Survey of economics

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ec nomics
SURVEY OF

8th EDITION

IRVIN B. TUCKER
University of North Carolina Charlotte

Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States


Survey of Economics, Eighth Edition
Irvin B. Tucker
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BRIEF

contents
PART 1 INTRODUCTION TO ECONOMICS
Chapter 1

Introducing the Economic Way of Thinking

Chapter 2

Appendix 1: Applying Graphs to Economics
Production Possibilities, Opportunity Cost, and Economic Growth

PART 2 THE MICROECONOMY
Chapter 3
Chapter 4
Chapter
Chapter
Chapter
Chapter
Chapter
Chapter

1
2
17
27

47

Market Demand and Supply
Markets in Action

48
73

Appendix 4: Applying Supply and Demand Analysis to Health Care

94

5
6

Price Elasticity of Demand
Production Costs

98
112

7
8

Perfect Competition
Monopoly

131
152

Monopolistic Competition and Oligopoly
Labor Markets and Income Distribution

175
194

9
10

PART 3 THE MACROECONOMY AND FISCAL POLICY 227
Chapter
Chapter
Chapter
Chapter

11
12

Gross Domestic Product
Business Cycles and Unemployment

228
248

13

Inflation

270

14

Aggregate Demand and Supply
Appendix 14: The Self-Correcting Aggregate Demand and Supply Model

288
313

Fiscal Policy
The Public Sector

325
345

Federal Deficits, Surpluses, and the National Debt

364

Chapter 15
Chapter 16
Chapter 17

PART 4 MONEY, BANKING, AND MONETARY POLICY 391
Chapter 18
Chapter 19
Chapter 20

Money and the Federal Reserve System

392

Money Creation
Monetary Policy

409
428

Appendix 20: Policy Disputes Using the Self-Correcting Aggregate
Demand and Supply Model

451

PART 5 THE INTERNATIONAL ECONOMY
Chapter 21
Chapter 22
Chapter 23

461

International Trade and Finance

462

Economies in Transition
Growth and the Less-Developed Countries

491
510

Appendix A: Answers to Odd-Numbered Study Questions and Problems
Appendix B: Answers to Practice Quizzes

534
547

Appendix C: Answers to Road Map Questions

549

Glossary
Index

550
557
iii


contents

chapter 1

appendix 1

chapter 2

iv

PREFACE

xvi

ABOUT THE AUTHOR

xxv

PART 1 INTRODUCTION TO ECONOMICS

1

Introducing the Economic Way of Thinking

2

The Problem of Scarcity

3

Scarce Resources and Production

3

Economics: The Study of Scarcity and Choice

5

The Methodology of Economics

6

CHECKPOINT: Can You Prove There Is No Trillion-Dollar Person?

7

Hazards of the Economic Way of Thinking

8

CHECKPOINT: Should Nebraska State Join a Big-Time Athletic Conference?

9

ECONOMICS IN PRACTICE: Mops and Brooms, the Boston Snow Index,
the Super Bowl, and other Economic Indicators

9

Why Do Economists Disagree?

10

ECONOMICS IN PRACTICE: Does the Minimum Wage Really Help the
Working Poor?

11

Careers in Economics

12

Key Concepts

13

Summary

13

Study Questions and Problems

14

Checkpoint Answers

14

Practice Quiz

15

Applying Graphs to Economics

17

A Direct Relationship

17

An Inverse Relationship

18

The Slope of a Straight Line

20

A Three-Variable Relationship in One Graph

20

A Helpful Study Hint for Using Graphs

22

Key Concepts

22

Summary

23

Study Questions and Problems

23

Practice Quiz

24

Production Possibilities, Opportunity Cost, and Economic Growth 27
Three Fundamental Economic Questions

28

Opportunity Cost

28

Marginal Analysis

30


CONTENTS

chapter 3

v

The Production Possibilities Curve

30

The Law of Increasing Opportunity Costs

32

Sources of Economic Growth

34

ECONOMICS IN PRACTICE: FedEx Wasn’t an Overnight Success

36

CHECKPOINT: What Does a War on Terrorism Really Mean?

36

Present Investment and the Future Production Possibilities Curve

36

GLOBAL ECONOMICS: How Does Public Capital Affect a Nation’s Curve?

38

Key Concepts

38

Summary

39

Study Questions and Problems

40

Checkpoint Answer

41

Practice Quiz

41

PART 1 Road Map

44

PART 2 THE MICROECONOMY

47

Market Demand and Supply

48

The Law of Demand

49

The Distinction between Changes in Quantity Demanded and Changes
in Demand

51

Nonprice Determinants of Demand

52

CHECKPOINT: Can Gasoline Become an Exception to the Law of Demand?

56

The Law of Supply

56

CHECKPOINT: Can the Law of Supply Be Repealed for the Oil Market?

58

The Distinction between Changes in Quantity Supplied and Changes in Supply 59

chapter 4

Nonprice Determinants of Supply

61

ECONOMICS IN PRACTICE: PC Prices: How Low Can They Go?

62

A Market Supply and Demand Analysis

64

GLOBAL ECONOMICS: The Market Approach to Organ Shortages

67

CHECKPOINT: Can the Price System Eliminate Scarcity?

