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Brief Contents
ParT i Introduction To Economics 1 ParT iV Further Macroeconomics

Issues 264
1 The Scope and Method of Economics 1
2 The Economic Problem: Scarcity and Choice 22 14 Financial Crises, Stabilization, and Deficits 264
3 Demand, Supply, and Market Equilibrium 42 15 Household and Firm Behavior in the Macroeconomy:
A Further Look 280
4 Demand and Supply Applications 72
16 Long-Run Growth 301
ParT ii Concepts and Problems in 17 Alternative Views in Macroeconomics 317

Macroeconomics 90
ParT V The World Economy 332
5 Introduction to Macroeconomics 90
6 Measuring National Output and National 18 International Trade, Comparative Advantage, and
Income 103 Protectionism 332
7 Unemployment, Inflation, and Long-Run 19 Open-Economy Macroeconomics: The Balance of

Growth 123 Payments and Exchange Rates 356
20 Economic Growth in Developing Economies 382
ParT iii The Core of Macroeconomic
Theory 139 ParT Vi Methodology 399
8 Aggregate Expenditure and Equilibrium Output 141 21 Critical Thinking about Research 399
9 The Government and Fiscal Policy 162 Glossary 414
10 Money, the Federal Reserve, and the Interest Index 424
Rate 187
11 The Determination of Aggregate Output, the Price Photo Credits 440
Level, and the Interest Rate 214
12 Policy Effects and Cost Shocks in the AS/AD
Model 231
13 The Labor Market in the Macroeconomy 245
vii
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Contents
ParT i Introduction To Economics 1

3 Demand, Supply, and Market
Equilibrium 42
1 The Scope and Method of

Economics 1
firms and households: The Basic decision-
Making Units 43
why Study economics? 2 input Markets and output Markets: The Circular
To Learn a Way of Thinking 2 flow 43
To Understand Society 3 demand in Product/output Markets 45
To Be an Informed Citizen 4 Changes in Quantity Demanded versus Changes in
The Scope of economics 4 Demand 45
Microeconomics and Macroeconomics 4 Price and Quantity Demanded: The Law of
Economics in PracticE iPod and the World 5 Demand 46
The Diverse Fields of Economics 5 Other Determinants of Household
The Method of economics 7 Demand 49
Theories and Models 7 Economics in PracticE Have You Bought This
Economics in PracticE Does Your Roommate Textbook? 50
Matter for Your Grades? 9 Economics in PracticE On Sunny Days People
Economic Policy 9 Buy Convertibles! 51
an invitation 11 Shift of Demand versus Movement along a
Summary 11 review Terms and Concepts 12 Problems 12 Demand Curve 52
appendix: how to read and Understand Graphs 14 From Household Demand to Market
Demand 53
2 The Economic Problem: Scarcity

and Choice 22
Supply in Product/output Markets 55
Price and Quantity Supplied: The Law of
Supply 56
Scarcity, Choice, and opportunity Cost 23
Scarcity and Choice in a One-Person Other Determinants of Supply 57
Economy 23 Shift of Supply versus Movement along a Supply
Scarcity and Choice in an Economy of Two or Curve 58
More 24 From Individual Supply to Market Supply 59
Economics in PracticE Frozen Foods and Market equilibrium 60
Opportunity Costs 25 Excess Demand 60
The Production Possibility Frontier 29 Excess Supply 62
Economics in PracticE Trade-Offs among the Changes in Equilibrium 63
Rich and Poor 35 Economics in PracticE Quinoa 65
The Economic Problem 35
demand and Supply in Product Markets:
economic Systems and the role of a review 65
Government 36
Economics in PracticE Why Do the Prices of
Command Economies 36 Newspapers Rise? 66
Laissez-Faire Economies: The Free Market 36
looking ahead: Markets and the allocation
Mixed Systems, Markets, and Governments 37 of resources 67
looking ahead 38
Summary 67 review Terms and Concepts 68 Problems 69
ix
x Contents
4 Demand and Supply Economics in PracticE Macroeconomics in

