Business Analytics
- MODULE 1: INTRODUCTION TO BUSINESS ANALYTICS
Overview of Business Analytics
Important Business Analytics Applications
Types of Data
Sample and Population Data
Cross-Sectional and Time Series Data
Structured and Unstructured Data
Big Data
Variables and Scales of Measurement
The Measurement Scales
Data Sources and File Formats
Fixed-Width Format
Delimited Format
eXtensible Markup Language
HyperText Markup Language
JavaScript Object Notation
Writing With Big Data
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MODULE 2: DATA MANAGEMENT AND WRANGLING
Data Management
Data Modeling: The Entity-Relationship Diagram
Data Retrieval in the Database Environment
Data Warehouse and Data Mart
Data Inspection
Data Preparation
Handling Missing Values
Subsetting
Transforming Numerical Data
Binning
Mathematical Transformations
Transforming Categorical Data
Category Reduction
Dummy Variables
Category Scores
Writing With Big Data
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MODULE 3: DATA VISUALIZATION AND SUMMARY MEASURES
Methods to Visualize Categorical and Numerical Variables
Methods to Visualize a Categorical Variable
Methods to Visualize a Numerical Variable
Cautionary Comments When Constructing or Interpreting Charts or Graphs
Methods to Visualize the Relationship Between Two Variables
Methods to Visualize the Relationship between Two Categorical Variables
A Method to Visualize the Relationship between Two Numerical Variables
Other Data Visualization Methods
A Scatterplot with a Categorical Variable
A Bubble Plot
A Line Chart
A Heat Map
Options for Advanced Visualizations
Summary Measures
Measures of Central Location
Measures of Dispersion
Measures of Shape
Measures of Association
Detecting Outliers
A Boxplot
z-Scores
Writing With Big Data
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MODULE 4: PROBABILITY AND PROBABILITY DISTRIBUTIONS
Probability Concepts and Probability Rules
Events
Assigning Probabilities
Rules of Probability
The Total Probability Rule and Bayes’ Theorem
The Total Probability Rule and Bayes’ Theorem
Extensions of the Total Probability Rule and Bayes’ Theorem
Random Variables and Discrete Probability Distributions
The Discrete Probability Distribution
Summary Measures of a Discrete Random Variable
The Binomial and the Poisson Distributions
The Binomial Distribution
The Poisson Distribution
Using Excel and R to Obtain Binomial and Poisson Probabilities
The Normal Distribution
The Standard Normal Distribution
The Transformation of Normal Random Variables
Using Excel and R for the Normal Distribution
Writing With Data
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MODULE 5: STATISTICAL INFERENCE
Sampling Distributions
The Sampling Distribution of the Sample Mean
The Sampling Distribution of the Sample Proportion
Estimation
Confidence Interval for the Population Mean μ
Using Excel and R to Construct a Confidence Interval for μ
Confidence Interval for the Population Proportion
Hypothesis Testing
Hypothesis Test for the Population Mean μ
Using Excel and R to Test μ
Hypothesis Test for the Population Proportion
Writing With Data
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MODULE 6: REGRESSION ANALYSIS
The Linear Regression Model
The Components of the Linear Regression Model
Estimating a Linear Regression Model with Excel or R
Categorical Variables with Multiple Categories
Model Selection
The Standard Error of the Estimate, se
The Coefficient of Determination R2
The Adjusted R2
One Last Note on Goodness-of-Fit Measures
Tests of Significance
Test of Joint Significance
Test of Individual Significance
A Test for a Nonzero Slope Coefficient
Reporting Regression Results
Model Assumptions and Common Violations
Required Assumptions of Regression Analysis
Common Violation 1: Nonlinear Patterns
Common Violation 2: Multicollinearity
Common Violation 3: Changing Variability
Common Violation 4: Correlated Observations
Common Violation 5: Excluded Variables
Summary
Using Excel and R to Construct Residual Plots
Writing With Big Data
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MODULE 7: ADVANCED REGRESSION ANALYSIS
Regression Models with Interaction Variables
The Interaction of Two Dummy Variables
The Interaction of a Dummy Variable and a Numerical Variable
The Interaction of Two Numerical Variables
Regression Models for Nonlinear Relationships
The Quadratic Regression Model
Regression Models with Logarithms
The Log-Log Regression Model
The Logarithmic Regression Model
The Exponential Regression Model
Comparing Linear and Log-Transformed Regression Models
Using Excel and R to Compare Linear and Log-Transformed Regression Models
Linear Probability and Logistic Regression Models
The Linear Probability Model
The Logistic Regression Model
Accuracy of Binary Choice Models
Using Analytic Solver and R to Estimate the Logistic Regression Model
Cross-Validation Methods
The Holdout Method
Using Analytic Solver and R for the Holdout Method for the Logistic Regression Model
The k-Fold Cross-Validation Method
Writing With Big Data
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MODULE 8: INTRODUCTION TO DATA MINING
Data Mining Overview
The Data Mining Process
Supervised and Unsupervised Data Mining
Similarity Measures
Similarity Measures for Numerical Data
Similarity Measures for Categorical Data
Performance Evaluation
Data Partitioning
Oversampling
Performance Evaluation in Supervised Data Mining
Performance Evaluation for Classification Models
Using Excel to Obtain the Confusion Matrix and Performance Measures
Selecting Cut-off Values
Performance Charts for Classification
Using Excel to Obtain Performance Charts for Classification
Performance Evaluation for Prediction
Using Excel to Obtain Performance Measures for Prediction
Principal Component Analysis352
Using Analytic Solver and R to Perform Principal Component Analysis
Writing With Big Data
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MODULE 9: SUPERVISED DATA MINING: K-NEAREST NEIGHBORS AND NAÏVE BAYES
Introduction to Supervised Data Mining
Comparison of Supervised Data Mining Techniques
The k-Nearest Neighbors Method
The Naïve Bayes Method
Transforming Numerical into Categorical Values
Writing With Big Data
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MODULE 10: SUPERVISED DATA MINING: DECISION TREES
Introduction to Classification and Regression Trees (CART)
Classification and Regression Trees (CART)
Classification Trees
Using Analytic Solver and R to Develop a Classification Tree
Regression Trees
Using Analytic Solver and R to Develop a Prediction Tree
Ensemble Tree Models
Using Analytic Solver and R to Develop Ensemble Classification Tree Models
Writing With Big Data
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MODULE 11: UNSUPERVISED DATA MINING
Hierarchical Cluster Analysis
Hierarchical Cluster Analysis
Agglomerative Clustering with Numerical or Categorical Variables
Using Analytic Solver and R to Perform Agglomerative Clustering
Agglomerative Clustering with Mixed Data
k-Means Cluster Analysis
Using Analytic Solver and R to Perform k-Means Clustering
Association Rule Analysis
Using Analytic Solver and R to Perform Association Rule Analysis
Writing With Big Data
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MODULE 12: FORECASTING WITH TIME SERIES DATA
The Forecasting Process for Time Series
Forecasting Methods
Model Selection Criteria
Simple Smoothing Techniques
The Moving Average Technique
The Simple Exponential Smoothing Technique
Using Excel for Moving Averages and Exponential Smoothing
Linear Regression Models for Trend and Seasonality
The Linear Trend Model
The Linear Trend Model with Seasonality
A Note on Causal Models for Forecasting
Nonlinear Regression Models for Trend and Seasonality
The Exponential Trend Model
The Polynomial Trend Model
The Nonlinear Trend Models with Seasonality
Data Partitioning and Model Selection
Cross-validation of Regression Models with R
Advanced Exponential Smoothing Methods
The Holt Exponential Smoothing Method
The Holt-Winters Exponential Smoothing Method
Writing With Data
- MODULE 13: INTRODUCTION TO PRESCRIPTIVE ANALYTICS
Overview of Prescriptive
Monte Carlo Simulation
Modeling Risk and Uncertainty
Using Excel and R to Generate Random Observations from a Discrete Probability Distribution
Using Excel and R to Generate Random Observations from a Continuous Probability Distribution
Formulating and Developing a Monte Carlo Simulation
Optimization with Linear Programming
Formulating a Linear Programming Model
Solving a Linear Programming Problem
Optimization with Integer Programming
Capital Budgeting
Transportation Problem
Writing With Data
International Economics
- MODULE 1: INTERNATIONAL ECONOMICS IS DIFFERENT
Four Controversies
The Trade of War
Immigration
Brexit
China’s Exchange Rate
Economics and the Nation-State
Factor Mobility
Different Fiscal Policies
Different Moneys
- MODULE 2: THE BASIC THEORY USING DEMAND AND SUPPLY
Four Questions about Trade
Demand and Supply
Demand
Consumer Surplus
Case Study
Trade is Important
Global Crisis
The Trade Mini-Collapse of 2009
Supply
Producer Surplus
A National Market with No Trade
Two National Markets and the Opening of Trade
Free-Trade Equilibrium
Effects in the Importing Country
Effects in the Exporting Country
Which Country Gains More?
Summary: Early Answers to the Four Trade Questions
Key Terms
Suggested Reading
Questions and Problems
- MODULE 3: WHY EVERYBODY TRADES: COMPARATIVE ADVANTAGE
Adam Smith’s Theory of Absolute Advantage
Case Study
Mercantilism: Older Than Smith-and Alive Today
Ricardo’s Theory of Comparative Advantage
Ricardo’s Constant Cost and the Production-Possibility Curve
Focus on Labor: Absolute Advantage Does Matter
Extension: What if Trade Doesn’t Balance?
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 4: TRADE: FACTOR AVAILABILITY AND FACTOR PROPORTIONS ARE KEY
Production with Increasing Marginal Costs
What’s Behind the Bowed-Out Production-Possibility Curve?
What Production Combination is Actually Chosen?
Community Indifference Curves
Production and Consumption Together
Without Trade
With Trade
Demand and Supply Curves Again
The Gains from Trade
Trade Affects Production and Consumption
What Determines the Trade Pattern?
The Heckscher-Ohlin (H-O) Theory
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 5: WHO GAINS AND LOSES FROM TRADE?
Who Gains and Who Loses within a Country
Short-Run Effects of Opening Trade
The Long-Run Factor-Price Response
Three Implications of the H-O Theory
The Stolper-Samuelson Theorem
The Specialized-Factor Pattern
The Factor-Price Equalization Theorem
Does Heckscher-Ohlin Explain Actual Trade Patterns?
Factor Endowments
International Trade
What are the Export-Oriented and Import-Competing Factors?
The U.S. Pattern
The Canadian Pattern
Patterns in Other Countries
Do Factor Prices Equalize Internationally?
Summary: Fuller Answers to the Four Trade Questions
Key Terms
Suggested Reading
Questions and Problems
- MODULE 6: SCALE ECONOMIES, IMPERFECT COMPETITION, AND TRADE
Scale Economies
Internal Scale Economies
External Scale Economies
Intra-Industry Trade
How Important Is Intra-Industry Trade?
What Explains Intra-Industry Trade?
Monopolistic Competition and Trade
The Market with No Trade
Opening to Free Trade
Basis for Trade
Extension: The Individual Firm in Monopolistic Competition
Gains from Trade
Oligopoly and Trade
Extension: The Gravity Model of Trade
Substantial Scale Economies
Oligopoly Pricing
External Scale Economies and Trade
Summary: How Does Trade Really Work?