67

Key Concepts

68

Summary

68

Study Questions and Problems

69

Checkpoint Answers

70

Practice Quiz

71

Markets in Action

73

Changes in Market Equilibrium

74

CHECKPOINT: Why the Higher Price for Ethanol Fuel?

76

Can the Laws of Supply and Demand Be Repealed?

77


vi

CONTENTS

appendix 4

chapter 5

chapter 6

ECONOMICS IN PRACTICE: Who Turned Out the Lights in California?

79

CHECKPOINT: Is There Price Fixing at the Ticket Window?

82

ECONOMICS IN PRACTICE: Rigging the Market for Milk

82

Market Failure

83

CHECKPOINT: Should There Be a War on Drugs?

87

ECONOMICS IN PRACTICE: Can Vouchers Fix Our Schools?

88

Key Concepts

89

Summary

89

Study Questions and Problems

90

Checkpoint Answers

90

Practice Quiz

91

Applying Supply and Demand Analysis to Health Care

94

The Impact of Health Insurance

94

Shifts in the Demand for Health Care

96

Shifts in the Supply of Health Care

96

Price Elasticity of Demand

98

Price Elasticity of Demand

99

Price Elasticity of Demand Variations Along a Demand Curve

103

CHECKPOINT: Will Fliers Flock to Low Summer Fares?

105

Determinants of Price Elasticity of Demand

105

CHECKPOINT: Can Trade Sanctions Affect Elasticity of Demand for Cars?

106

ECONOMICS IN PRACTICE: Cigarette Smoking Price Elasticity of Demand

107

Key Concepts

108

Summary

108

Study Questions and Problems

109

Checkpoint Answers

109

Practice Quiz

110

Production Costs

112

Costs and Profit

113

CHECKPOINT: Should the Professor Go or Stay?

114

Short-Run Production Costs

115

Short-Run Cost Formulas

117

Long-Run Production Costs

121

Different Scales of Production

123

ECONOMICS IN PRACTICE: Why Is That Web Site You’re Using Free?

125

Key Concepts

126

Summary

126

Study Questions and Problems

127


CONTENTS

chapter 7

vii

Checkpoint Answer

128

Practice Quiz

129

Perfect Competition

131

Perfect Competition

132

Short-Run Profit Maximization for a Perfectly Competitive Firm

134

Short-Run Loss Minimization For a Perfectly Competitive Firm

137

CHECKPOINT: Should Motels Offer Rooms at the Beach for Only $50 a Night? 141

chapter 8

chapter 9

Short-Run Supply Curves Under Perfect Competition

141

Long-Run Supply Curves Under Perfect Competition

144

CHECKPOINT: Are You in Business for the Long Run?

145

ECONOMICS IN PRACTICE: Gators Snapping Up Profits

146

Key Concepts

147

Summary

147

Study Questions and Problems

148

Checkpoint Answers

149

Practice Quiz

150

Monopoly

152

The Monopoly Market Structure

153

Price and Output Decisions for a Monopolist

155

GLOBAL ECONOMICS: Monopolies Around the World

156

Price Discrimination

162

ECONOMICS IN PRACTICE: The Standard Oil Monopoly

164

CHECKPOINT: Why Don’t Adults Pay More for Popcorn at the Movies?

165

Comparing Monopoly and Perfect Competition

165

The Case Against and For Monopoly

168

ECONOMICS IN PRACTICE: New York Taxicabs: Where Have All the Fare
Flags Gone?

168

Key Concepts

169

Summary

169

Study Questions and Problems

171

Checkpoint Answer

172

Practice Quiz

173

Monopolistic Competition and Oligopoly

175

The Monopolistic Competition Market Structure

176

Price and Output Decisions for a Monopolistically Competitive Firm

177

ECONOMICS IN PRACTICE: Social Networking Sites: The New Advertising Game 178
Comparing Monopolistic Competition and Perfect Competition

179

Oligopoly—Competition Among a Few

182


viii

CONTENTS

chapter 10

Price and Output Decisions for an Oligopolist

183

GLOBAL ECONOMICS: Major Cartels in Global Markets

184

An Evaluation of Oligopoly

187

CHECKPOINT: Which Model Fits the Cereal Aisle?

187

Review of the Four Market Structures

187

ECONOMICS IN PRACTICE: How Oligopolists Compete at the Final Four

188

Key Concepts

188

Summary

188

Study Questions and Problems

190

Checkpoint Answer

191

Practice Quiz

191

Labor Markets and Income Distribution

194

The Labor Market Under Perfect Competition

195

Labor Unions: Employee Power

200

Union Membership Around the World

202

The Distribution of Income

204

Equality Versus Efficiency

205

Poverty

207

Antipoverty Programs

209

ECONOMICS IN PRACTICE: Pulling on the Strings of the Welfare Safety Net

212

Discrimination

213

ECONOMICS IN PRACTICE: Is Pay for Females Fair?

214

CHECKPOINT: Should the Law Protect Women?

215

Key Concepts

215

Summary

215

Study Questions and Problems

216

Checkpoint Answer

217

Practice Quiz

217

PART 2 Road Map

220

PART 3 THE MACROECONOMY AND FISCAL POLICY 227

chapter 11

Gross Domestic Product

228

Gross Domestic Product

229

Measuring GDP

230

CHECKPOINT: How Much Does Mario Add to GDP?