Literature 98
Applications 72
The U.S. economy Since 1970 99
The Price System: rationing and allocating Summary 101 review Terms and Concepts 101
resources 73 Problems 101
Price Rationing 73
Constraints on the Market and Alternative
Rationing Mechanisms 75
Economics in PracticE Why Is My Hotel
Room So Expensive? A Tale of Hurricane
6 Measuring National Output and
National Income 103
Sandy 77 Gross domestic Product 104
Prices and the Allocation of Resources 79 Final Goods and Services 104
Price Floor 79 Exclusion of Used Goods and Paper
Transactions 105
Supply and demand analysis: an oil import
fee 80 Exclusion of Output Produced Abroad by
Domestically Owned Factors of
Economics in PracticE The Price Mechanism
Production 105
at Work for Shakespeare 81
Calculating GdP 106
Supply and demand and Market
efficiency 82 The Expenditure Approach 106
Consumer Surplus 82 Economics in PracticE Where Does eBay Get
Counted? 107
Producer Surplus 83
The Income Approach 109
Competitive Markets Maximize the Sum of
Producer and Consumer Surplus 84 nominal versus real GdP 111
Potential Causes of Deadweight Loss From Economics in PracticE GDP: One of the Great
Under- and Overproduction 85 Inventions of the 20th Century 112
looking ahead 85 Calculating Real GDP 113
Calculating the GDP Deflator 114
Summary 86 review Terms and Concepts 86
Problems 86 The Problems of Fixed Weights 115
limitations of the GdP Concept 116
GDP and Social Welfare 116
ParT ii Concepts and Problems in The Informal Economy 116
Macroeconomics 90 Economics in PracticE Green Accounting 117
Gross National Income per Capita 117
5 Introduction to
Macroeconomics 90
looking ahead 118
Summary 118
Problems 120
review Terms and Concepts 119
Macroeconomic Concerns 91
Output Growth 91
7 Unemployment, Inflation, and

Unemployment 93
Inflation and Deflation 93 Long-Run Growth 123
The Components of the Macroeconomy 94
Unemployment 124
The Circular Flow Diagram 94
Measuring Unemployment 124
The Three Market Arenas 95
The Role of the Government in the Economics in PracticE Time Use for the
Unemployed in a Recession 125
Macroeconomy 96
Components of the Unemployment Rate 126
a Brief history of Macroeconomics 97
Contents xi
9 The Government and Fiscal

Economics in PracticE A Quiet Revolution:
Women Join the Labor Force 127
Policy 162
The Costs of Unemployment 127
Economics in PracticE The Consequences of Government in the economy 163
Unemployment Persist 128 Government Purchases (G), Net Taxes (T), and
inflation and deflation 129 Disposable Income (Yd ) 163
The Consumer Price Index 129 The Determination of Equilibrium Output
The Costs of Inflation 131 (Income) 165
Economics in PracticE Chain-Linked fiscal Policy at work: Multiplier
Consumer Price Index in the News 133 effects 167
What about Deflation? 133 The Government Spending Multiplier 168
long-run Growth 133 The Tax Multiplier 170
Output and Productivity Growth 134 The Balanced-Budget Multiplier 171
looking ahead 135 The federal Budget 173
Summary 136 review Terms and Concepts 136
The Budget in 2014 173
Problems 136 Fiscal Policy since 1993: The Clinton, Bush, and
Obama Administrations 174
Economics in PracticE Long-Term Projections
ParT iii The Core of Macroeconomic of the Federal Government Debt 176
Theory 139 The Federal Government Debt 176
The economy’s influence on the Government
8 Aggregate Expenditure and Budget 177

Equilibrium Output 141 Automatic Stabilizers and Destabilizers 177
Full-Employment Budget 178
The Keynesian Theory of Consumption 142
looking ahead 179
Other Determinants of Consumption 145
Economics in PracticE Behavioral Biases in
appendix a 182 appendix B 183
Saving Behavior 146
Planned investment (I) versus actual
10
investment 147
Money, the Federal Reserve,
Planned investment and the interest rate (r) 147
Other Determinants of Planned Investment 148
and the Interest Rate 187
The determination of equilibrium output an overview of Money 188
(income) 148 What Is Money? 188
The Saving/Investment Approach to Economics in PracticE Don’t Kill the
Equilibrium 151 Birds! 189
Adjustment to Equilibrium 152 Commodity and Fiat Monies 189
The Multiplier 152 Measuring the Supply of Money in the United
Economics in PracticE General Motors’ States 190
Silverado 153 how Banks Create Money 192
The Multiplier Equation 155 A Historical Perspective: Goldsmiths 192
Economics in PracticE The Paradox of Economics in PracticE A Run on the
Thrift 156 Bank: George Bailey, Mary Poppins,
The Size of the Multiplier in the Real World 157 Wyatt Earp 193
looking ahead 157 The Modern Banking System 194
Summary 158 review Terms and Concepts 158 Problems 159 The Creation of Money 195
appendix 161 The Money Multiplier 197
xii Contents
The federal reserve System 198 Monetary Policy effects 234