Key Terms
Suggested Reading
Questions and Problems
- MODULE 7: GROWTH AND TRADE
Balanced versus Biased Growth
Growth in Only One Factor
Changes in the Country’s Willingness to Trade
Case Study: The Dutch Disease and Deindustrialization
Effects on the Country’s Terms of Trade
Small Country
Large Country
Immiserizing Growth
Technology and Trade
Individual Products and the Product Cycle
Openness to Trade Affects Growth
Focus on Labor: Trade, Technology, and U.S. Wages
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 8: ANALYSIS OF A TARIFF
A Preview of Conclusions
The Effect of a Tariff on Domestic Producers
Global Governance: WTO and GATT: Tariff Success
The Effect of a Tariff on Domestic Consumers
The Tariff as Government Revenue
The Net National Loss from a Tariff
Extension The Effective Rate of Protection
Case Study They Tax Exports, Too
The Terms-of-Trade Effect and a Nationally Optimal Tariff
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 9: NONTARIFF BARRIERS TO IMPORTS
Types of Nontariff Barriers to Imports
The Import Quota
Quota versus Tariff for a Small Country
Ways to Allocate Import Licenses
Global Governance The WTO: Beyond Tariffs
Global Crisis Dodging Protectionism
Extension A Domestic Monopoly Prefers a Quota
Quota versus Tariff for a Large Country
Voluntary Export Restraints
Case Study VERs: Two Examples
Other Nontariff Barriers
Product Standards
Domestic Content Requirements
Case Study Carrots Are Fruit, Snails Are Fish, and X-Men Are Not Humans
Government Procurement
How Big Are the Costs of Protection?
As a Percentage of GDP
As the Extra Cost of Helping Domestic Producers
International Trade Disputes
America’s “Section 301”: Unilateral Pressure
Dispute Settlement in the WTO
Focus on China China in the WTO
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 10: ARGUMENTS FOR AND AGAINST PROTECTION
The Ideal World of First Best
The Realistic World of Second Best
Government Policies toward Externalities
The Specificity Rule
Promoting Domestic Production or Employment
The Infant Industry Argument
How It Is Supposed to Work
How Valid Is It?
Focus on Labor How Much Does It Cost to Protect a Job?
The Dying Industry Argument and Adjustment Assistance
Should the Government Intervene?
Trade Adjustment Assistance
The Developing Government (Public Revenue) Argument
Other Arguments for Protection: Noneconomic Objectives
National Pride
National Defense
Income Redistribution
The Politics of Protection
The Basic Elements of the Political–Economic Analysis
When Are Tariffs Unlikely?
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- MODULE 11: PUSHING EXPORTS
Dumping
Reacting to Dumping: What Should a Dumpee Think?
Actual Antidumping Policies: What Is Unfair?
Proposals for Reform
Case Study Antidumping in Action
Export Subsidies
Exportable Product, Small Exporting Country
Exportable Product, Large Exporting Country
Switching an Importable Product into an Exportable Product
WTO Rules on Subsidies
Should the Importing Country Impose Countervailing Duties?
Case Study Agriculture Is Amazing
Strategic Export Subsidies Could Be Good
Global Governance Dogfight at the WTO
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 12: TRADE BLOCS AND TRADE BLOCKS
Types of Economic Blocs
Is Trade Discrimination Good or Bad?
The Basic Theory of Trade Blocs: Trade Creation and Trade Diversion
Other Possible Gains from a Trade Bloc
The Eu Experience
Case Study Postwar Trade Integration in Europe
North America Becomes a Bloc
NAFTA: Provisions and Controversies
NAFTA: Effects
Rules of Origin
Renegotiation
Trade Blocs among Developing Countries
Trade Embargoes
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 13: TRADE AND ENVIRONMENT
Is Free Trade Anti-Environment?
Is the WTO Anti-Environment?
The Specificity Rule Again
Global Governance Dolphins, Turtles, and the WTO
A Preview of Policy Prescriptions
Trade and Domestic Pollution
Transborder Pollution
The Right Solution
A Next-Best Solution
NAFTA and the Environment
Global Environmental Challenges
Global Problems Need Global Solutions
Extinction of Species
Overfishing
CFCs and Ozone
Greenhouse Gases and Global Warming
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 14: TRADE POLICIES FOR DEVELOPING COUNTRIES
Which Trade Policy for Developing Countries?
Are the Long-Run Price Trends Against Primary Producers?
Case Study Special Challenges of Transition
International Cartels to Raise Primary-Product Prices
The OPEC Victories
Classic Monopoly as an Extreme Model for Cartels
The Limits to and Erosion of Cartel Power
Oil Prices since 1999
Other Primary Products
Import-Substituting Industrialization
ISI at Its Best
Experience with ISI
Exports of Manufactures to Industrial Countries
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 15: MULTINATIONALS AND MIGRATION: INTERNATIONAL FACTOR MOVEMENTS
Foreign Direct Investment
Multinational Enterprises
FDI: History and Current Patterns
Why Do Multinational Enterprises Exist?
Inherent Disadvantages
Firm-Specific Advantages
Location Factors
Internalization Advantages
Oligopolistic Rivalry
Taxation of Multinational Enterprises’ Profits
Case Study CEMEX: A Model Multinational from an Unusual Place
MNEs and International Trade 348
Should the Home Country Restrict FDI Outflows?
Should the Host Country Restrict FDI Inflows?
Focus on China: China as a Host Country
Migration
How Migration Affects Labor Markets
Should the Sending Country Restrict Emigration?
Should the Receiving Country Restrict Immigration?
Effects on the Government Budget
External Costs and Benefits
What Policies to Select Immigrants?
Case Study Are Immigrants a Fiscal Burden?
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 16: PAYMENTS AMONG NATIONS
Accounting Principles
A Country’s Balance of Payments
Current Account
Financial Account
Official International Reserves
Statistical Discrepancy
The Macro Meaning of the Current Account Balance
The Macro Meaning of the Overall Balance
The International Investment Position
Euro Crisis International Indicators Lead the Crisis
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 17: THE FOREIGN EXCHANGE MARKET
The Basics of Currency Trading
Using the Foreign Exchange Market
Case Study Foreign Exchange Trading
Interbank Foreign Exchange Trading
Demand and Supply for Foreign Exchange
Floating Exchange Rates
Fixed Exchange Rates
Current Arrangements
Arbitrage within the Spot Exchange Market
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 18: FORWARD EXCHANGE AND INTERNATIONAL FINANCIAL INVESTMENT
Exchange-Rate Risk
The Market Basics of Forward Foreign Exchange
Hedging Using Forward Foreign Exchange
Speculating Using Forward Foreign Exchange
Extension Futures, Options, and Swaps
International Financial Investment
International Investment with Cover
Covered Interest Arbitrage
Covered Interest Parity
International Investment Without Cover
Case Study: "The World’s Greatest Investor"
Does Interest Parity Really Hold? Empirical Evidence
Evidence on Covered Interest Parity
Case Study Eurocurrencies: Not (Just) Euros and Not Regulated
Evidence on Uncovered Interest Parity
Evidence on Forward Exchange Rates and Expected
Future Spot Exchange Rates
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 19: WHAT DETERMINES EXCHANGE RATES?
A Road Map
Exchange Rates in the Short Run
The Role of Interest Rates
The Role of the Expected Future Spot Exchange Rate
The Long Run: Purchasing Power Parity (PPP)
The Law of One Price
Absolute Purchasing Power Parity ”
Relative Purchasing Power Parity
Case Study PPP from Time to Time
Relative PPP: Evidence
Case Study Price Gaps and International Income Comparisons
The Long Run: The Monetary Approach
Money, Price Levels, and Inflation
Money and PPP Combined
The Effect of Money Supplies on an Exchange Rate
The Effect of Real Incomes on an Exchange Rate
Exchange-Rate Overshooting
How Well Can We Predict Exchange Rates?
Four Ways to Measure the Exchange Rate
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 20: GOVERNMENT POLICIES TOWARD THE FOREIGN EXCHANGE MARKET
Two Aspects: Rate Flexibility and Restrictions on Use
Floating Exchange Rate
Fixed Exchange Rate
What to Fix To?
When to Change the Fixed Rate?
Defending a Fixed Exchange Rate
Defense Through Official Intervention
Defending against Depreciation
Defending against Appreciation
Temporary Disequilibrium
Disequilibrium That Is Not Temporary
Exchange Control
International Currency Experience
The Gold Standard Era, 1870–1914 (One Version of Fixed Rates)
Interwar Instability
The Bretton Woods Era, 1944–1971 (Adjustable Pegged Rates)
Global Governance The International Monetary Fund
The Current System: Limited Anarchy
Summary
Key Terms
Questions and Problems
- MODULE 21: INTERNATIONAL LENDING AND FINANCIAL CRISES
Gains and Losses From Well-Behaved International Lending
Taxes on International Lending
International Lending to Developing Countries
The Surge in International Lending, 1974–1982
The Debt Crisis of 1982
The Resurgence of Capital Flows in the 1990s
The Mexican Crisis, 1994–1995
The Asian Crisis, 1997
The Russian Crisis, 1998
Argentina’s Crisis, 2001–2002
Global Governance Short of Reserves? Call 800-IMF-LOAN
Financial Crises: What Can and Does Go Wrong
Waves of Overlending and Overborrowing
Exogenous International Shocks
Exchange-Rate Risk
Fickle International Short-Term Lending
Extension The Special Case of Sovereign Debt
Global Contagion
Resolving Financial Crises
Rescue Packages
Debt Restructuring
Reducing the Frequency of Financial Crises
Bank Regulation and Supervision
Capital Controls
Global Financial and Economic Crisis
How the Crisis Happened
Causes and Amplifiers
Euro Crisis National Crises, Contagion, and Resolution
Summary
Key Terms
Suggested Reading
Questions and Problems
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- MODULE 22: HOW DOES THE MICROECONOMY WORK?
The Performance of a National Economy
A Framework for Macroeconomic Analysis
Domestic Production Depends on Aggregate Demand
Trade Depends on Income
Equilibrium GDP and Spending Multipliers
Equilibrium GDP
The Spending Multiplier in a Small Open Economy
Foreign Spillovers and Foreign-Income Repercussions
A More Complete Framework: Three Markets
The Domestic Product Market
The Money Market
The Foreign Exchange Market (or Balance of Payments)
Three Markets Together
The Price Level Does Change
Trade Also Depends on Price Competitiveness
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 23: INTERNAL AND EXTERNAL BALANCED WITH FIXED EXCHANGE RATES
From the Balance of Payments to the Money Supply
The Central Bank’s Balance Sheet and the Money Supply
Official Foreign Exchange Intervention
From the Money Supply Back to the Balance of Payments
Sterilization
Monetary Policy with Fixed Exchange Rates
Fiscal Policy with Fixed Exchange Rates
Perfect Capital Mobility
Shocks to the Economy
Internal Shocks
International Capital-Flow Shocks
International Trade Shocks
Imbalances and Policy Responses
Internal and External Imbalances
A Short-Run Solution: Monetary–Fiscal Mix
Surrender: Changing the Exchange Rate
Case Study: A Tale of Three Countries
How Well Does the Trade Balance Respond to Changes in the Exchange Rate?
How the Response Could Be Unstable
Why the Response Is Probably Stable
Timing: The J Curve
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 24: FLOATING EXCHANGE RATES AND INTERNAL BALANCE
Monetary Policy With Floating Exchange Rates
Fiscal Policy With Floating Exchange Rates
Shocks to the Economy
Internal Shocks
International Capital-Flow Shocks
Case Study Why Are U.S. Trade Deficits So Big?
International Trade Shocks
Internal Imbalance and Policy Responses
Global Crisis Liquidity Trap!
International Macroeconomic Policy Coordination
Case Study Can Governments Manage the Float?