234

GDP In Other Countries

234

GDP Shortcomings

234


CONTENTS

chapter 12

chapter 13

ix

ECONOMICS IN PRACTICE: Is GDP a False Beacon Steering Us into the Rocks?

237

Other National Income Accounts

237

Changing Nominal GDP to Real GDP

240

CHECKPOINT: Is the Economy Up or Down?

243

Key Concepts

243

Summary

243

Study Questions and Problems

244

Checkpoint Answers

245

Practice Quiz

245

Business Cycles and Unemployment

248

The Business-Cycle Roller Coaster

249

CHECKPOINT: Where Are We on the Business-Cycle Roller Coaster?

252

Total Spending and the Business Cycle

254

ECONOMICS IN PRACTICE: Does a Stock Market Crash Cause Recession?

255

Unemployment

256

Types of Unemployment

259

CHECKPOINT: What Kind of Unemployment Did the Invention of the Wheel
Cause?

262

The Goal of Full Employment

262

ECONOMICS IN PRACTICE: What Kind of Unemployment Do Robot Musicians
Cause?

263

The GDP Gap

263

Key Concepts

266

Summary

266

Study Questions and Problems

267

Checkpoint Answers

267

Practice Quiz

267

Inflation

270

Meaning and Measurement of Inflation

271

ECONOMICS IN PRACTICE: How Much More Does It Cost to Laugh?

274

CHECKPOINT: The College Education Price Index

276

Consequences of Inflation

277

CHECKPOINT: What Is the Real Price of Gasoline?

279

Demand-Pull and Cost-Push Inflation

281

Inflation in Other Countries

282

GLOBAL ECONOMICS: When the Inflation Rate Is 116,000 Percent, Prices
Change by the Hour

283

Key Concepts

284

Summary

284


x

CONTENTS

chapter 14

appendix 14

chapter 15

Study Questions and Problems

285

Checkpoint Answers

285

Practice Quiz

286

Aggregate Demand and Supply

288

The Aggregate Demand Curve

289

Reasons for the Aggregate Demand Curve’s Shape

290

Nonprice-Level Determinants of Aggregate Demand

292

The Aggregate Supply Curve

293

Three Ranges of the Aggregate Supply Curve

296

Changes in the AD-AS Macroeconomic Equilibrium

298

Nonprice-Level Determinants of Aggregate Supply

301

Cost-Push and Demand-Pull Inflation Revisited

304

Increase in Both Aggregate Demand and Aggregate Supply Curves

306

ECONOMICS IN PRACTICE: Was John Maynard Keynes Right?

307

CHECKPOINT: Would the Greenhouse Effect Cause Inflation,
Unemployment, or Both?

308

Key Concepts

308

Summary

308

Study Questions and Problems

309

Checkpoint Answer

310

Practice Quiz

310

The Self-Correcting Aggregate Demand and Supply Model

313

Why the Short-Run Aggregate Supply Curve is Upward Sloping

313

Why the Long-Run Aggregate Supply Curve is Vertical

315

Equilibrium in the Self-Correcting AD-AS Model

315

The Impact of an Increase in Aggregate Demand

315

The Impact of a Decrease in Aggregate Demand

318

Key Concepts

321

Summary

321

Study Questions and Problems

322

Practice Quiz

322

Fiscal Policy

325

Discretionary Fiscal Policy

326

CHECKPOINT: What Is the MPC for Uncle Sam’s Stimulus Package?

329

CHECKPOINT: Walking the Balanced Budget Tightrope

333

Automatic Stabilizers

333

Supply-Side Fiscal Policy

335


CONTENTS

chapter 16

chapter 17

xi

ECONOMICS IN PRACTICE: The Laffer Curve

339

Key Concepts

339

Summary

340

Study Questions and Problems

341

Checkpoint Answers

341

Practice Quiz

342

The Public Sector

345

Government Size and Growth

346

Financing Government Budgets

349

The Art of Taxation

351

ECONOMICS IN PRACTICE: Is It Time to Trash the 1040s?

356

Public Choice Theory

356

CHECKPOINT: What Does Public Choice Say about a Budget Deficit?

360

Key Concepts

360

Summary

360

Study Questions and Problems

361

Checkpoint Answer

362

Practice Quiz

362

Federal Deficits, Surpluses, and the National Debt

364

The Federal Budget Balancing Act

365

Why Worry Over the National Debt?

370

ECONOMICS IN PRACTICE: The Great Federal Budget Surplus Debate

372

CHECKPOINT: What’s Behind the National Debt?

374

ECONOMICS IN PRACTICE: How Real Is Uncle Sam’s Debt?

379

Key Concepts

379

Summary

379

Study Questions and Problems

381

Checkpoint Answer

381

Practice Quiz

381

PART 3 Road Map

384

PART 4 MONEY, BANKING, AND MONETARY POLICY 391

chapter 18

Money and the Federal Reserve System

392

What Makes Money Money?

393

GLOBAL ECONOMICS: Why a Loan in Yap Is Hard to Roll Over

395

CHECKPOINT: Are Debit Cards Money?