Functions of the Federal Reserve 199 The Fed’s Response to the Z Factors 234
The demand for Money 200 Shape of the AD Curve When the Fed Cares
interest rates and Security Prices 201 More About the Price Level than
Economics in PracticE Professor Serebryakov Output 235
Makes an Economic Error 202 What Happens When There Is a Zero Interest Rate
how the federal reserve Controls the interest Bound? 235
rate 203 Shocks to the System 237
Tools Prior to 2008 203 Cost Shocks 237
Expanded Fed Activities Beginning in 2008 204 Economics in PracticE A Bad Monsoon
The Federal Reserve Balance Sheet 205 Season Fuels Indian Inflation 238
Tools After 2008 206 Demand-Side Shocks 238
looking ahead 207 Expectations 239
Summary 207 review Terms and Concepts 208 Problems 208 Monetary Policy since 1970 239
appendix 211 Inflation Targeting 241
looking ahead 241
11
The Determination of Aggregate
Output, the Price Level, and the
Interest Rate 214
The aggregate Supply (AS) Curve 215 13 The Labor Market in the
Macroeconomy 245
Aggregate Supply in the Short Run 215 The labor Market: Basic Concepts 246
Shifts of the Short-Run Aggregate Supply The Classical View of the labor Market 246
Curve 217 The Classical Labor Market and the Aggregate
The aggregate demand (AD) Curve 218 Supply Curve 247
Planned Aggregate Expenditure and the Interest The Unemployment Rate and the Classical
Rate 218 View 248
The Behavior of the Fed 219 explaining the existence of Unemployment 248
Economics in PracticE The Federal Efficiency Wage Theory 248
Reserve Bank gets a New Chair, Janet Imperfect Information 249
Yellen 221 Minimum Wage Laws 249
Deriving the AD Curve 222 explaining the existence of Cyclical
Economics in PracticE How Does the Fed Unemployment 250
Look at Inflation? 223 Sticky Wages 250
The final equilibrium 224
Economics in PracticE The Longer You Are
other reasons for a downward-Sloping AD Unemployed, the Harder It Is to Get a Job 251
Curve 224
An Open Question 252
The long-run AS Curve 225
The Short-run relationship Between the
Potential GDP 225 Unemployment rate and inflation 252
Economics in PracticE The Simple The Phillips Curve: A Historical Perspective 253
“Keynesian” Aggregate Supply Curve 227 Aggregate Supply and Aggregate Demand Analysis
Summary 228 review Terms and Concepts 228 Problems 228 and the Phillips Curve 254
Expectations and the Phillips Curve 256
12 Policy Effects and Cost Shocks Inflation and Aggregate Demand 257
in the AS/AD Model 231 The long-run aggregate Supply Curve,
Potential output, and the natural rate of
fiscal Policy effects 232 Unemployment 257
Fiscal Policy Effects in the Long Run 233
Contents xiii
The Nonaccelerating Inflation Rate of firms: investment and employment

Unemployment (NAIRU) 258 decisions 289
looking ahead 259 Expectations and Animal Spirits 289
Summary 260 review Terms and Concepts 260 Problems 261 Excess Labor and Excess Capital
Effects 290
ParT iV Further Macroeconomics Issues 264 Inventory Investment 291
A Summary of Firm Behavior 292
The Firm Sector Since 1970 292
14 Financial Crises, Stabilization, Productivity and the Business Cycle 294

and Deficits 264 The Short-run relationship Between output and
Unemployment 295
The Stock Market, the housing Market, and The Size of the Multiplier 296
financial Crises 265
Stocks and Bonds 265
16
Determining the Price of a Stock 265
The Stock Market Since 1948 266
Long-Run Growth 301
Housing Prices Since 1952 268
Household Wealth Effects on the Economy 269 The Growth Process: from agriculture to
Financial Crises and the 2008 Bailout 269 industry 302
Sources of economic Growth 303
Economics in PracticE Predicting
Recessions 270 Increase in Labor Supply 303
Time lags regarding Monetary and fiscal Economics in PracticE Government Strategy
Policy 271 for Growth 304
Recognition Lags 272 Increase in Physical Capital 305
Implementation Lags 273 Increase in the Quality of the Labor Supply
Response Lags 273 (Human Capital) 306
Summary 274 Increase in the Quality of Capital (Embodied
Technical Change) 307
Government deficit issues 274
Deficit Targeting 275 Economics in PracticE German Jewish Émigrés
Contribute to U.S. Growth 308
Disembodied Technical Change 308
More on Technical Change 309
15 Household and Firm Behavior in