Global Crisis Central Bank Liquidity Swaps
Summary
Key Terms
Suggested Reading
Questions and Problems
- MODULE 25: NATIONAL AND GLOBAL CHOICES: FLOATING RATES AND THE ALTERNATIVES
Key Issues in the Choice of Exchange-Rate Policy
Effects of Macroeconomic Shocks
Case Study What Role for Gold?
The Effectiveness of Government Policies
Differences in Macroeconomic Goals, Priorities, and Policies
Controlling Inflation
Real Effects of Exchange-Rate Variability
National Choices
Extreme Fixes
Currency Board
“Dollarization”
The International Fix—Monetary Union
Exchange Rate Mechanism
European Monetary Union
Summary
Key Terms
Suggested Reading
Questions and Problems
Managerial Accounting
- PROLOGUE: MANAGERIAL ACCOUNTING: AN OVERVIEW
What Is Managerial Accounting?
Planning
Controlling
Decision Making
Why Does Managerial Accounting Matter to Your Career?
Business Majors
Accounting Majors
Professional Certification—A Smart Investment
Managerial Accounting: Understanding the Broader Context
Big Data
Ethics
Code of Conduct for Management Accountants
Strategy
Enterprise Risk Management
Corporate Social Responsibility
Process Management Perspective
Leadership
Intrinsic Motivation
Extrinsic Incentives
Cognitive Bias
Summary
Glossary
Questions
Exercises
- MODULE 1: MANAGERIAL ACCOUNTING AND COST CONCEPTS
Cost Classifications for Assigning Costs to Cost Objects
Direct Cost
Indirect Cost
Cost Classifications for Manufacturing Companies
Manufacturing Costs
Direct Materials
Direct Labor
Manufacturing Overhead
Nonmanufacturing Costs
Cost Classifications for Preparing Financial Statements
Product Costs
Period Costs
Cost Classifications for Predicting Cost Behavior
Variable Cost
Fixed Cost
The Linearity Assumption and the Relevant Range
Mixed Costs
Cost Terminology—A Closer Look
Cost Classifications for Decision Making
Differential Cost and Revenue
Opportunity Cost and Sunk Cost
Using Different Cost Classifications for Different Purposes
The Traditional Format Income Statement
The Contribution Format Income Statement
Summary
Review Problem 1: Cost Terms
Review Problem 2: Income Statement Formats
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
- MODULE 2: JOB-ORDER COSTING: CALCULATING UNIT PRODUCT COSTS
Job-Order Costing—An Overview
Job-Order Costing—An Example
Measuring Direct Materials Cost
Job Cost Sheet 63
Measuring Direct Labor Cost
Computing Predetermined Overhead Rates
Applying Manufacturing Overhead
Manufacturing Overhead—A Closer Look
The Need for a Predetermined Rate
Computation of Total Job Costs and Unit Product Costs
Job-Order Costing—A Managerial Perspective
Choosing an Allocation Base—A Key to Job Cost Accuracy
Job-Order Costing Using Multiple Predetermined Overhead Rates
Multiple Predetermined Overhead Rates—A Departmental Approach
Multiple Predetermined Overhead Rates—An Activity-Based Approach
Job-Order Costing—An External Reporting Perspective
Overhead Application and the Income Statement
Job Cost Sheets: A Subsidiary Ledger
Job-Order Costing in Service Companies
Summary
Review Problem: Calculating Unit Product Costs
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Case
Appendix 2A: Activity-Based Absorption Costing
Glossary (Appendix 2A)
Appendix 2A: Exercises, Problems, and Case
Appendix 2B: The Predetermined Overhead Rate and Capacity
Appendix 2B: Exercises, Problem, and Case
- MODULE 3: JOB-ORDER COSTING: COST FLOWS AND EXTERNAL REPORTING
Job-Order Costing—The Flow of Costs
The Purchase and Issue of Materials
Issue of Direct and Indirect Materials
Labor Cost
Manufacturing Overhead Costs
Applying Manufacturing Overhead
The Concept of a Clearing Account
Nonmanufacturing Costs
Cost of Goods Manufactured
Cost of Goods Sold
Schedules of Cost of Goods Manufactured and Cost of Goods Sold
Schedule of Cost of Goods Manufactured
Schedule of Cost of Goods Sold
Income Statement
Underapplied and Overapplied Overhead—A Closer Look
Computing Underapplied and Overapplied Overhead
Disposition of Underapplied or Overapplied Overhead Balances
Closed to Cost of Goods Sold
Closed Proportionally to Work in Process, Finished Goods, and Cost of Goods Sold
Comparing the Two Methods for Disposing of Underapplied or Overapplied Overhead
A General Model of Product Cost Flows
Summary
Review Problem: The Flow of Costs in a Job-Order Costing System
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
Appendix 3A: Job-Order Costing: A Microsoft Excel-Based Approach
Appendix 3A: Exercises and Problems
- MODULE 4: PROCESS COSTING
Comparison of Job-Order and Process Costing
Similarities between Job-Order and Process Costing
Differences between Job-Order and Process Costing
Cost Flows in Process Costing
Processing Departments
The Flow of Materials, Labor, and Overhead Costs
Materials, Labor, and Overhead Cost Entries
Materials Costs
Labor Costs
Overhead Costs
Completing the Cost Flows
Process Costing Computations: Three Key Concepts
Key Concept #1
Key Concept #2
Key Concept #3
The Weighted-Average Method: An Example
Step 1: Compute the Equivalent Units of Production
Step 2: Compute the Cost per Equivalent Unit
Step 3: Assign Costs to Units
Step 4: Prepare a Cost Reconciliation Report
Operation Costing
Summary
Review Problem: Process Cost Flows and Costing Units
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
Appendix 4A: FIFO Method
Appendix 4A: Exercises, Problems, and Case
Appendix 4B: Service Department Cost Allocations
Appendix 4B: Exercises, Problems, and Case
- MODULE 5: COST-VOLUME-PROFIT RELATIONSHIPS
The Basics of Cost-Volume-Profit (CVP) Analysis
Contribution Margin
CVP Relationships in Equation Form
CVP Relationships in Graphic Form
Preparing the CVP Graph
Contribution Margin Ratio (CM Ratio) and the Variable Expense Ratio
Applications of the Contribution Margin Ratio
Additional Applications of CVP Concepts
Example 1: Change in Fixed Cost and Sales Volume
Alternative Solution 1
Alternative Solution 2
Example 2: Change in Variable Costs and Sales Volume
Solution
Example 3: Change in Fixed Cost, Selling Price, and Sales Volume
Solution
Example 4: Change in Variable Cost, Fixed Cost, and Sales Volume
Solution
Example 5: Change in Selling Price
Solution
Break-Even and Target Profit Analysis
Break-Even Analysis
The Equation Method
The Formula Method
Break-Even in Dollar Sales
Target Profit Analysis
The Equation Method
The Formula Method
Target Profit Analysis in Terms of Dollar Sales
The Margin of Safety
CVP Considerations in Choosing a Cost Structure
Cost Structure and Profit Stability
Operating Leverage
Sales Mix
The Definition of Sales Mix
Sales Mix and Break-Even Analysis
Summary
Review Problem: CVP Relationships
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Case
Appendix 5A: Analyzing Mixed Costs
Glossary (Appendix 5A)
Appendix 5A: Exercises and Problems
- MODULE 6: VARIABLE COSTING AND SEGMENT REPORTING: TOOLS FOR MANAGEMENT
Overview of Variable and Absorption Costing
Variable Costing
Absorption Costing
Selling and Administrative Expenses
Summary of Differences
Variable and Absorption Costing—An Example
Variable Costing Contribution Format Income Statement
Absorption Costing Income Statement
Reconciliation of Variable Costing with Absorption Costing Income
Advantages of Variable Costing and the Contribution Approach
Enabling CVP Analysis
Explaining Changes in Net Operating Income
Supporting Decision Making
Segmented Income Statements and the Contribution Approach
Traceable and Common Fixed Costs and the Segment Margin
Identifying Traceable Fixed Costs
Traceable Fixed Costs Can Become Common Fixed Costs
Segmented Income Statements—An Example
Levels of Segmented Income Statements
Segmented Income Statements—Decision Making and Break-Even Analysis
Decision Making
Break-Even Analysis
Segmented Income Statements—Common Mistakes
Omission of Costs
Inappropriate Methods for Assigning Traceable Costs among Segments
Failure to Trace Costs Directly
Inappropriate Allocation Base
Arbitrarily Dividing Common Costs among Segments
Income Statements—An External Reporting Perspective
Companywide Income Statements
Segmented Financial Information
Summary
Review Problem 1: Contrasting Variable and Absorption Costing
Review Problem 2: Segmented Income Statements
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
Appendix 6A: Super-Variable Costing
Glossary (Appendix 6A)
Appendix 6A: Exercises and Problems
- MODULE 7: ACTIVITY-BASED COSTING: A TOOL TO AID DECISION MAKING
Activity-Based Costing: An Overview
Nonmanufacturing Costs and Activity-Based Costing
Manufacturing Costs and Activity-Based Costing
Cost Pools, Allocation Bases, and Activity-Based Costing
Designing an Activity-Based Costing (ABC) System
Steps for Implementing Activity-Based Costing:
Step 1: Define Activities, Activity Cost Pools, and Activity Measures
The Mechanics of Activity-Based Costing
Step 2: Assign Overhead Costs to Activity Cost Pools
Step 3: Calculate Activity Rates
Step 4: Assign Overhead Costs to Cost Objects
Step 5: Prepare Management Reports
Comparison of Traditional and ABC Product Costs
Product Margins Computed Using the Traditional Cost System
The Differences between ABC and Traditional Product Costs
Targeting Process Improvements
Activity-Based Costing and External Reports
The Limitations of Activity-Based Costing
Summary
Review Problem: Activity-Based Costing
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Appendix 7A: Time-Driven Activity-Based Costing: A Microsoft Excel-Based Approach
Appendix 7A: Exercises and Problems
-
- MODULE 8: MASTER BUDGETING
Why and How Do Organizations Create Budgets?
Why Do Organizations Create Budgets?
How Do Organizations Create Budgets?