395

Other Desirable Properties of Money

395


xii

CONTENTS

chapter 19

chapter 20

What Stands Behind Our Money?

396

Money Supply Definitions

397

The Federal Reserve System

399

What a Federal Reserve Bank Does

401

The U.S. Banking Revolution

404

The Monetary Control Act of 1980

404

ECONOMICS IN PRACTICE: The Wreck of Lincoln Savings and Loan

405

Key Concepts

406

Summary

406

Study Questions and Problems

407

Checkpoint Answer

407

Practice Quiz

407

Money Creation

409

Money Creation Begins

410

How a Single Bank Creates Money

410

Multiplier Expansion of Money by the Banking System

414

How Monetary Policy Creates Money

416

CHECKPOINT: Who Has More Dollar Creation Power?

419

Monetary Policy Shortcomings

422

ECONOMICS IN PRACTICE: How Does the FOMC Really Work?

423

Key Concepts

424

Summary

424

Study Questions and Problems

425

Checkpoint Answer

425

Practice Quiz

425

Monetary Policy

428

The Keynesian View of the Role of Money

429

How Monetary Policy Affects the Interest Rate

433

CHECKPOINT: What Does the Money Supply Curve Look Like When the
Fed Targets the Federal Funds Rate?

434

How Monetary Policy Affects Prices, Output, and Employment

434

The Monetarist View of the Role of Money

435

ECONOMICS IN PRACTICE: Did the Fed Cause the Great Recession?

441

CHECKPOINT: A Horse of Which Color?

442

A Comparison of Macroeconomic Views

442

ECONOMICS IN PRACTICE: Monetary Policy during the Great Depression

443

Key Concepts

445

Summary

445


CONTENTS

appendix 20

chapter 21

chapter 22

xiii

Study Questions and Problems

446

Checkpoint Answers

447

Practice Quiz

448

Policy Disputes Using the Self-Correcting Aggregate Demand
and Supply Model

451

The Classical versus Keynesian Views of Expansionary Policy

451

Classical versus Keynesian Views of Contractionary Policy

452

Summary

453

Practice Quiz

454

PART 4 Road Map

456

PART 5 THE INTERNATIONAL ECONOMY

461

International Trade and Finance

462

Why Nations Need Trade

463

Absolute and Comparative Advantage

466

CHECKPOINT: Do Nations with an Advantage Always Trade?

467

Free Trade Versus Protectionism

467

Arguments for Protection

469

GLOBAL ECONOMICS: World Trade Slips on Banana Peel

471

Free Trade Agreements

472

The Balance of Payments

473

CHECKPOINT: Should Everyone Keep a Balance of Payments?

477

Exchange Rates

477

GLOBAL ECONOMICS: Return to the Yellow Brick Road?

484

Key Concepts

485

Summary

485

Study Questions and Problems

487

Checkpoint Answers

488

Practice Quiz

488

Economies in Transition

491

Basic Types of Economic Systems

492

GLOBAL ECONOMICS: Choosing an Economic System on Another Planet

497

The “ISMS”

498

CHECKPOINT: To Plan or Not to Plan–That Is the Question

501

Comparing Economic Systems

502

Economies in Transition

503

Privatization versus Nationalization

505

xiv

CONTENTS

chapter 23

GLOBAL ECONOMICS: China’s Quest for Free Market Reform

506

Key Concepts

507

Summary

507

Study Questions and Problems

507

Checkpoint Answer

508

Practice Quiz

508

Growth and the Less-Developed Countries

510

Comparing Developed and Less-Developed Countries

511

Economic Growth and Development Around the World

514

CHECKPOINT: Does Rapid Growth Mean a Country Is Catching Up?

517

GLOBAL ECONOMICS: Hong Kong: A Leaping Pacific Rim Tiger

520

The Helping Hand of Advanced Countries

521

CHECKPOINT: Is the Minimum Wage an Antipoverty Solution
for Poor Countries?