the Macroeconomy: A Further
Look 280
U.S. Labor Productivity: 1952 I–2014 IV 309
Growth and the environment and issues of
Sustainability 310
households: Consumption and labor Supply
decisions 281
17
The Life-Cycle Theory of Consumption 281
Alternative Views in
The Labor Supply Decision 282
Interest Rate Effects on Consumption 284 Macroeconomics 317
Government Effects on Consumption and Labor Keynesian economics 318
Supply: Taxes and Transfers 284 Monetarism 318
A Possible Employment Constraint on The Velocity of Money 318
Households 285 The Quantity Theory of Money 319
A Summary of Household Behavior 286 The Keynesian/Monetarist Debate 321
The Household Sector Since 1970 286 Supply-Side economics 321
Economics in PracticE Measuring Housing The Laffer Curve 322
Price Changes 287 Evaluating Supply-Side Economics 322
xiv Contents
new Classical Macroeconomics 323

The Development of New Classical
Macroeconomics 323
19 Open-Economy Macroeconomics:
The Balance of Payments and
Exchange Rates 356
Rational Expectations 324
Economics in PracticE How Are Expectations The Balance of Payments 357
Formed? 325 The Current Account 357
Real Business Cycle Theory and New Keynesian The Capital Account 359
Economics 327 Economics in PracticE Who Are the Debtor
Evaluating the Rational Expectations Nations? 360
Assumption 327 equilibrium output (income) in an open
Testing alternative Macroeconomic Models 328 economy 360
Summary 329 review Terms and Concepts 330 Problems 330 The International Sector and Planned Aggregate
Expenditure 360
Imports and Exports and the Trade Feedback
ParT V The World Economy 332
Effect 363
Import and Export Prices and the Price Feedback
18
Effect 363
International Trade,
The open economy with flexible exchange
Comparative Advantage, and rates 364
Protectionism 332 The Market for Foreign Exchange 365
Trade Surpluses and deficits 333 Factors That Affect Exchange Rates 367
The economic Basis for Trade: Comparative The Effects of Exchange Rates on the
advantage 333 Economy 369
Absolute Advantage versus Comparative an interdependent world economy 373
Advantage 333 Summary 373 review Terms and Concepts 374 Problems 374
Terms of Trade 338 appendix 376
Exchange Rates 338
The Sources of Comparative advantage 341
The Heckscher-Ohlin Theorem 341
Other Explanations for Observed Trade Flows 341
Trade Barriers: Tariffs, export Subsidies, and
20 Economic Growth in Developing
Economies 382
life in the developing nations: Population and
Quotas 342 Poverty 383
Economics in PracticE Globalization Improves Economics in PracticE What Can We Learn
Firm Productivity 343 from the Height of Children? 384
U.S. Trade Policies, GATT, and the WTO 343 economic development: Sources and
Economics in PracticE What Happens When Strategies 384
We Lift a Quota? 344 The Sources of Economic Development 385
free Trade or Protection? 346
Economics in PracticE Corruption 387
The Case for Free Trade 346
Strategies for Economic Development 388
The Case for Protection 347
Economics in PracticE Who You Marry May
Economics in PracticE A Petition 349 Depend on the Rain 390
an economic Consensus 351 Two Examples of Development: China
Summary 352 review Terms and Concepts 353 Problems 353 and India 392
Contents xv
Economics in PracticE Cell Phones Increase Random Experiments 402

Profits for Fishermen in India 393 Regression Discontinuity 403
development interventions 393 Economics in PracticE Moving to
Random and Natural Experiments: Some New Opportunity 404
Techniques in Economic Development 394 Economics in PracticE Birth Weight and
Education Ideas 394 Infant Mortality 405
Health Improvements 395 Difference-in-Differences 406
Summary 396 review Terms and Concepts 397 Problems 397 Economics in PracticE Using Difference-in-
Differences to Study the Minimum Wage 407
Statistical Significance 408
ParT Vi Methodology 399 regression analysis 409
21 Critical Thinking about

Research 399
Glossary
Index 424
414
Selection Bias 400

Photo Credits 440
Causality 401
Correlation versus Causation 401
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Preface
Our goal in the 12th edition, as it was in the first edition, is to instill in students a fascination
with both the functioning of the economy and the power and breadth of economics. The first
line of every edition of our book has been “The study of economics should begin with a sense
of wonder.” We hope that readers come away from our book with a basic understanding of
how market economies function, an appreciation for the things they do well, and a sense of the
things they do poorly. We also hope that readers begin to learn the art and science of economic
thinking and begin to look at some policy and even personal decisions in a different way.
what’s new in This edition?

