inflation Targeting Policy Interventions
31: International Trade
31.1: Introduction to International Trade
31.1.0: Reasons for Trade
31.1.1: Understanding Production Possibilities
31.1.2: Defining Absolute Advantage
31.1.3: Defining Comparative Advantage
31.1.4: Absolute Advantage Versus Comparative Advantage
31.1.5: Benefits of Specialization
31.1.6: Relationship Between Specialization and Trade
31.2: Gains from Trade
31.2.0: Exports: The Economic Impacts of Selling Goods to Other Countries
31.2.1: Imports: The Economics Impacts of Buying Goods from Other Countries
31.2.2: Costs of Trade
31.3: The United States in the Global Economy
31.3.0: The Importance of Trade
31.3.1: The Balance of Trade
31.4: Barriers to Trade
31.4.0: Tariffs
31.4.1: Quotas
31.4.2: Other Barriers
31.5: Arguments for and Against Protectionist Policy
31.5.0: National Security Argument
31.5.1: Infant Industry Argument
31.5.2: Unfair Competition Argument
31.5.3: Jobs Argument
31.5.4: A Summary of International Trade Agreements
32: Open Economy Macroeconomics
32.1: Capital Flows
32.1.0: The Balance of Payments
32.1.1: The Current Account
32.1.2: The Financial Account
32.1.3: The Capital Account
32.1.4: Reason for a Zero Balance
32.2: Exchange Rates
32.2.0: Introducing Exchange Rates
32.2.1: Finding an Equilibrium Exchange Rate
32.2.2: Real Versus Nominal Rates
32.2.3: Exchange Rate Policy Choices
32.2.4: Exchange Rate Systems
32.2.5: Fixed Exchange Rates
32.2.6: Managed Float
32.3: Equilibrium
32.3.0: Open Economy Equilibrium
32.3.1: Impacts of Policies and Events on Equilibrium
32.3.2: Effect of a Government Budget Deficit on Investment and Equilibrium
33: Economic Crises
33.1: Fundamentals of Banking Crises
33.1.0: Causes of Banking Crises
33.1.1: Consequences of Banking Crises
33.2: The 2007-2009 Crisis
33.2.0: Causes and Immediate Impacts of the Crisis
33.2.1: Recovery
33.2.2: Global Impacts
34: Interest and Profit
34.1: Interest
34.1.0: Defining Capital
34.1.1: Interest Rates and Economic Rationale
35: Health Care Economics
35.1: Introducing Health Care Economics
35.1.0: Defining Health, Health Care, and Medical Care
35.1.1: Where a Dollar Spent on Health Care Goes: Introducing the Inputs to Health Care
35.1.2: Different Health Care Systems Around the World
35.1.3: Externalities in the Health Care Market
35.1.4: Current Issues in Health Care
36: Natural Resource Economics
36.1: Introduction to Natural Resource Economics
36.1.0: Types of Natural Resources
36.1.1: Basic Economics of Natural Resources
36.1.2: Externalities and Impacts on Resource Allocation
37: Agriculture Economics
37.1: Introduction to the Agriculture Economics
37.1.0: The Agricultural Market Landscape
37.1.1: Subsidies and Income Supports
37.1.2: Price Supports
37.1.3: Supply Reduction
37.1.4: Evaluating Policies
38: Immigration Economics
38.1: Introduction to Immigration Economics
38.1.0: Dimensionalizing Immigration: Numbers of Immigrants around the World
38.1.1: Impact of Immigration on the Immigrant
38.1.2: Impact of Immigration on the Host and Home Country Economies
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