525

Key Concepts

525

Summary

526

Study Questions and Problems

526

Checkpoint Answers

527

Practice Quiz

527

PART 5 Road Map

530

Appendix A Answers to Odd-Numbered Study Questions and Problems

534

Appendix B Answers to Practice Quizzes

547

Appendix C Answers to Road Map Questions

549

Glossary

550

Index

557


AVAILABLE

versions
The Four Versions of This Book
Economics for Today

Economics
for Today

Macroeconomics Microeconomics
for Today
for Today

Survey of
Economics

1

Introducing the Economic Way of
Thinking

X

X

X

X

2

Production Possibilities, Opportunity
Cost, and Economic Growth

X

X

X

X

3

Market Supply and Demand

X

X

X

X

4

Markets in Action

X

X

X

X

5

Price Elasticity of Demand and Supply

X

X

X

6

Consumer Choice Theory

X

X

7

Production Costs

X

X

X

8

Perfect Competition

X

X

X

9

Monopoly

X

X

X

10

Monopolistic Competition and
Oligopoly

X

X

X

11

Labor Markets

X

X

12

Income Distribution, Poverty, and

Discrimination

X

X

13

Antitrust and Regulation

X

X

14

Environmental Economics

X

X

15

Gross Domestic Product

X

X

X

16

Business Cycles and Unemployment

X

X

X

17

Inflation

X

X

X

18

The Keynesian Model

X

X

19

The Keynesian Model in Action

X

X

20

Aggregate Demand and Supply

X

X

X

21

Fiscal Policy

X

X

X

22

The Public Sector

X

X

X

23

Federal Deficits, Surpluses, and the
National Debt

X

X

X

24

Money and the Federal Reserve System

X

X

X

25

Money Creation

X

X

X

26

Monetary Policy

X

X

X

27

The Phillips Curve and Expectations
Theory

X

X

28

International Trade and Finance

X

X

X

X

29

Economies in Transition

X

X

X

X

30

Growth and the Less-Developed
Countries

X

X

X

X

X

Note: Chapter numbers refer to the complete book, Economics for Today

xv


preface
TEXT WITH A MISSION
The purpose of Survey of Economics, eighth edition, is to teach, in an engaging
style, the basic operations of the U.S. economy to students who will take a oneterm economics course. Rather than taking an encyclopedic approach to economic
concepts, Survey of Economics focuses on the most important tool in economics—
supply and demand analysis—and applies it to clearly explain real-world economic
issues.
Every effort has been made to make Survey of Economics the most
“student-friendly” text on the market. This text was written because so many
others expose students to a confusing array of economic analyses that force
students to simply memorize in order to pass the course. Instead, Survey of
Economics presents a straightforward and unbiased approach that effectively
teaches the application of basic economic principles. After reading this text, the
student should be able to say “now that economics stuff in the news makes
sense.”

HOW IT FITS TOGETHER
This text presents the core principles of microeconomics, macroeconomics, and

international economics. The first 10 chapters introduce the logic of economic
analysis and develop the core of microeconomic analysis. Here students learn
the role of demand and supply in determining prices in competitive versus
monopolistic markets. This part of the book explores such issues as minimum
wage laws, rent control, and pollution. The next 10 chapters develop the macroeconomics part of the text. Using the modern, yet simple, aggregate demand and
aggregate supply model, the text explains measurement of and changes in the
price level, national output, and employment in the economy. The study of macroeconomics also includes how the supply of and the demand for money influence the economy. Finally, this text concludes with three chapters devoted
entirely to global issues. For example, students will learn how the supply of and
demand for currencies determine exchange rates and what the complications of
a strong or a weak dollar are.

TEXT FLEXIBILITY
Survey of Economics is easily adapted to an instructor’s preference for the
sequencing of microeconomics and macroeconomics topics. This text can be
used in a macroeconomic-microeconomic sequence by teaching the first four
chapters and then Parts 2, 3, and 4. Also, some instructors prefer to teach
Chapter 22, Economies in Transition, after Chapter 1. Instructors should note
the appendices on the self-correcting aggregate demand and supply model that
follow Chapter 14, Aggregate Demand and Supply, and Chapter 20, Monetary
Policy. This approach allows instructors to decide whether to cover this model.
An alternative placement for Chapter 21, International Trade and Finance, is
also possible. Some instructors say they prefer to emphasize international economics by placing it before the macroeconomic material in Parts 3 and 4. Other
instructors believe that students should learn both the microeconomic and macroeconomic material before tackling Chapter 21. Also, a customized text might
meet your needs. If so, contact your Cengage South-Western sales representative
for information.

xvi


PREFACE

xvii

HOW NOT TO STUDY ECONOMICS
To some students, studying economics is a little frightening because many chapters
are full of graphs. Students often make the mistake of preparing for tests by trying
to memorize the lines of graphs. When their graded tests are returned, the students
using this strategy will probably exclaim, “What happened?” The answer to this
question is that the students should have learned the economic concepts first; then
they would understand the graphs as illustrations of these underlying concepts.
Stated simply, superficial cramming for economics quizzes does not work.
For students who are anxious about using graphs, the appendix to Chapter 1
provides a brief review of graphical analysis. In addition, The Graphing Workshop on the Tucker Web site: www.cengage.com/economics/tucker/survey_
of_economics8e and the Study Guide contain step-by-step features on how to
interpret graphs.

NEW TO THE EIGHTH EDITION
The basic layout of the eighth edition remains the same. The following are key
changes:
●

Chapter 1 recognizes that students taking introductory college-level economics
courses are considering their major. One reason to select economics is that the
average starting salary for an undergraduate economics major is higher compared to many other majors. To aid their decision, current average starting
salary figures for selected majors have been provided.

●

Chapter 8, Monopoly, presents a new concept, network good, which
updates this chapter by linking economies of scale and monopoly power to

the popular Facebook and Match.com Web sites.

●

Chapter 10, Labor Markets and Income Distribution, has been updated with
the latest figures on family income distribution and poverty rates. In addition,
the feature article on fair pay for females has been updated to include the
Lilly Ledbetter Pay Act. This feature generates great interest for students.

●

Chapter 12, Business Cycles and Unemployment, presents Exhibits 12.2 and
12.3 with updated business cycle data. This chapter also includes updated
unemployment rate data and a new section on globalization. Under this new
section is a discussion of the difference between outsourcing and offshoring.