• The 12th edition has continued the changes in the Economics in Practice boxes that we began
several editions ago. In these boxes, we try to bring economic thinking to the concerns of
the typical student. In many cases, we do this by spotlighting recent research, much of it
by young scholars. Some of the many new boxes include:
– Chapter 3 uses behavioral economics to ask whether having unusually sunny weather
increases consumer purchasess of convertible cars.
– In Chapter 7 we look at new research on how individuals unemployed as a result of a
recession spend their time. How much of that new time goes to job search versus other
activities?
– In Chapter 14 we describe recent research on how well recessions can be predicted.
– In Chapter 20 we describe work that uses children’s height in India to examine hunger
and gender inequality.
– Chapter 21, our new chapter, contains three boxes, examining the Moving to
Opportunity program, birth weight and infant mortality, and the effects of the mini-
mum wage.
In other cases we use recent events or common situations to show the power and breadth
of economic models. For example:
– In Chapter 25 we illustrate the role of banks in creating money by describing bank
runs in two classic movies and in the legend of Wyatt Earp.
It is our hope that students will come to see both how broad the tools of economics are
and how exciting is much of the new research in the field. For each box, we have also
added questions to take students back from the box to the analytics of the textbook to
reinforce the underlying economic principles of the illustrations.
• As in the previous edition, we have reworked some of the chapters to streamline them
and to improve readability. In this edition, Chapter 20 has been revised to include
more of the modern approach to economic development, including discussion of the
millennium challenge.
• A major change in macro in the last edition was to replace the LM curve with a Fed
interest rate rule, where the money supply now plays a smaller role in the analysis.
Continuing in this spirit, in the current edition we have merged the supply of money
and demand for money chapters into one chapter, Chapter 10. This streamlines the
analysis and eliminates material that is no longer important.
• We have added a new chapter, Chapter 21, “Critical Thinking About Research,” which
we are quite excited about. It may be the first time a chapter like this has been included
in an introductory economics text. This chapter covers the research methodology of
economics. We highlight some of the key concerns of empirical economics: selection
issues, causality, statistical significance, and regression analysis. Methodology is a key
part of economics these days, and we have tried to give the introductory student a sense
of what this methodology is.
xvii
xviii Preface
• All of the macro data have been updated through 2014. The slow recovery from the
2008–2009 recession is still evident in these data, as it was in the 11th edition. This gives
students a good idea of what has been happening to the economy since they left high
school.
• Many new questions and problems at the end of the chapters have been added.
The foundation
The themes of Principles of Macroeconomics, 12th edition, are the same themes of the first
eleven editions. The purposes of this book are to introduce the discipline of economics and
to provide a basic understanding of how economies function. This requires a blend of eco-
nomic theory, institutional material, and real-world applications. We have maintained a
balance between these ingredients in every chapter. The hallmark features of our book are
as follows:
1. Three-tiered explanations of key concepts (stories-graphs-equations)

2. Intuitive and accessible structure
3. International coverage
Three-Tiered Explanations: Stories-Graphs-Equations

Professors who teach principles of economics are faced with a classroom of students with
different abilities, backgrounds, and learning styles. For some students, analytical material
is difficult no matter how it is presented; for others, graphs and equations seem to come
naturally. The problem facing instructors and textbook authors is how to convey the core
principles of the discipline to as many students as possible without selling the better stu-
dents short. Our approach to this problem is to present most core concepts in the following
three ways.
First, we present each concept in the context of a simple intuitive story or example in
words often followed by a table. Second, we use a graph in most cases to illustrate the story
or example. And finally, in many cases where appropriate, we use an equation to present
the concept with a mathematical formula.
Macroeconomic Structure
We remain committed to the view that it is a mistake simply to throw aggregate demand and
aggregate supply curves at students in the first few chapters of a principles book. To under-
stand the AS and AD curves, students need to know about the functioning of both the goods
market and the money market. The logic behind the simple demand curve is wrong when it is
applied to the relationship between aggregate demand and the price level. Similarly, the logic
behind the simple supply curve is wrong when it is applied to the relationship between aggre-
gate supply and the price level. We thus build up to the AS/AD model slowly.
The goods market is discussed in Chapters 8 and 9 (the IS curve). The money market
is discussed in Chapter 10 (material behind the Fed rule). Everything comes together in
Chapter 11, which derives the AD and AS curves and determines the equilibrium val-
ues of aggregate output, the price level, and the interest rate. This is the core chapter and
where the Fed rule plays a major role. Chapter 12 then uses the model in Chapter 11 to
analyze policy effects and cost shocks. Chapter 13 then brings in the labor market. The
figure at the top of the next page (Figure III.1 on page 139) gives you an overview of this
structure.
One of the big issues in the organization of the macroeconomic material is whether
long-run growth issues should be taught before short-run chapters on the determina-
tion of national income and countercyclical policy. In the last four editions, we moved a
significant discussion of growth to Chapter 7, “Unemployment, Inflation, and Long-Run
Preface xix
CHAPTERS 8–9 CHAPTER 11 CHAPTER 13