The Master Budget: An Overview
Seeing the Big Picture
Preparing the Master Budget
The Beginning Balance Sheet
The Budgeting Assumptions
The Sales Budget
The Production Budget
Inventory Purchases—Merchandising Company
The Direct Materials Budget
The Direct Labor Budget
The Manufacturing Overhead Budget
The Ending Finished Goods Inventory Budget
The Selling and Administrative Expense Budget
The Cash Budget
The Budgeted Income Statement
The Budgeted Balance Sheet
Summary
Review Problem: Budget Schedules
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
- MODULE 9: FLEXIBLE BUDGETS AND PERFORMANCE ANALYSIS
The Variance Analysis Cycle
Preparing Planning Budgets and Flexible Budgets with One Cost Driver
Characteristics of a Flexible Budget
Deficiencies of the Static Planning Budget
How a Flexible Budget Works
Flexible Budget Variances
Activity Variances
Revenue and Spending Variances
A Performance Report Combining Activity and Revenue and Spending Variances
Performance Reports in Nonprofit Organizations
Performance Reports in Cost Centers
Preparing Planning Budgets and Flexible Budgets with Multiple Cost Drivers
Summary
Review Problem: Variance Analysis Using a Flexible Budget
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
- MODULE 10: STANDARD COSTS AND VARIANCES
Standard Costs—Setting the Stage
Setting Direct Materials Standards
Setting Direct Labor Standards
Setting Variable Manufacturing Overhead Standards
Using Standards in Flexible Budgets
A General Model for Standard Cost Variance Analysis
Using Standard Costs—Direct Materials Variances
The Materials Price Variance
The Materials Quantity Variance
Using Standard Costs—Direct Labor Variances
The Labor Rate Variance
The Labor Efficiency Variance
Using Standard Costs—Variable Manufacturing Overhead Variances
The Variable Manufacturing Overhead Rate and Efficiency Variances
An Important Subtlety in the Materials Variances
Standard Costs—Managerial Implications
Advantages of Standard Costs
Potential Problems with Standard Costs
Summary
Review Problem: Standard Costs
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
Appendix 10A: Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System
Glossary (Appendix 10A)
Appendix 10A: Exercises and Problems
Appendix 10B: Standard Cost Systems: A Financial Reporting Perspective Using Microsoft Excel
Appendix 10B: Exercises and Problems
- MODULE 11: RESPONSIBILITY ACCOUNTING SYSTEMS
Decentralization in Organizations
Advantages and Disadvantages of Decentralization
Responsibility Accounting
Cost, Profit, and Investment Centers
Cost Center
Profit Center
Investment Center
Evaluating Investment Center Performance—Return on Investment
Net Operating Income and Operating Assets Defined
Understanding ROI
Criticisms of ROI
Residual Income
Motivation and Residual Income
Transfer Pricing
Negotiated Transfer Prices
Negotiated Transfer Prices: An Example
The Selling Division’s Lowest Acceptable Transfer Price
The Buying Division’s Highest Acceptable Transfer Price
Selling Division has Idle Capacity
Selling Division has No Idle Capacity
Selling Division Has Some Idle Capacity
No Outside Supplier
Evaluation of Negotiated Transfer Prices
Transfers at the Cost to the Selling Division
Transfers at Market Price
Service Department Charges
Service Department Charges: Key Concepts
Variable Costs
Fixed Costs
Service Department Charges: An Example
Some Cautions in Allocating Service Department Costs
Pitfalls in Allocating Fixed Costs
Summary
Review Problem 1: Return on Investment (ROI) and Residual Income
Review Problem 2: Transfer Pricing
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Case
- MODULE 12: STRATEGIC PERFORMANCE MEASUREMENT
The Balanced Scorecard: An Overview
Learning and Growth Measures
Internal Business Process Measures
Customer Measures
Financial Measures
Cost of Quality: A Closer Look
Cost of Quality
Quality Cost Reports: Strengths and Limitations
Operating Performance Measures: A Closer Look
Throughput (Manufacturing Cycle) Time
Delivery Cycle Time 544
Manufacturing Cycle Efficiency (MCE)
Example
Required: Overall Equipment Effectiveness (OEE)
Example
Constructing a Balanced Scorecard
Selecting Balanced Scorecard Measures
Tying Compensation to the Balanced Scorecard
Corporate Social Responsibility Performance Measures
Global Reporting Initiative
Corporate Social Responsibility and the Balanced Scorecard
Summary
Review Problem: Operating Performance Measures
Glossary
Questions
Applying Excel
Exercises
Problems
Case
- MODULE 13: DIFFERENTIAL ANALYSIS: THE KEY TO DECISION MAKING
Decision Making: Six Key Concepts
Key Concept #1
Key Concept #2
Key Concept #3
Key Concept #4
Key Concept #5
Key Concept #6
Identifying Relevant Costs and Benefits: An Example
Decision Analysis: The Total Cost and Differential Cost Approaches
Why Isolate Relevant Costs?
Adding and Dropping Product Lines and Other Segments
An Illustration of Cost Analysis
A Comparative Format
Beware of Allocated Fixed Costs
Make or Buy Decisions
Strategic Aspects of the Make or Buy Decision
An Example of a Make or Buy Decision
Opportunity Cost
Special Order Decisions
Volume Trade-Off Decisions
What Is a Constraint?
Utilizing a Constrained Resource to Maximize Profits
Managing Constraints
Joint Product Costs and Sell or Process Further Decisions
Santa Maria Wool Cooperative: An Example
Activity-Based Costing and Relevant Costs
Summary
Review Problem: Differential Analysis
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
Appendix 13A: Pricing Decisions
The Absorption Costing Approach to Cost-Plus Pricing
Pricing and Customer Latitude
Value-Based Pricing
Target Costing
Summary (Appendix 13A)
Glossary (Appendix 13A)
Appendix 13A: Exercises and Problems
- MODULE 14: CAPITAL BUDGETING DECISIONS
Capital Budgeting—An Overview
Typical Capital Budgeting Decisions
Cash Flows versus Net Operating Income
Typical Cash Outflows
Typical Cash Inflows
The Time Value of Money
The Payback Method
Evaluation of the Payback Method
An Extended Example of Payback
Payback and Uneven Cash Flows
The Net Present Value Method
The Net Present Value Method Illustrated
Recovery of the Original Investment
An Extended Example of the Net Present Value Method
The Internal Rate of Return Method
The Internal Rate of Return Method Illustrated
Comparison of the Net Present Value and Internal Rate of Return Methods
Expanding the Net Present Value Method
Least-Cost Decisions
Uncertain Cash Flows
An Example
Preference Decisions—The Ranking of Investment Projects
Internal Rate of Return Method
Net Present Value Method
The Simple Rate of Return Method
Postaudit of Investment Projects
Summary
Review Problem: Comparison of Capital Budgeting Methods
Glossary
Questions
Applying Excel
The Foundational 15
Exercises
Problems
Cases
Appendix 14A: The Concept of Present Value
Appendix 14A: Review Problem: Basic Present Value Computations
Glossary (Appendix 14A)
Appendix 14A: Exercises
Appendix 14B: Present Value Tables
Appendix 14C: Income Taxes and the Net Present Value Method
Summary (Appendix 14C)
Appendix 14C: Exercises and Problems
- MODULE 15: STATEMENT OF CASH FLOWS
The Statement of Cash Flows: Key Concepts
Organizing the Statement of Cash Flows
Operating Activities: Direct or Indirect Method?
The Indirect Method: A Three-Step Process
Step 1
Step 2
Step 3
Investing and Financing Activities: Gross Cash Flows
Property, Plant, and Equipment
Retained Earnings
Summary of Key Concepts
An Example of a Statement of Cash Flows
Operating Activities
Step 1
Step 2
Step 3
Investing Activities
Financing Activities
Seeing the Big Picture
Interpreting the Statement of Cash Flows
Consider a Company’s Specific Circumstances
Consider the Relationships among Numbers
Free Cash Flow
Earnings Quality
Summary
Review Problem
Glossary
Questions
The Foundational 15
Exercises
Problems
Appendix 15A: The Direct Method of Determining the Net Cash Provided by Operating Activities
Appendix 15A: Exercises and Problems
- MODULE 16: FINANCIAL STATEMENT ANALYSIS
Limitations of Financial Statement Analysis
Comparing Financial Data across Companies
Looking beyond Ratios
Statements in Comparative and Common-Size Form
Dollar and Percentage Changes on Statements
Common-Size Statements
Ratio Analysis—Liquidity
Working Capital
Current Ratio
Acid-Test (Quick) Ratio
Ratio Analysis—Asset Management
Accounts Receivable Turnover
Inventory Turnover
Operating Cycle
Total Asset Turnover
Ratio Analysis—Debt Management
Times Interest Earned Ratio
Debt-to-Equity Ratio
Equity Multiplier
Ratio Analysis—Profitability
Gross Margin Percentage
Net Profit Margin Percentage
Return on Total Assets
Return on Equity
Ratio Analysis—Market Performance
Earnings per Share
Price-Earnings Ratio
Dividend Payout and Yield Ratios
The Dividend Payout Ratio
The Dividend Yield Ratio
Book Value per Share
Summary of Ratios and Sources of Comparative Ratio Data
Summary
Review Problem: Selected Ratios and Financial Leverage
Glossary
Questions
The Foundational 15
Exercises
Problems
Integration Exercises
Economics
PART I: INTRODUCTION. TO ECONOMICS AND THE ECONOMY
- MODULE 1: LIMITS, ALTERNATIVES, AND CHOICES
The Economic Perspective
Scarcity and Choice / Purposeful Behavior / Marginal Analysis: Comparing Benefits and Costs
Consider This: Is Facebook Free?
Theories, Principles, and Models
Microeconomics and Macroeconomics
Microeconomics / Macroeconomics / Positive and Normative Economics
Individual’s Economizing Problem
Limited Income / Unlimited Wants / A Budget Line
Consider This: Did Zuckerberg, Seacrest, and Grande Make Bad Choices?
Society’s Economizing Problem
Scarce Resources / Resource Categories
Production Possibilities Model
Production Possibilities Table / Production Possibilities Curve / Law of Increasing Opportunity Costs / Optimal Allocation
Unemployment, Growth, and the Future
A Growing Economy / Present Choices and Future Possibilities / A Qualification: International Trade
Last Word: The Marginal Starbucks
Module 1 Appendix: Graphs and Their Meanings
- MODULE 2: THE MARKET SYSTEM AND THE CIRCULAR FLOW
Economic Systems
Laissez-Faire Capitalism / The Command System / The Market System
Characteristics of the Market System
Private Property / Freedom of Enterprise and Choice / Self-Interest / Competition / Markets and Prices / Technology and Capital Goods / Specialization / Use of Money / Active, but Limited, Government
Five Fundamental Questions
What Will Be Produced? / How Will the Goods and Services Be Produced? / Who Will Get the Output? / How Will the System Accommodate Change? / How Will the System Promote Progress?
Consider This: Bitcoin and Cheap Electrons
The “Invisible Hand”
The Demise of the Command Systems
Consider This: Korea by Night
The Circular Flow Model
Households / Businesses / Product Market / Resource Market
How the Market System Deals with Risk
The Profit System / Shielding Employees and Suppliers from Business Risk / Benefits of Restricting Business Risk to Owners
Consider This: Built on Sand
Last Word: Hasta La Vista, Venezuela
PART II: PRICE, QUANTITY, AND EFFICIENCY
- MODULE 3: DEMAND, SUPPLY, AND MARKET EQUILIBRIUM
Markets
Demand
Law of Demand / The Demand Curve / Market Demand / Changes in Demand / Changes in Quantity Demanded
Supply
Law of Supply / The Supply Curve / Market Supply / Determinants of Supply / Changes in Supply / Changes in Quantity Supplied
Market Equilibrium
Equilibrium Price and Quantity / Rationing Function of Prices / Efficient Allocation
Consider This: Emergent Equilibria
Changes in Supply, Demand, and Equilibrium
Changes in Demand / Changes in Supply / Complex Cases
Consider This: Salsa and Coffee Beans
Application: Government-Set Prices
Price Ceilings on Gasoline / Rent Controls / Price Floors on Wheat
Last Word: Student Loans and Tuition Costs
Module Appendix: Additional Examples of Supply and Demand
- MODULE 4: MARKET FAILURES CASUED BY EXTERNALITIES AND ASYMMETRIC INFORMATION
Efficiently Functioning Markets
Consumer Surplus / Producer Surplus / Total Surplus and Efficiency / Efficiency Losses (Deadweight Losses)
Positive and Negative Externalities
Negative Externalities / Positive Externalities / Government Intervention /
Consider This: The Fable of the Bees
Society’s Optimal Amount of Externality Reduction
MC, MB, and Equilibrium Quantity / Shifts of MB and MC Curves / Government’s Role in the Economy
Consider This: Congestion Pricing
Asymmetric Information
Inadequate Buyer Information about Sellers / Inadequate Seller Information about Buyers / Qualification
Last Word: Visible Pollution, Hidden Costs
- MODULE 5: PUBLIC GOODS, PUBLIC CHOICE, AND GOVERNMENT FAILURE
Public Goods
Characteristics of Private Goods / Public Goods Characteristics / Optimal Quantity of a Public Good / Demand for Public Goods /Comparing MB and MC / Cost-Benefit Analysis / Quasi-Public Goods / The Reallocation Process
Consider This: Street Entertainers
Public Choice Theory and Voting Paradox
Public Choice Theory / Revealing Preferences through Majority Voting / Paradox of Voting / Median-Voter Model / Alternative Voting Mechanisms
Government Failure
Representative Democracy and the Principal-Agent Problem / Limited and Bundled Choice / Bureaucracy and Inefficiency / Inefficient Regulation and Intervention / Corruption / Imperfect Institutions
Consider This: Getting Fleeced
Consider This: Government, Scofflaw
Last Word: Should Governments Subsidize Corporate Relocations?