●

Chapter 13, Inflation, updates data on inflation, including the Economics
in Practice on “How Much More Does it Cost to Laugh?” In addition,
here students enjoy learning how to convert Babe Ruth’s 1932 salary into
today’s dollars.

●

Chapter 14, Aggregate Demand and Supply, has been updated. To enhance
student understanding and interest, updated actual CPI and real GDP
numbers are used throughout rather than generic Ps and Qs. For example,
a new Exhibit 14.9 is added that explains with actual data how decreases
in aggregate demand during the Great Recession caused a movement along

the flat Keynesian range of the aggregate supply curve with the CPI constant.
Here students can clearly visualize and comprehend the Keynesian argument
against the classical school that prices and wages are inflexible downward.

●

Chapter 15, Fiscal Policy, also uses realism as its hallmark by explaining the
stimulus package and the spending multiplier process with real-world
updated numbers.


xviii

PREFACE

●

Chapter 16, The Public Sector, highlights the important current issue of the
changing economic character of the United States with global comparisons
to other countries. Here, for example, updated data traces the growth of
U.S. government expenditures and taxes since the Great Depression. And
U.S. spending and taxation are compared to other countries. An explanation
of the Value Added Tax (VAT) has been added to the Economics in Practice
feature discussion of the flat tax and national sales tax.

●

Chapter 17, Federal Deficits, Surpluses, and the National Debt, focuses on
the current “hot button” issues of federal deficits, the national debt, and the
debt ceiling using updated data and exhibits. This chapter now includes a

discussion of the “PayGo” rule and a new Exhibit 17.4 giving a global
comparison of federal surpluses or deficits as a percentage of GDP. The
current financial crisis in Greece is included in the chapter debate over the
consequences of the U.S. national debt.

●

Chapter 18, Money and the Federal Reserve System, has updated money
supply figures and a new Exhibit 18.4 listing the 10 top U.S. banks with
asset size.

●

Chapter 20, Monetary Policy, has been updated using realistic data in the
model that link changes in the money supply and changes in the aggregate
demand curve required to restore the economy to full employment. Students’ interest is enhanced by adding a new Exhibit 20.9 that compares
monetary policy during the Great Depression to monetary policy during the
Great Recession.

●

The final three chapters of the text are the international chapters, and each
has been updated. For example, Chapter 21, International Trade and
Finance, explains the recent sharp decline in the U.S. balance of trade. The
interesting example of Babe Ruth has been rewritten to explain the difference between absolute advantage and comparative advantage. Chapter 22,
Economies in Transition, contrasts privatization in Cuba, Russia, and China
to recent nationalization in the United States. Chapter 23, Growth and the
Less-Developed Countries, presents updated data used to explain, for example,
the link between economic freedom and quality-of-life indicators.

●

The lecture PowerPoint slides have been updated and revised by the author.

●

Each chapter has a new practice quiz at the end of the chapter with free
corresponding new tutorial quizzes that explain the answers on the web site.

●

New questions have been written by the author and added to the test bank.

ALTERNATE VERSIONS OF THE BOOK
For instructors who wish to spend various amounts of time for their courses
and offer different topics of this text:
●

Economics for Today. This complete version of the book contains all
30 chapters. It is designed for two-semester introductory courses that
cover both microeconomics and macroeconomics.

●

Microeconomics for Today. This version contains 17 chapters and is
designed for one-semester courses in introductory microeconomics.

●

Macroeconomics for Today. This version contains 20 chapters and is

designed for one-semester courses in introductory macroeconomics.


PREFACE

●

xix

Survey of Economics. This version of the book contains 23 chapters. It is
designed for one-semester courses that cover the basics of both microeconomics and macroeconomics.

The table on page xv shows precisely which chapters are included in each
book. Instructors who wish more information about these alternative versions
should contact their local Cengage South-Western representative.

MOTIVATIONAL PEDAGOGICAL FEATURES
Survey of Economics strives to motivate and advance the boundaries of pedagogy
with the following features:

Part Openers
Each part begins with a statement of the overall mission of the chapters in the
part. In addition, there is a nutshell introduction of each chapter in relation to
the part’s learning objective.

Chapter Previews
Each chapter begins with a preview designed to pique the student’s interest and
reinforce how the chapter fits into the overall scheme of the book. Each preview
appeals to the student’s “Sherlock Holmes” impulses by posing several economics puzzles that can be solved by understanding the material presented in
the chapter.

Margin Definitions and Flashcards
Key concepts introduced in the chapter are highlighted in bold type and then
defined with the definitions again in the margins. This feature therefore serves
as a quick reference. Key terms are also defined on the Tucker Web site: www
.cengage.com/economics/tucker/survey_of_economics8e with a Flashcard feature
that is great for learning terms.

Economics in Practice
Each chapter includes boxed inserts that provide the acid test of “relevance to
everyday life.” This feature gives the student an opportunity to encounter
timely, real-world extensions of economic theory. For example, students read
about Fred Smith as he writes an economics term paper explaining his plan
to create FedEx. To ensure that the student wastes no time figuring out which
concepts apply to the article, applicable concepts are listed after each title.
Many of these boxed features include quotes from newspaper articles over
a period of years, demonstrating that economic concepts remain relevant
over time.