The Goods-and-Services Full Equilibrium: AS/AD The Labor Market
Market Model
• The supply of labor
• Planned aggregate • Aggregate supply curve • The demand for labor
expenditure • Fed rule • Employment and
Consumption (C) • Aggregate demand curve unemployment
Planned investment (I)
Government (G) Equilibrium interest
• Aggregate output rate (r*)
(income) (Y) Equilibrium output
(income) (Y*)
Equilibrium price
level (P*)
CHAPTER 10 CHAPTER 12
The Money Market Policy and Cost
Effects in the AS/AD model
• The supply of money
• The demand for money
• Interest rate (r)
▴▴FIGure III.1 The Core of Macroeconomic Theory
Growth,” and highlighted it. However, while we wrote Chapter 16, the major chapter
on long-run growth, so that it can be taught before or after the short-run chapters, we
remain convinced that it is easier for students to understand the growth issue once they
have come to grips with the logic and controversies of short-run cycles, inflation, and
unemployment.
international Coverage
As in previous editions, we continue to integrate international examples and applications
throughout the text. This probably goes without saying: The days in which an introductory
economics text could be written with a closed economy in mind have long since gone.
Tools for learning

As authors and teachers, we understand the challenges of the principles of economics
course. Our pedagogical features are designed to illustrate and reinforce key economic con-
cepts through real-world examples and applications.
Economics in Practice
As described earlier, the Economics in Practice feature focuses on recent research or events that
support a key concept in the chapter and help students think about the broad and exciting
applications of economics to their lives and the world around them. Each box contains a
question or two to further connect the material they are learning with their lives.
Graphs
Reading and interpreting graphs is a key part of understanding economic concepts. The
Chapter 1 Appendix, “How to Read and Understand Graphs,” shows readers how to inter-
pret the 200-plus graphs featured in this book. We use red curves to illustrate the behavior
xx Preface
▸▴FIGure 3.9 excess P

Demand, or Shortage
At a price of $1.75 per bushel, S
Price of soybeans per bushel ($)

quantity demanded exceeds
quantity supplied. When excess Equilibrium point
demand exists, there is a tendency
for price to rise. When quan- 2.00
tity demanded equals quantity
supplied, excess demand is 1.75
eliminated and the market is in
Excess demand D
equilibrium. Here the equilib- = shortage
rium price is $2.00 and the
equilibrium quantity is 40,000
bushels.
0 25,000 40,000 50,000 Q
Bushels of soybeans
of firms and blue curves to show the behavior of households. We use a different shade of
red and blue to signify a shift in a curve.
Problems and Solutions

Each chapter and appendix ends with a problem set that asks students to think about
and apply what they’ve learned in the chapter. These problems are not simple memo-
rization questions. Rather, they ask students to perform graphical analysis or to apply
economics to a real-world situation or policy decision. More challenging problems are
indicated by an asterisk. Many problems have been updated. The solutions to all of the
problems are available in the Instructor’s Manuals. Instructors can provide the solutions to
their students so they can check their understanding and progress.
digital features located in Myeconlab

MyEconLab is a unique online course management, testing, and tutorial resource. It
is included with the eText version of the book or as a supplement to the print book.
Students and instructors will f ind the following online resources to accompany the
twelfth edition:
• Concept Checks: Each section of each learning objective concludes with an online
Concept Check that contains one or two multiple choice, true/false, or fill-in ques-
tions. These checks act as “speed bumps” that encourage students to stop and check
their understanding of fundamental terms and concepts before moving on to the next
section. The goal of this digital resource is to help students assess their progress on a
section-by-section basis, so they can be better prepared for homework, quizzes, and
exams.
• Animations: Graphs are the backbone of introductory economics, but many students
struggle to understand and work with them. Select numbered figures in the text have a
supporting animated version online. The goal of this digital resource is to help students
understand shifts in curves, movements along curves, and changes in equilibrium
values. Having an animated version of a graph helps students who have difficulty inter-
preting the static version in the printed text. Graded practice exercises are included
with the animations. Our experience is that many students benefit from this type of
online learning.
Preface xxi
• Learning Catalytics: Learning Catalytics is a “bring your own device” Web-based