PART III: CONSUMER BEHAVIOR
- MODULE 6: ELASTICITY
Price Elasticity of Demand
The Price-Elasticity Coefficient and Formula / Interpretations of Ed
The Total-Revenue Test
Elastic Demand / Inelastic Demand / Unit Elasticity / Price Elasticity Along a Linear Demand Curve / Price Elasticity and the Total-Revenue Curve
Determinants of Price Elasticity of Demand
Applications of Price Elasticity of Demand
Consider This: The Southwest Effect
Price Elasticity of Supply
Price Elasticity of Supply: The Immediate Market Period / Price Elasticity of Supply: The Short Run / Price Elasticity of Supply: The Long Run / Applications of Price Elasticity of Supply
Cross Elasticity and Income Elasticity of Demand
Cross Elasticity of Demand / Income Elasticity of Demand
Last Word: Elasticity and Pricing Power: Why Different Consumers Pay Different Prices
- MODULE 7: UTILITY MAXIMIZATION
Law of Diminishing Marginal Utility
Terminology / Total Utility and Marginal Utility / Marginal Utility and Demand
Theory of Consumer Behavior
Consumer Choice and the Budget Constraint / Utility-Maximizing Rule / Numerical Example / Algebraic Generalization
Consider This: There’s No Accounting for Taste
Utility Maximization and the Demand Curve
Deriving the Demand Schedule and Curve
Income and Substitution Effects
Applications and Extensions
iPads / The Diamond-Water Paradox / Cash and Noncash Gifts
Last Word: Criminal Behavior
Module 7 Appendix: Indifference Curve Analysis
Consider This: Indifference Maps and Topographical Maps
- MODULE 8: BEHAVIORAL ECONOMICS
Systematic Errors and the Origin of Behavioral Economics
Comparing Behavioral Economics with Neoclassical Economics
Our Efficient, Error-Prone Brains
Heuristics Are Energy Savers / Brain Modularity
Prospect Theory
Framing Effects and Advertising / Anchoring and Credit Card Bills / Mental Accounting and Overpriced Warranties / The Endowment Effect and Market Transactions / Status Quo Bias
Consider This: Rising Consumption and the Hedonic Treadmill
Myopia and Time Inconsistency
Myopia / Time Inconsistency
Consider This: A Bright Idea
Fairness and Self-Interest
Field Evidence for Fairness / Experimental Evidence for Fairness
Last Word: The Behavioral Insights Team
PART IV: MICROECONOMICS OF PRODUCT MARKETS
- MODULE 9: BUSINESSES AND COSTS OF PRODUCTION
Economic Costs
Explicit and Implicit Costs / Accounting Profit and Normal Profit / Economic Profit / Short Run and Long Run
Short-Run Production Relationships
Law of Diminishing Returns
Short-Run Production Costs
Fixed, Variable, and Total Costs / Per-Unit, or Average, Costs / Marginal Cost / Shifts of the Cost Curves
Consider This: Ignoring Sunk Costs
Long-Run Production Costs
Firm Size and Costs / The Long-Run Cost Curve / Economies and Diseconomies of Scale / Minimum Efficient Scale and Industry Structure
Applications and Illustrations
Rising Gasoline Prices / The Verson Stamping Machine / Successful Start-Up Firms / Aircraft and Concrete Plants
Last Word: 3-D Printers
- MODULE 10: PURE COMPETITION IN THE SHORT RUN
Four Market Models
Pure Competition: Characteristics and Occurrence
Demand as Seen by a Purely Competitive Seller
Perfectly Elastic Demand / Average, Total, and Marginal Revenue
Profit Maximization in the Short Run: Total-Revenue–Total-Cost Approach
Profit Maximization in the Short Run: Marginal-Revenue–Marginal-Cost Approach
Profit-Maximizing Case / Loss-Minimizing Case / Shutdown Case
Marginal Cost and Short-Run Supply
Generalized Depiction / Changes in Supply / Firm and Industry: Equilibrium Price
Consider This: The “Still There” Motel
Last Word: Raiders of the Fixed Costs
- MODULE 11: PURE COMPETITION IN THE LONG RUN
The Long Run in Pure Competition
Profit Maximization in the Long Run
The Long-Run Adjustment Process in Pure Competition
Long-Run Equilibrium
Long-Run Supply Curves
Long-Run Supply for a Constant-Cost Industry / Long-Run Supply for an Increasing-Cost Industry / Long-Run Supply for a Decreasing-Cost Industry
Pure Competition and Efficiency
Productive Efficiency: P = Minimum ATC / Allocative Efficiency: P = MC / Maximum Consumer and Producer Surplus / Dynamic Adjustments / “Invisible Hand” Revisited
Technological Advance and Competition
Creative Destruction
Consider This: Running a Company Is Hard Business
Last Word: Elon Musk, Profit Engineer
- MODULE 12: PURE MONOPOLY
An Introduction to Pure Monopoly
Examples of Monopoly
Barriers to Entry
Economies of Scale / Legal Barriers to Entry: Patents and Licenses / Ownership or Control of Essential Resources / Pricing and Other Strategic Barriers to Entry
Monopoly Demand
Marginal Revenue Is Less Than Price / The Monopolist Is a Price Maker / The Monopolist Sets Prices in the Elastic Region of Demand
Output and Price Determination
Cost Data / MR = MC Rule / No Monopoly Supply Curve / Misconceptions Concerning Monopoly Pricing / Possibility of Losses by Monopolist
Consider This: Salt Monopolies
Economic Effects of Monopoly
Price, Output, and Efficiency / Income Transfer / Cost Complications / Assessment and Policy Options
Price Discrimination
Conditions / Examples of Price Discrimination / Graphical Analysis
Regulated Monopoly
Socially Optimal Price: P = MC / Fair-Return Price: P = ATC / Dilemma of Regulation
Last Word: Personalized Pricing
- MODULE 13: MONOPOLISTIC COMPETITION
Monopolistic Competition
Relatively Large Number of Sellers / Differentiated Products / Easy Entry and Exit / Advertising / Monopolistically Competitive Industries
Price and Output in Monopolistic Competition
The Firm’s Demand Curve / The Short Run: Profit or Loss / The Long Run: Only a Normal Profit
Monopolistic Competition and Efficiency
Neither Productive nor Allocative Efficiency / Excess Capacity
Product Variety
Benefits of Product Variety / Further Complexity
Consider This: The Spice of Life
Last Word: Higher Wages, More McRestaurants
- MODULE 14: OLIGOPOLY AND STRATEGIC BEHAVIOR
Oligopoly
A Few Large Producers / Homogeneous or Differentiated Products / Control over Price, but Mutual Interdependence / Entry Barriers / Mergers / Oligopolistic Industries
Oligopoly Behavior: A Game-Theory Overview
Mutual Interdependence Revisited / Collusion / Incentive to Cheat
Three Oligopoly Models
Kinked-Demand Theory: Noncollusive Oligopoly / Cartels and Other Collusion / Price Leadership Model
Oligopoly and Advertising
Positive Effects of Advertising / Potential Negative Effects of Advertising
Oligopoly and Efficiency
Game Theory and Strategic Behavior
A One-Time Game: Strategies and Equilibrium / Credible and Empty Threats / Repeated Games and Reciprocity Strategies / First-Mover Advantages and Preemption of Entry
Last Word: Internet Oligopolies
- MODULE 15: TECHNOLOGY, R & D, AND EFFICIENCY
Invention, Innovation, and Diffusion
Invention / Innovation / Diffusion / R&D Expenditures / Modern View of Technological Advance
Role of Entrepreneurs and Other Innovators
Forming Start-Ups / Innovating within Existing Firms / Anticipating the Future / Exploiting University and Government Scientific Research
A Firm’s Optimal Amount of R&D
Interest-Rate Cost of Funds / Expected Rate of Return / Optimal R&D Expenditures
Increased Profit via Innovation
Increased Revenue via Product Innovation / Reduced Costs via Process Innovation
Imitation and R&D Incentives
Benefits of Being First / Profitable Buyouts
Consider This: Trade Secrets
Role of Market Structure
Inverted-U Theory of R&D / Market Structure and Technological Advance: The Evidence
Technological Advance and Efficiency
Productive Efficiency / Allocative Efficiency
Last Word: A Patent Failure?
PART V: MICROECONOMICS OF RESOURCE MARKETS AND GOVERNMENT
- MODULE 16: THE DEMAND FOR RESOURCES
Significance of Resource Pricing
Marginal Productivity Theory of Resource Demand
Resource Demand as a Derived Demand / Marginal Revenue Product / Rule for Employing Resources: MRP = MRC / MRP as Resource Demand Schedule / Resource Demand under Imperfect Product Market Competition / Market Demand for a Resource
Determinants of Resource Demand
Changes in Product Demand / Changes in Productivity / Changes in the Prices of Other Resources / Occupational Employment Trends
Consider This: Superstars
Elasticity of Resource Demand
Optimal Combination of Resources
The Least-Cost Rule / The Profit-Maximizing Rule / Numerical Illustration
Marginal Productivity Theory of Income Distribution
Last Word: Labor and Capital: Substitutes or Complements?
- MODULE 17: WAGE DETERMINATION
Labor, Wages, and Earnings
General Level of Wages / Role of Productivity / Real Wages and Productivity / Long-Run Trend of Real Wages
A Purely Competitive Labor Market
Market Demand for Labor / Market Supply of Labor / Labor Market Equilibrium
Consider This: Fringe Benefits vs. Take-Home Pay
Monopsony Model
Upward Sloping Labor Supply to Firm / MRC Higher Than the Wage Rate / Equilibrium Wage and Employment / Examples of Monopsony Power
Three Union Models
Demand-Enhancement Model / Exclusive or Craft Union Model / Inclusive or Industrial Union Model / Wage Increases and Job Loss
Bilateral Monopoly Model
Indeterminate Outcome of Bilateral Monopoly / Desirability of Bilateral Monopoly
The Minimum-Wage Controversy
Case Against the Minimum Wage / Case for the Minimum Wage / Evidence and Conclusions
Wage Differentials
Marginal Revenue Productivity / Noncompeting Groups / Compensating Differences / Market Imperfections
Consider This: My Entire Life
Pay for Performance
The Principal-Agent Problem
Last Word: Occupational Licensing
Module 17 Appendix: Labor Unions and Their Impacts
- MODULE 18: RENT, INTEREST, AND PROFIT
Economic Rent
Perfectly Inelastic Supply / Equilibrium Rent and Changes in Demand / Productivity Differences and Rent Differences / Land Rent: A Surplus Payment / Land Ownership: Fairness versus Allocative Efficiency
Interest
Money Is Not a Resource / Interest Rates and Interest Income / Range of Interest Rates / Pure Rate of Interest
Loanable Funds Theory of Interest Rates
Supply of Loanable Funds / Demand for Loanable Funds / Extending the Model
Time-Value of Money
Compound Interest / Future Value and Present Value
Role of Interest Rates
Interest and Total Output / Interest and the Allocation of Capital / Interest and R&D Spending / Nominal and Real Interest Rates
Economic Profit
Entrepreneurship and Profit / Insurable and Uninsurable Risks / Sources of Uninsurable Risks / Profit as Compensation for Bearing Uninsurable Risks / Sources of Economic Profit / Entrepreneurs, Profits, and Corporate Stockholders
Consider This: Profits and Efficiency
Income Shares
Last Word: Determining the Price of Credit
- MODULE 19: NATURAL RESOURCE AND ENERGY ECONOMICS
Resource Supplies: Doom or Boom?