Global Economics
GLOBAL
Economics

Today’s economic environment is global. Survey of Economics carefully integrates international topics throughout the text and presents the material using a
highly readable and accessible approach designed for students with no training in
international economics. All sections of the text that present global economics are
identified by a special global icon in the text margin and in the Global Economics
boxes. In addition, the final three chapters of the book are devoted entirely to
international economics.

xx

PREFACE

Analyze the Issue
This feature follows each Economics in Practice and Global Economics feature
and asks specific questions that require students to test their knowledge of how
the material in the boxed insert is relevant to the applicable concept. To allow
these questions to be used in classroom discussions or homework assignments,
answers are provided in the Instructor’s Manual rather than the text.

Checkpoint
Watch for these! Who said learning economics can’t be fun? This feature is a
unique approach to generating interest and critical thinking. These questions
spark students to check their progress by asking challenging economics puzzles
in game-like style. Students enjoy thinking through and answering the questions,
and then checking the answers at the end of the chapter. Students who answer
correctly earn the satisfaction of knowing they have mastered the concepts.

Illustrations
Attractive large graphical presentations with grid lines and real-world numbers
are essential for any successful economics textbook. Each exhibit has been carefully
analyzed to ensure that the key concepts being represented stand out clearly. Brief
descriptions are included with graphs to provide guidance for students as they
study the graph. When actual data are used, the Web site reference is provided so
that students can easily locate the data source.

Causation Chains Game
This will be one of your favorites. The highly successful causation chains are

included under many graphs throughout the text. This pedagogical device helps students visualize complex economic relationships in terms of simple box diagrams
that illustrate how one change causes another change. Each exhibit having a causation chain in the text is included in the Animated Causation Chains game on the
Tucker Web site (www.cengage.com/economics/tucker/ survey_of_economics8e).
This game makes it fun to learn. Arrange the blocks correctly and hear the cheers.

Key Concepts
Key concepts introduced in the chapter are listed at the end of each chapter
and on the Tucker Web site (www.cengage.com/economics/tucker/survey_of_
economics8e). As a study aid, you can use the key concepts as flashcards to
test your knowledge. First state the definition and then click on the term to
check for correctness.

Visual Summaries
Each chapter ends with a brief point-by-point summary of the key concepts.
Many of these summarized points include miniaturized versions of the important graphs and causation chains that illustrate many of the key concepts. These
are intended to serve as visual reminders for students as they finish the chapters
and are also useful in reviewing and studying for quizzes and exams.

Study Questions and Problems
The end-of-chapter questions and problems offer a variety of levels ranging from
straightforward recall to deeply thought-provoking applications. The answers to
odd questions and problems are in the back of the text. This feature gives students
immediate feedback without requiring the instructor to check their work.


PREFACE

xxi

End-of-Chapter Practice Quizzes

A great help before quizzes. Many instructors test students using multiple-choice
questions. For this reason, the final section of each chapter provides the type of
multiple-choice questions given in the instructor’s Test Bank. The answers to all
of these questions are given in the back of the text. In addition, students may visit
the Tucker Web site (www.cengage.com/economics/tucker/survey_of_economics8e)
and answer these questions on a free online quiz. The Web site is a tutorial because
it provides a correct explanation for each answer.
ROAD MAP

Part Road Map
This feature concludes each part with review questions listed by chapter from
the previous part. To reinforce the concepts, each set of questions relates to the
interactive causation chain game. Click on the Tucker Web site (www.cengage
.com/economics/tucker/survey_of_economics8e) and make learning fun listening
to the cheers when correct and jeers for a wrong answer. Answers to the questions are in the back of the text.

Interactive Quizzes
In addition to the end-of-chapter practice quizzes, there are additional multiplechoice questions written by the author on the Tucker Web site (www.cengage
.com/economics/tucker/survey_of_economics8e). Each quiz contains multiple
questions like those found in a typical exam. Feedback is included for each
answer so that you may know instantly why you have answered correctly or
incorrectly. In addition, you may email yourself and/or your instructor the quiz
results with a listing of correct and incorrect answers. Between this feature and
the end-of-chapter practice quizzes, students are well prepared for tests.

Online Exercises
These exercises for each chapter are designed to spark students’ excitement
about researching on the Internet by asking them to access online economic
data and then answer questions related to the content of the chapter. All Internet exercises are on the Tucker Web site (www.cengage.com/economics/tucker/
survey_of_economics8e) with direct links to the addresses so that students will

not have the tedious and error-prone task of entering long Web site addresses.

Learning Objectives
Learning objectives provide readings sections in the text and steps to achieve learning objectives. The steps include reference to “Ask the Instructor Video Clips,”
the “Graphing Workshop” available on the Tucker Web site (www.cengage.com/
economics/tucker/survey_of_economics8e).

A SUPPLEMENTS PACKAGE DESIGNED FOR SUCCESS
To learn more about the supplements for Survey of Economics, visit the Tucker
Web site, www.cengage.com/economics/tucker/survey_of_economics8e.