student engagement, assessment, and classroom intelligence system. This system gen-
erates classroom discussion, guides lectures, and promotes peer-to-peer learning with
real-time analytics. Students can use any device to interact in the classroom, engage
with content, and even draw and share graphs.
To learn more, ask your local Pearson representative or visit www.learningcatalytics.com.
• Digital Interactives: Focused on a single core topic and organized in progressive
levels, each interactive immerses students in an assignable and auto-graded activity.
Digital Interactives are also engaging lecture tools for traditional, online, and hybrid
courses, many incorporating real-time data, data displays, and analysis tools for rich
classroom discussions.
• Dynamic Study Modules: With a focus on key topics, these modules work by con-
tinuously assessing student performance and activity in real time and using data and
analytics, provide personalized content to reinforce concepts that target each student’s
particular strengths and weaknesses.
• NEW: Math Review Exercises: MyEconLab now offers a rich array of assignable and
auto-graded exercises covering fundamental math concepts geared specifically to prin-
ciples and intermediate economics students. Aimed at increasing student confidence and
success, our new math skills review Chapter R is accessible from the assignment manager
and contains over 150 graphing, algebra, and calculus exercises for homework, quiz, and
test use. Offering economics students warm-up math assignments, math remediation, or
math exercises as part of any content assignment has never been easier!
• Graphs Updated with Real-Time Data from FRED: Approximately 25 graphs are
continuously updated online with the latest available data from FRED (Federal Reserve
Economic Data), which is a comprehensive, up-to-date data set maintained by the Federal
Reserve Bank of St. Louis. Students can display a pop-up graph that shows new data
plotted in the graph. The goal of this digital feature is to help students understand how to
work with data and understand how including new data affects graphs.
• Interactive Problems and Exercises Updated with Real-Time Data from FRED:
The end-of-chapter problems in select chapters include real-time data exercises that use
the latest data from FRED.
MyEconLab for the Instructor

Instructors can choose how much or how little time to spend setting up and using
MyEconLab. Here is a snapshot of what instructors are saying about MyEconLab:
MyEconLab offers [students] a way to practice every week. They receive immediate
feedback and a feeling of personal attention. As a result, my teaching has become
more targeted and efficient.—Kelly Blanchard, Purdue University
Students tell me that offering them MyEconLab
is almost like offering them individual tutors.—
Jefferson Edwards, Cypress Fairbanks College
MyEconLab’s eText is great—particularly in
that it helps offset the skyrocketing cost of text-
books. Naturally, students love that.—Doug Gehrke,
Moraine Valley Community College
Each chapter contains two preloaded homework
exercise sets that can be used to build an individualized
study plan for each student. These study plan exercises
contain tutorial resources, including instant feedback,
links to the appropriate learning objective in the eText,
xxii Preface
pop-up definitions from the text, and step-by-step guided solutions, where appropriate.
After the initial setup of the course by the instructor, student use of these materials requires
no further instructor setup. The online grade book records each student’s performance and
time spent on the tests and study plan and generates reports by student or chapter.
Alternatively, instructors can fully customize MyEconLab to match their course exactly,
including reading assignments, homework assignments, video assignments, current news assign-
ments, and quizzes and tests. Assignable resources include:
• Preloaded exercise assignments sets for each chapter that include the student tutorial
resources mentioned earlier
• Preloaded quizzes for each chapter that are unique to the text and not repeated in the
study plan or homework exercise sets
• Study plan problems that are similar to the end-of-chapter problems and numbered
exactly like the book to make assigning homework easier
• Real-Time-Data Analysis Exercises, marked with , allow students and instructors to
use the very latest data from FRED. By completing the exercises, students become
familiar with a key data source, learn how to locate data, and develop skills in
interpreting data.
• In the eText available in MyEconLab, select figures labeled MyEconLab Real-time data
allow students to display a pop-up graph updated with real-time data from FRED.
• Current News Exercises, provide a turnkey way to assign gradable news-based exercises
in MyEconLab. Each week, Pearson scours the news, finds a current microeconomics
and macroeconomics article, creates exercises around these news articles, and then
automatically adds them to MyEconLab. Assigning and grading current news-based
exercises that deal with the latest micro and macro events and policy issues has never
been more convenient.
• Experiments in MyEconLab are a fun and engaging way to promote active learning and
mastery of important economic concepts. Pearson’s Experiments program is flexible,
easy-to-assign, auto-graded, and available in single- and multiplayer versions.
– Single-player experiments allow your students to play against virtual players from
anywhere at any time so long as they have an Internet connection.
– Multiplayer experiments allow you to assign and manage a real-time experiment
with your class.
– Pre- and post-questions for each experiment are available for assignment in
MyEconLab.
– For a complete list of available experiments, visit www.myeconlab.com.
• Test Item File questions that allow you to assign quizzes or homework that will look
just like your exams
• Econ Exercise Builder, which allows you to build customized exercises
Exercises include multiple-choice, graph drawing, and free-response items, many of
which are generated algorithmically so that each time a student works them, a different
variation is presented.
MyEconLab grades every problem type except essays, even problems with graphs.
When working homework exercises, students receive immediate feedback, with links to
additional learning tools.
Customization and Communication MyEconLab in MyLab/Mastering provides addi-
tional optional customization and communication tools. Instructors who teach dis-
tance-learning courses or very large lecture sections find the MyLab/Mastering format
useful because they can upload course documents and assignments, customize the order of
chapters, and use communication features such as Document Sharing, Chat, ClassLive, and
Discussion Board.
Preface xxiii
MyEconLab for the Student