Population Growth / Resource Consumption per Person
Consider This: I'll Betcha
Energy Economics
Energy Efficiency Is Increasing / Efficient Electricity Use
Running Out of Energy?
Plunging Photovoltaic Prices / Limitations on Solar Electricity Production / Multiple Oil Substitutes
Consider This: Storage Wars
Natural Resource Economics
Renewables vs. Nonrenewables / Optimal Resource Management / Using Present Values to Evaluate Future Possibilities / Nonrenewable Resources / Incomplete Property Rights Lead to Excessive Present Use / Application: Conflict Diamonds
Renewable Resources
Elephant Preservation / Forest Management / Optimal Fisheries Management / Policies to Limit Catch Sizes
Consider This: The Tragedy of the Commons
Last Word: Is Economic Growth Bad for the Environment?
- MODULE 20: PUBLIC FINANCE: EXPENDITURES AND TAXES
Government and the Circular Flow
Government Finance
Government Purchases and Transfers / Government Revenues, Including Borrowing
Federal Finance
Federal Expenditures / Federal Tax Revenues
State and Local Finance
State Finances / Local Finances
Consider This: State Lotteries: A Good Bet?
Local, State, and Federal Employment
Apportioning the Tax Burden
Benefits Received versus Ability to Pay / Progressive, Proportional, and Regressive Taxes
Tax Incidence and Efficiency Loss
Elasticity and Tax Incidence / Efficiency Loss of a Tax
Probable Incidence of U.S. Taxes
Personal Income Tax and Inheritance Tax / Payroll Taxes / Corporate Income Tax / Sales and Excise Taxes / Property Taxes / The U.S. Tax Structure
Last Word: Taxation and Spending: Redistribution Versus Recycling
PART VI: MICROECONOMIC ISSUES AND POLICIES
- MODULE 21: ANTITRUST POLICY AND REGULATION
The Antitrust Laws
Historical Background / Sherman Act of 1890 / Clayton Act of 1914 / Federal Trade Commission Act of 1914 / Celler-Kefauver Act of 1950
Antitrust Policy: Issues and Impacts
Issues of Interpretation / Issues of Enforcement / Effectiveness of Antitrust Laws
Consider This: Of Sea Fish and eBooks (and Other Things in Common)
Industrial Regulation
Natural Monopoly
Problems with Industrial Regulation / Deregulation
Social Regulation
Distinguishing Features / The Optimal Level of Social Regulation / Two Reminders
Last Word: Antitrust Online
- MODULE 22: AGRICULTURE: ECONOMICS AND POLICY
Economics of Agriculture
The Short Run: Price and Income Instability
The Long Run: A Declining Industry
Technology and Supply Increases / Lagging Demand / Graphical Portrayal / Consequences / Farm-Household Income
Economics of Farm Policy
Rationale for Farm Subsidies / Background: The Parity Concept / Economics of Price Supports / Reduction of Surpluses
Consider This: Putting Corn in Your Gas Tank
Criticisms and Politics
Criticisms of the Parity Concept / Criticisms of the Price-Support System
Recent Farm Policies
Freedom to Farm Act of 1996 / The Food, Conservation, and Energy Act of 2008 / The Agricultural Act of 2014 / The Agricultural Act of 2018
Last Word: Seeing the Forest for the Subsidies
- MODULE 23: INCOME INEQUALITY, POVERTY, AND DISCRIMINATION
Facts about Income Inequality
Distribution by Income Category / Distribution by Quintiles (Fifths) / The Lorenz Curve and Gini Ratio / Income Mobility: The Time Dimension / Effect of Government Redistribution
Causes of Income Inequality
Ability / Education and Training / Discrimination / Preferences and Risks / Unequal Distribution of Wealth / Market Power / Luck, Connections, and Misfortune
Income Inequality over Time
Rising Income Inequality since 1980 / Causes of Growing Inequality
Equality versus Efficiency
The Case for Equality: Maximizing Total Utility / The Case for Inequality: Incentives and Efficiency / The Equality-Efficiency Trade-off
The Economics of Poverty
Definition of Poverty / Incidence of Poverty / Measurement Issues
The U.S. Income-Maintenance System
Social Insurance Programs / Public Assistance Programs
Economic Analysis of Discrimination
Taste-for-Discrimination Model / Statistical Discrimination / Occupational Segregation: The Crowding Model / Cost to Society as Well as to Individuals
Last Word: Debating Universal Basic Income
- MODULE 24: HEALTH CARE
The Health Care Industry
The U.S. Emphasis on Private Health Insurance / Twin Problems: Costs and Access / High and Rising Health Care Costs / Quality of Care: Are We Healthier?
Economic Implications of Rising Costs
Reduced Access to Care / Labor Market Effects / Personal Bankruptcies / Impact on Government Budgets / Too Much Spending?
Limited Access
Why the Rapid Rise in Costs?
Peculiarities of the Health Care Market / The Increasing Demand for Health Care / Role of Health Insurance / Supply Factors in Rising Health Care Prices
Consider This: Why Do Hospitals Sometimes Charge $25 for an Aspirin?
Cost Containment: Altering Incentives
Deductibles and Copayments / Health Savings Accounts / Managed Care / Medicare and DRG / Limits on Malpractice Awards
The Patient Protection and Affordable Care Act
Major Provisions / Objections and Alternatives
Last Word: Singapore’s Efficient and Effective Health Care System
- MODULE 25: IMMIGRATION
Number of Immigrants
Legal Immigrants / Illegal Immigrants
The Decision to Migrate
Earnings Opportunities / Moving Costs / Factors Affecting Costs and Benefits
Economic Effects of Immigration
Personal Gains / Impacts on Wage Rates, Efficiency, and Output / Income Shares / Complications and Modifications / Fiscal Impacts / Research Findings
Consider This: Stars and Stripes
The Illegal Immigration Debate
Employment Effects / Wage Effects / Price Effects / Fiscal Impacts on Local and State Governments / Other Concerns / Conclusions
Last Word: Immigration, Aussie Style
PART VII: GDP, GROWTH, AND INSTABILITY
- MODULE 26: AN INTRODUCTION TO MACROECONOMICS
Performance and Policy
Real GDP / Unemployment / Inflation / Preview
The Miracle of Modern Economic Growth
Saving, Investment, and Choosing between Present and Future Consumption
Banks and Other Financial Institutions
Consider This: Economic versus Financial Investment
Uncertainty, Expectations, and Shocks
The Importance of Expectations and Shocks / Demand Shocks and Sticky Prices / Example: A Single Firm Dealing with Demand Shocks and Sticky Prices / Generalizing from a Single Firm to the Entire Economy
Consider This: The Great Recession
How Sticky Are Prices?
Categorizing Macroeconomic Models Using Price Stickiness
Last Word: The Behavioral Economics of Sticky Prices
- MODULE 27: MEASURING DOMESTIC OUTPUT AND NATIONAL INCOME
Assessing the Economy’s Performance
Gross Domestic Product / Value Added / Gross Output and Multiple Counting / GDP Excludes Nonproduction Transactions / Two Ways of Looking at GDP: Spending and Income
The Expenditures Approach
Personal Consumption Expenditures (C) / Gross Private Domestic Investment (Ig) / Government Purchases (G) / Net Exports (Xn) / Putting It All Together: GDP = C + Ig + G + Xn
The Income Approach
Compensation of Employees / Rents / Interest / Proprietors’ Income / Corporate Profits / Taxes on Production and Imports / From National Income to GDP
Other National Accounts
Net Domestic Product / National Income / Personal Income / Disposable Income / The Circular Flow Revisited
Nominal GDP versus Real GDP
Adjustment Process in a One-Product Economy / An Alternative Method / Real-World Considerations and Data
Shortcomings of GDP
Nonmarket Activities / Leisure and Psychic Income / Improved Product Quality / The Underground Economy / GDP and the Environment / Composition and Distribution of Output / Noneconomic Sources of Well-Being / The Importance of Intermediate Output
Last Word: Measuring Quality to Price the Priceless
- MODULE 28: ECONOMIC GROWTH
Economic Growth
Growth as a Goal / Arithmetic of Growth / Growth in the United States
Modern Economic Growth
The Uneven Distribution of Growth / Catching Up Is Possible / Institutional Structures That Promote Modern Economic Growth
Consider This: Patents and Innovation
Determinants of Growth
Supply Factors / Demand Factor / Efficiency Factor / Production Possibilities Analysis
Accounting for Growth
Labor Inputs versus Labor Productivity / Technological Advance / Quantity of Capital per Worker / Education and Training / Economies of Scale and Resource Allocation
Recent Fluctuations in Average Productivity Growth
Reasons for the Rise in Average Productivity Growth Between 1995 and 2010 / Implications for Economic Growth / The Recent Productivity Slowdown
Is Growth Desirable and Sustainable?
The Antigrowth View / In Defense of Economic Growth
Last Word: Ladies First
- MODULE 29: BUSINESS CYCLES, UNEMPLOYMENT, AND INFLATION
The Business Cycle
Phases of the Business Cycle / Causation: A First Glance / Cyclical Impact: Durables and Nondurables
Unemployment
Measurement of Unemployment / Types of Unemployment / Definition of Full Employment / Economic Cost of Unemployment / Noneconomic Costs
Consider This: Downwardly Sticky Wages and Unemployment
Inflation
Measurement of Inflation / Facts of Inflation / Types of Inflation / Core Inflation
Redistribution Effects of Inflation
Nominal and Real Income / Anticipations / Who Is Hurt by Inflation? / Who Is Unaffected or Helped by Inflation? / Anticipated Inflation / Other Redistribution Issues
Does Inflation Affect Output?
Cost-Push Inflation and Real Output / Demand-Pull Inflation and Real Output / Hyperinflation
Last Word: The Great Skills Shortage
PART VIII: MACROECONOMIC MODELS AND FISCAL POLICY
- MODULE 30: BASIC MACROECONOMIC RELATIONSHIPS
The Income-Consumption and Income-Saving Relationships
The Consumption Schedule / The Saving Schedule / Average and Marginal Propensities
Nonincome Determinants of Consumption and Saving
Other Important Considerations
Consider This: The Great Recession and the Paradox of Thrift
The Interest-Rate–Investment Relationship
Expected Rate of Return / The Real Interest Rate / Investment Demand Curve
Shifts of the Investment Demand Curve
Instability of Investment
The Multiplier Effect
Rationale / The Multiplier and the Marginal Propensities / How Large Is the Actual Multiplier?