Instructor Resources
Instructor’s Manual
This manual, prepared by Douglas Copeland of Johnson County Community
College, provides valuable course assistance to instructors. It includes chapter
outlines, instructional objectives, critical thinking/group discussion questions,
hints for effective teaching, answers to the Analyze the Issue questions, answers


xxii

PREFACE

to even-numbered questions and problems, summary quizzes with answers, and
classroom games.
Instructor’s Manual ISBN: 978-1-133-18944-2

Test Bank
Too often, test banks are not written by the author and the questions do not
really fit the text. Not so here; the Test Bank is prepared by the text author to

match the text. The Test Bank includes over 4,000 multiple-choice, true-false,
and short essay questions. The questions are arranged by the order presented in
the chapter and are grouped with concept headings that make it easy to select
questions. Most questions have been thoroughly tested in the classroom by the
author and are classified by topic and degree of difficulty.
Test Bank ISBN: 978-1-133-19037-0

ExamView
ExamView Computerized Testing Software contains all of the questions in the
printed Test Bank. ExamView is an easy-to-use test creation software compatible
with both Microsoft Windows and Apple Macintosh. Instructors can add or edit
questions, instructions, and answers; select questions by previewing them on the
screen; or select questions randomly or by number. Instructors can also create
and administer quizzes online, whether over the Internet, a local area network
(LAN), or a wide area network (WAN).
Available on Instructor’s Resource CD: ISBN: 978-1-111-96948-6

PowerPoint Lecture Slides
This state-of-the-art slide presentation written and prepared by the author provides
instructors with visual support in the classroom for each chapter. Lecture Slides
contain vivid highlights of important concepts. Instructors can edit the PowerPoint
presentations or create their own exciting in-class presentations. These slides are
available on the Instructor’s Resource CD as well as for downloading from the
Tucker Web site www.cengage.com/economics/tucker/survey_of_economics8e.

PowerPoint Exhibit Slides
These slides contain the exhibits and tables from the text. Instructors can easily
incorporate them into their own PowerPoint presentations by downloading from
the Tucker Web site www.cengage.com/economics/tucker/survey_of_economics8e.

Instructor’s Resource CD
Get quick access to all instructor ancillaries from your desktop. This easy-to-use
CD lets you review, edit, and copy exactly what you need in the format you
want. This supplement contains the Instructor’s Manual, Test Bank, ExamView
Testing software, and the PowerPoint presentation slides.
IRCD ISBN: 978-1-111-96948-6

Complete Online Tomlinson Videos Course
The Tomlinson videos are online multimedia video lecture series that provide
students with instructional assistance 24/7. Students can watch these segments
over and over as they prepare for class, review topics, and study for exams. Lecture
notes and quizzes for each segment are also available. Professors may require
students to view the videos before class to leave the class time free for activities or
further explanation. www.cengage.com/economics/tomlinson


PREFACE

xxiii

Student Resources
Study Guide
The Study Guide is recommended for each student using the text. It is perhaps the
best way to prepare for quizzes. Too often, study guides are not written by
the author, and the material does not really fit the text. Not so here. The Study
Guide was prepared by the text author to prepare students before they take tests
in class. The Study Guide contains student-friendly features such as the chapter
in a nutshell, key concepts review, learning objectives, fill-in-the-blank questions,
step-by-step interpretation of the graph boxes, multiple-choice questions, true-false
questions, and crossword puzzles.

Study Guide ISBN: 978-1-133-56240-5

The Tucker Course Mate Website
Available for purchase, the CourseMate Web site: (www.cengagebrain.com) features a content-rich, robust set of interactive learning, study, and exam preparation
tools to support the textbook. CourseMate includes an integrated eBook, interactive teaching and learning tools, quizzes, flashcards, videos, and more. It also
includes Engagement Tracer, a first-of-its kind that monitors student engagement
in the course.
The following are some of the CourseMate features that have been specifically developed with the student in mind:
●

News Videos. This supplement consists of high-interest clips from current
news events as well as historic raw footage going back 40 years. Perfect
for discussion starters or to enrich your lectures and spark interest in
the material in the text, these brief videos provide students with a new
lens through which to view the past and present, one that will greatly
enhance their knowledge and understanding of significant events and
open up new dimension in learning. Clips are drawn from such programs as World News Tonight, Good Morning America, This Week,
PrimeTime Live, 20/20, and Nightline, as well as numerous ABC News
specials and material from the Associate Press Television News and
British Movietone News collections. Your South-Western Publishing
representative will be happy to provide a complete listing of the videos
and policies addressed.

●

The Graphing Workshop. The Graphing Workshop is a one-stop learning
resource for help in mastering the language of graphs, one of the more difficult aspects of an economics course for many students. It enables students
to explore important economic concepts through a unique learning system
made up of tutorials, interactive drawing tools, and exercises that teach
how to interpret, reproduce, and explain graphs.

●

Ask the Instructor Video Clips. Via streaming video, difficult concepts are
explained and illustrated. These video clips are extremely helpful review and
clarification tools if a student has trouble understanding an in-class lecture
or is a visual learner.

●

Economic Applications (EconApps). EconNews Online, EconDebate Online,
and EconData Online features help to deepen students’ understanding of the
theoretical concepts through hands-on exploration and analysis of the latest
economic news stories, policy debates, and data.