Last Word: Toppling Dominoes
- MODULE 31: THE AGGREGATE EXPENDITURES MODEL
Assumptions and Simplifications
A “Stuck Price” Model / Unplanned Inventory Adjustments / Current Relevance / A Preview
Consumption and Investment Schedules
Equilibrium GDP: C + Ig = GDP
Tabular Analysis / Graphical Analysis
Other Features of Equilibrium GDP
Saving Equals Planned Investment / No Unplanned Changes in Inventories
Changes in Equilibrium GDP and the Multiplier
Adding International Trade
Net Exports and Aggregate Expenditures / The Net Export Schedule / Net Exports and Equilibrium GDP / International Economic Linkages
Adding the Public Sector
Government Purchases and Equilibrium GDP / Taxation and Equilibrium GDP
Equilibrium versus Full-Employment GDP
Recessionary Expenditure Gap / Inflationary Expenditure Gap / Application: The Recession of 2007–2009
Last Word: Say’s Law, the Great Depression, and Keynes
-
- MODULE 32: AGGREGATE DEMAND AND AGGREGATE SUPPLY
Aggregate Demand
Aggregate Demand Curve
Changes in Aggregate Demand
Consumer Spending / Investment Spending / Government Spending / Net Export Spending
Aggregate Supply
Aggregate Supply in the Immediate Short Run / Aggregate Supply in the Short Run / Aggregate Supply in the Long Run / Focusing on the Short Run
Changes in Aggregate Supply
Input Prices / Productivity / Legal-Institutional Environment
Equilibrium in the AD-AS Model
Changes in Equilibrium
Increases in AD: Demand-Pull Inflation / Decreases in AD: Recession and Cyclical Unemployment / Decreases in AS: Cost-Push Inflation / Increases in AS: Full Employment with Price-Level Stability
Last Word: Stimulus and the Great Recession
Module 32 Appendix: The Relationship of the AD Curve to the Aggregate Expenditures Model
- MODULE 33: FISCAL POLICY, DEFICITS, AND DEBT
Fiscal Policy and the AD-AS Model
Expansionary Fiscal Policy / Contractionary Fiscal Policy
Built-In Stability
Tax Collections and the Business Cycle / Automatic or Built-In Stabilizers
Evaluating How Expansionary or Contractionary Fiscal Policy Is Determined
Cyclically Adjusted Budget
Recent and Projected U.S. Fiscal Policy
Fiscal Policy from 2000 to 2007 / Fiscal Policy During and After the Great Recession
Problems, Criticisms, and Complications of Implementing Fiscal Policy
Problems of Timing / Political Considerations / Future Policy Reversals / Offsetting State and Local Finance / Crowding-Out Effect
The U.S. Public Debt
Ownership / International Comparisons / Interest Charges / False Concerns / Bankruptcy / Burdening Future Generations / Substantive Issues / Income Distribution / Incentives / Foreign-Owned Public Debt / Crowding-Out Effect Revisited
Last Word: The Social Security and Medicare Time Bombs
PART IX: MONEY, BANKING, AND MONETARY POLICY
- MODULE 34: MONEY, BANKING, AND FINANCIAL INSTITUTIONS
The Functions of Money
The Components of the Money Supply
Money Definition M1 / Money Definition M2
Consider This: Are Credit Cards Money?
What “Backs” the Money Supply?
Money as Debt / Value of Money / Money and Prices / Stabilizing Money’s Purchasing Power
The Federal Reserve and the Banking System
Historical Background / Board of Governors / The 12 Federal Reserve Banks / FOMC / Commercial Banks and Thrifts
Fed Functions, Responsibilities, and Independence
Federal Reserve Independence
The Financial Crisis of 2007 and 2008
Overview / Prelude / Causes / Crisis / Immediate Response / Post-Crisis Policy Changes
Last Word: Too Big to Fail. Too Big to Jail?
- MODULE 35: MONEY CREATION
The Fractional Reserve System
Illustrating the Idea: The Goldsmiths / Significant Characteristics of Fractional Reserve Banking
A Single Commercial Bank
Transaction 1: Creating a Bank / Transaction 2: Acquiring Property and Equipment / Transaction 3: Accepting Deposits / Transaction 4: Depositing Reserves in a Federal Reserve
Bank / Transaction 5: Clearing a Check Drawn Against the Bank
Money-Creating Transactions of a Commercial Bank
Transaction 6: Granting a Loan / Transaction 7: Buying Government Securities / Profits, Liquidity, and the Federal Funds Market
The Banking System: Multiple-Deposit Expansion
The Banking System’s Lending Potential
The Monetary Multiplier
Reversibility: The Multiple Destruction of Money
Last Word: Banking, Leverage, and Financial Instability
- MODULE 36: INTEREST RATES AND MONETARY POLICY
Interest Rates
The Demand for Money / The Equilibrium Interest Rate / Interest Rates and Bond Prices
The Consolidated Balance Sheet of the Federal Reserve Banks
Assets / Liabilities
Tools of Monetary Policy
Open-Market Operations / The Reserve Ratio / The Discount Rate / Interest on Reserves / Relative Importance
Fed Targets and the Taylor Rule
The Fed’s Unemployment Target / The Fed’s Inflation Target / The Bullseye Chart / Using the Taylor Rule to Aim for the Bullseye / The Taylor Rule
Monetary Policy, Real GDP, and the Price Level
Cause-Effect Chain / Effects of an Expansionary Monetary Policy / Effects of a Restrictive Monetary Policy
Monetary Policy: Evaluation and Issues
Recent U.S. Monetary Policy / Problems and Complications
The “Big Picture”
- MODULE 37: FINANCIAL ECONOMICS
Financial Investment
Present Value
Compound Interest / The Present Value Model / Applications
Some Popular Investments
Stocks / Bonds / Mutual Funds
Calculating Investment Returns
Percentage Rates of Return / The Inverse Relationship Between Asset Prices and Rates of Return
Consider This: Corporate Ownership
Arbitrage
Risk
Diversification
Comparing Risky Investments
Average Expected Rate of Return / Beta / Relationship Between Risk and Average Expected Rate of Return / The Risk-Free Rate of Return
The Security Market Line
Security Market Line: Applications
Last Word: Index Funds versus Actively Managed Funds
PART X: EXTENSIONS AND ISSUES
- MODULE 38: EXTENDING THE ANALYSIS AND AGGREGATE SUPPLY
From Short Run to Long Run
Short-Run Aggregate Supply / Long-Run Aggregate Supply / Long-Run Equilibrium in the AD-AS Model
Applying the Extended AD-AS Model
Demand-Pull Inflation in the Extended AD-AS Model / Cost-Push Inflation in the Extended AD-AS Model / A Controversy: Recessions and Stimulus in the Extended AD-AS Model / Economic Growth with Ongoing Inflation
The Inflation-Unemployment Relationship
The Phillips Curve / Aggregate Supply Shocks and the Phillips Curve
The Long-Run Phillips Curve
Short-Run Phillips Curve / Long-Run Vertical Phillips Curve / Disinflation
Taxation and Aggregate Supply
Taxes and Incentives to Work, Save, and Invest / The Laffer Curve / Criticisms of the Laffer Curve / Evaluation
Last Word: Do Tax Increases Reduce Real GDP?
- MODULE 39: CURRENT ISSUES IN MACRO THEORY AND POLICY
What Causes Macro Instability?
Mainstream View / Monetarist View / Real-Business-Cycle View / Coordination Failures
Consider This: Too Much Money?
Does the Economy “Self-Correct”?
New Classical View of Self-Correction / Mainstream View of Self-Correction
Rules or Discretion?
In Support of Policy Rules / In Defense of Discretionary Stabilization Policy / Policy Successes / Summary of Alternative Views
Last Word: Market Monetarism
PART XI: INTERNATIONAL ECONOMICS
- MODULE 40: INTERNATIONAL TRADE
Some Key Trade Facts
The Economic Basis for Trade
Comparative Advantage / Two Isolated Nations / Specializing Based on Comparative Advantage / Terms of Trade / Gains from Trade / Trade with Increasing Costs / The Case for Free Trade”
Consider This: A CPA and a House Painter
Supply and Demand Analysis of Exports and Imports
Supply and Demand in the United States / Supply and Demand in Canada / Equilibrium World Price, Exports, and Imports
Trade Barriers and Export Subsidies
Economic Impact of Tariffs / Economic Impact of Quotas / Net Costs of Tariffs and Quotas
The Case for Protection: A Critical Review
Military Self-Sufficiency Argument / Diversification-for-Stability Argument / Infant Industry Argument / Protection-Against-Dumping Argument / Increased Domestic Employment Argument / Cheap Foreign Labor Argument
Multilateral Trade Agreements and Free-Trade Zones
General Agreement on Tariffs and Trade / World Trade Organization / The European Union / North American Free Trade Agreement / Trade Adjustment Assistance / Offshoring of Jobs
Last Word: Petition of the Candlemakers, 1845
- MODULE 41: THE BALANCE OF PAYMENTS, EXCHANGE RATES, AND TRADE DEFICITS
International Financial Transactions
The Balance of Payments
Current Account / Capital and Financial Account / Why the Balance?
Flexible Exchange Rates
Depreciation and Appreciation / Determinants of Flexible Exchange Rates / Disadvantages of Flexible Exchange Rates
Fixed Exchange Rates
Foreign Exchange Market Replaced by Government Peg / Official Reserves / Defending a Peg by Altering Demand or Supply
The Current Exchange Rate System: The Managed Float
Recent U.S. Trade Deficits
Causes of the Trade Deficits / Implications of U.S. Trade Deficits
Last Word: Are Common Currencies Common Sense?
Module 41 Appendix: Previous International Exchange-Rate Systems
- MODULE 42: THE ECONOMICS OF DEVELOPING COUNTRIES
The Rich and the Poor
Classifications / Comparisons / Growth, Decline, and Income Gaps / The Human Realities of Poverty
Obstacles to Economic Development
Natural Resources / Human Resources / Capital Accumulation / Technological Advance / Sociocultural and Institutional Factors
Consider This: Faster, Please
The Vicious Circle
The Role of Government
A Positive Role / Public-Sector Problems
The Role of Advanced Nations
Expanding Trade / Admitting Temporary Workers / Discouraging Arms Sales / Foreign Aid: Public Loans and Grants / Flows of Private Capital
Last Word: Microfinance and Cash Transfers
Tables
Financial Accounting
- MODULE 1: FINANCIAL STATEMENTS AND BUSINESS DECISIONS
Introduction
Understanding the Business
The Four Basic Financial Statements: An Overview
The Balance Sheet
The Income Statement
Statement of Stockholders’ Equity
Statement of Cash Flows
Relationship Among the Statements
Notes and Financial Statement Formats
Summary of the Four Basic Financial Statements
Responsibilities for the Accounting Communication Process
Generally Accepted Accounting Principles
Ensuring the Accuracy of Financial Statements
Demonstration Case
Module Supplement A
Types of Business Entities
Module Supplement B
Employment in the Accounting Profession Today
Module Take-Aways
Key Terms
Questions
Multiple Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 2: INVESTING AND FINANCING DECISIONS AND THE ACCOUNTING SYSTEM
Introduction
Understanding the Business
Overview of Accounting Concepts
Concepts Emphasized in Module 2
What Business Activities Cause Changes in Financial Statement Accounts?
Nature of Business Transactions
Accounts
How Do Transactions Affect Accounts?
Principles of Transaction Analysis
Analyzing Common Transactions
How Do Companies Keep Track of Account Balances?
The Direction of Transaction Effects
Analytical Tools
Transaction Analysis Illustrated
How Is the Balance Sheet Prepared and Analyzed?
Classified Balance Sheet
Ratio Analysis in Decision Making
Demonstration Case
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 3: OPERATING DECISIONS AND THE ACCOUNTING SYSTEM
Introduction
Understanding the Business
How do Business Activities Affect the Income Statement?
The Operating Cycle
Elements of the Income Statement
How Are Operating Activities Recognized and Measured?
Accrual Accounting
The Expanded Analysis Model
Transaction Analysis Rules
Analyzing Common Transactions
How Is the Income Statement Prepared and Analyzed?
Classified Income Statement
Demonstration Case
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Comprehensive Problem (Modules 1-3)
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 4: ADJUSTMENTS, FINANCIAL STATEMENTS, AND THE QUALITY OF EARNINGS
Introduction
Understanding the Business
Adjusting Revenues and Expenses
Accounting Cycle
Purpose of Adjustments
Types of Adjustments
Adjustment Process
Preparing Financial Statements
Income Statement
Statement of Stockholders’ Equity
Balance Sheet
Closing the Books
End of Accounting Cycle
Post-Closing Trial Balance
Demonstration Case
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Comprehensive Problem (Modules 1-4)
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 5: COMMUNICATING AND INTERPRETING ACCOUNTING INFORMATION
Introduction
Understanding the Business
Players in the Accounting Communication Process
Regulators (SEC, FASB, PCAOB, Stock Exchanges)
Managers (CEO, CFO, and Accounting Staff)
Board of Directors (Audit Committee)
Auditors
Information Intermediaries: Information Services and Financial Analysts
Users: Institutional and Private Investors, Creditors, and Others
The Disclosure Process
Press Releases
Annual Reports and Form 10-K
Quarterly Reports and Form 10-Q
Other SEC Reports
A Closer Look at Financial Statement Formats and Notes
Classified Balance Sheet
Classified Income Statement
Statement of Stockholders’ Equity
Statement of Cash Flows
Notes to Financial Statements
Voluntary Disclosures
Return on Assets Analysis: A Framework for Evaluating Company Performance
ROA Profit Driver Analysis and Business Strategy
How Transactions Affect Ratios
Demonstration Case
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 6: REPORTING AND INTERPRETING SALES REVENUE, RECEIVABLES, AND CASH
Introduction
Understanding the Business
Accounting for Net Sales Revenue
Motivating Sales and Collections
Credit Card Sales to Consumers
Sales Discounts to Businesses
Sales Returns and Allowances
Reporting Net Sales
Revenue Recognition for Bundled Goods and Services: A Five-Step Process
Measuring and Reporting Receivables
Classifying Receivables
Accounting for Bad Debts
Reporting Accounts Receivable and Bad Debts
Estimating Bad Debts
Control over Accounts Receivable
Reporting and Safe-Guarding Cash
Cash and Cash Equivalents Defined
Cash Management
Internal Control of Cash
Reconciliation of the Cash Accounts and the Bank Statements
Demonstration Case A
Demonstration Case B
Module Supplement
Recording Discounts and Returns
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 7: REPORTING AND INTERPRETING COSTS OF GOODS SOLD AND INVENTORY
Introduction
Understanding the Business
Nature of Inventory and Cost of Goods Sold
Items Included in Inventory
Costs Included in Inventory Purchases
Flow of Inventory Costs
Costs of Goods Sold Equation
Perpetual and Periodic Inventory Systems
Inventory Costing Methods
Specific Identification Method
Cost Flow Assumptions
Financial Statement Effects of Inventory Methods
Managers’ Choice of Inventory Methods
Valuation at Lower of Cost or Net Realizable Value
Evaluating Inventory Management
Measuring Efficiency in Inventory Management
Inventory Methods and Financial Statement Analysis
Control of Inventory
Internal Control of Inventory
Errors in Measuring Ending
Inventory and Cash Flows
Demonstration Case
Module Supplement A
LIFO Liquidations
Module Supplement B
FIFO and LIFO Cost of Goods Sold under Periodic versus Perpetual Inventory Systems
Module Supplement C
Additional Issues in Measuring Purchases
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Comprehensive Problem (Modules 6-7)
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 8: REPORTING AND INTERPRETING PROPERTY, PLANT, AND EQUIPMENT; INTANGIBLES; AND NATURAL RESOURCES
Introduction
Understanding the Business
Acquisition and Maintenance of Plant and Equipment
Classifying Long-Lived Assets
Measuring and Recording Acquisition Cost
Repairs, Maintenance, and Improvements
Use, Impairment, and Disposal of Plant and Equipment
Depreciation Concepts
Alternative Depreciation Methods
How Managers Choose
Disposal of Property, Plant, and Equipment
Intangible Assets and Natural Resources
Acquisition and Amortization of Intangible Assets
Acquisition and Depletion of Natural Resources
Demonstration Case A
Demonstration Case B
Module Supplement
Changes in Deprecation Estimates
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Comprehensive Problem (Modules 6-8)
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 9: REPORTING AND INTERPRETING LIABILITIES
Introduction
Understanding the Business
Liabilities Defined and Classified
Current Liabilities
Accounts Payable
Accrued Liabilities
Deferred Revenues
Notes Payable
Current Portion of Long-Term Debt
Contingent Liabilities Reported on the Balance Sheet
Contingent Liabilities Reported in the Footnotes
Working Capital Management
Long-Term Liabilities
Long-term Notes Payable and Bonds
Lease Liabilities
Computing Present Values
Present Value of a Single Amount
Present Value of Annuity
Accounting Applications of Present Values
Demonstration Case
Module Supplement A
Present Value Computations Using a Calculator or Excel
Module Supplement B
Deferred Taxes
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 10: REPORTING AND INTERPRETING BOND SECURITIES
Introduction
Understanding the Business
Characteristics of Bond Securities
Reasons Why Companies Issue Bonds
Bond Terminology
Bond Issuance Process
Reporting Bond Transactions
Bonds Issued at Par
Bonds Issued at Discount
Bond Issued at Premium
The Book Value of Bond Over Time
Early Retirement of Bonds
Demonstration Case
Module Supplement
Accounting for Bonds without a Discount Account or Premium Account
Bonds Issued at Discount
Bonds Issued at Premium
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 11: REPORTING AND INTERPRETING STOCKHOLDERS’ EQUITY
Introduction
Understanding the Business
Ownership of a Corporation
Benefits of Stock Ownership
Authorized, Issued, and Outstanding Shares
Common Stock Transactions
Initial Sale of Stock
Sale of Stock in Secondary Markets
Stock Issued for Employee Compensation
Repurchase of Stock
Dividends on Common Stock
Key Dividend Dates
Stock Dividends and Stock Splits
Stock Dividends
Stock Splits
Statement of Stockholders’ Equity
Preferred Stock Transactions
Dividends on Preferred Stock
Demonstration Case
Module Supplement
Accounting for the Equity of Sole Proprietorships and Partnerships
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Comprehensive Problem (Modules 9-11)
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 12: STATEMENT OF CASH FLOWS
Introduction
Understanding the Business
Classifications of the Statement of Cash Flows
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities
Net Increase (Decrease) of Cash
Relationships to the Balance Sheet and Income Statement
Preliminary Steps in Preparing the Cash Flow Statement
Reporting and Interpreting Cash Flows from Operating Activities
Reporting Cash Flows from Operating Activities – Indirect Method
Interpreting Cash Flows from Operating Activities
Reporting and Interpreting Cash Flows from Investing Activities
Reporting Cash Flows from Investment Activities
Interpreting Cash Flows from Investment Activities
Reporting and Interpreting Cash Flows from Financing Activities
Reporting Cash Flows from Financing Activities
Interpreting Cash Flows from Financing Activities
Completing the Statement and Additional Disclosures
Statement Structure
Supplemental Cash Flow Information
Demonstration Case
Module Supplement A
Reporting Cash Flows from Operating Activities – Direct Method
Module Supplement B
Adjustment for Gains and Losses on Sale of Long-Term Assets – Indirect Method
Module Supplement C
T-Account Approach (Indirect Method)
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Case
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- MODULE 13: ANALYZING FINANCIAL STATEMENTS
Introduction
Understanding the Business
The Investment Decision
Understanding a Company’s Strategy
Financial Statement Analysis
Component Percentages and Ratio Analysis
Component Percentages
Ratio Analysis
Profitability Ratios
Asset Turnover Ratios
Liquidity Ratios
Solvency Ratios
Market Ratios
Interpreting Ratios and Other Analytical Considerations
Other Financial Information
Module Take-Aways
Key Terms
Questions
Multiple-Choice Questions
Mini-Exercises
Exercises
Problems
Alternate Problems
Continuing Problem
Cases and Projects
Annual Report Cases
Financial Reporting and Analysis Cases
Critical Thinking Cases
Financial Reporting and Analysis Team Project
- Courses Coming Soon -
| Fundamentals of Cost Accounting |
| Advanced Accounting |
| International Accounting |
| Auditing & Assurance Services |
| Ethical Obligations and Decision Making in Accounting |
| Data Accounting for Analytics |
| Computing Essentials 2021 |
| Money, Banking, and Financial Markets |
| Labor Economics |
| Technology Ventures: From Idea to Enterprise |
| Investments |
| Corporate Finance: Core Principles and Applications |
| International Financial Management |
| Real Estate Finance and Investments |
| Real Estate Principles: A Value Approach |
| Understanding Business: The Core |
| Business Communication: Developing Leaders for a Networked World |
| Business and Professional Communication: Putting People First |
| Essentials of Negotiation |
| Management: Leading & Collaborating in a Competitive World |
| Interpersonal Skills in Organizations |
| International Business: Competing in the Global Marketplace |
| Human Resource Management: Gaining a Competitive Advantage |
| Employee Training and Development |
| Human Relations: Strategies for Success |
| Essentials of Contemporary Management |
| Business Ethics: Decision Making for Personal Integrity & Social Responsibility |
| Strategic Management: Creating Competitive Advantages |
| Organizational Behavior: Improving Performance and Commitment in the Workplace |
| Business Driven Technology |
| Business Driven Information Systems |
| Dynamic Business Law: The Essentials, 5e |
| Business Math - Practical Business Math Procedures |
| Essentials of Business Statistics |
| Advertising and Promotion: An Integrated Marketing Communications Perspective |
| ABC's of Relationship Selling through Service |
| Essentials of Marketing |
| Customer Service: Skills for Success |
| International Marketing |
| Retailing Management |
| Operations and Supply Chain Management |
| Project Management: The Managerial Process |
| Operations Management In the Supply Chain: Decisions and Cases |
| Essentials of Medical Language |
| Electrocardiography for Healthcare Professionals |
| Integrated Electronic Health Records |
| Med Assist: Admin & Clin Procedures with A&P |
| Medical Office Procedures |
| Administering Medications |
| Medical Insurance: A Revenue Cycle Process Approach |
| Fundamentals of Solid Modeling and Graphic Communication |
| The Art of Public Speaking, High School Edition |
| Career Achievement: Growing Your Goals |
| Software Engineering: A Practitioner's Approach |
| Electricity for the Trades |
| Electronic Principles SB2 |
| Machining and CNC Technology |
| Fundamentals of Electric Circuits |
| Chemistry in Context: Applying Chemistry to Society |
| General, Organic, and Biochemistry |
| Essentials of Biology |
| Understanding Biology |
| Genetics: Analysis & Principles |
| Microbiology: A Systems Approach SB2 migration |
| Environmental Science: A Global Concern |
CTA: Request a course (work on wording) OR send to another landing page with these courses - TBD