MyEconLab puts students in control of their learning through a collection of testing, prac-
tice, and study tools tied to the online, interactive version of the textbook and other media
resources. Here is a snapshot of what students are saying about MyEconLab:
• It was very useful because it had EVERYTHING, from practice exams to exercises to
reading. Very helpful.—student, Northern Illinois University
• I would recommend taking the quizzes on MyEconLab because it gives you a true
account of whether or not you understand the material.—student, Montana Tech
• It made me look through the book to find answers, so I did more reading.—student,
Northern Illinois University
Students can study on their own or can com-
plete assignments created by their instructor. In
MyEconLab’s structured environment, students
practice what they learn, test their understanding,
and pursue a personalized study plan generated
from their performance on sample tests and from
quizzes created by their instructors. In Homework
or Study Plan mode, students have access to a
wealth of tutorial features, including:
• Instant feedback on exercises that helps stu-
dents understand and apply the concepts
• Links to the eText to promote reading of the
text just when the student needs to revisit a
concept or an explanation
• Step-by-step guided solutions that force stu-
dents to break down a problem in much the
same way an instructor would do during office
hours
• Pop-up key term definitions from the eText
to help students master the vocabulary of
economics
• A graphing tool that is integrated into the various exercises to enable students to build
and manipulate graphs to better understand how concepts, numbers, and graphs
connect
Additional MyEconLab Tools MyEconLab includes the following additional features:
• Enhanced eText—Students actively read and learn, and with more engagement than
ever before, through embedded and auto-graded practice, real-time data-graph updates,
animations, and more.
• Print upgrade—For students who wish to complete assignments in MyEconLab but
read in print, Pearson offers registered MyEconLab users a loose-leaf version of the
print text at a significant discount.
• Glossary flashcards—Every key term is available as a flashcard, allowing students to
quiz themselves on vocabulary from one or more chapters at a time.
MyEconLab content has been created through the efforts of Chris Annala, State
University of New York–Geneseo; Charles Baum, Middle Tennessee State University;
Peggy Dalton, Frostburg State University; Carol Dole, Jacksonville University; David Foti,
Lone Star College; Sarah Ghosh, University of Scranton; Satyajit Ghosh, Universtity of
Scranton; Woo Jung, University of Colorado; Chris Kauffman, University of Tennessee–
Knoxville; Russell Kellogg, University of Colorado–Denver; Katherine McCann, University
xxiv Preface
of Delaware; Daniel Mizak, Frostburg State University; Christine Polek, University of

Massachusetts–Boston; Mark Scanlan, Stephen F. Austin State University; Leonie L. Stone,
State University of New York–Geneseo; and Bert G. Wheeler, Cedarville University.
other resources for the instructor

The following supplements are designed to make teaching and testing flexible and easy and
are available for Micro, Macro, and Economics volumes.
Instructor’s Manuals
Two Instructor’s Manuals, one for Principles of Microeconomics and one for Principles of
Macroeconomics, were prepared by Tony Lima of California State University, East Bay
(Hayward, California). The Instructor’s Manuals are designed to provide the utmost teaching
support for instructors. They include the following content:
• Detailed Chapter Outlines include key terminology, teaching notes, and lecture suggestions.
• Topics for Class Discussion provide topics and real-world situations that help ensure that
economic concepts resonate with students.
• Unique Economics in Practice features that are not in the main text provide extra real-world
examples to present and discuss in class.
• Teaching Tips provide tips for alternative ways to cover the material and brief reminders
on additional help to provide students. These tips include suggestions for exercises and
experiments to complete in class.
• Extended Applications include exercises, activities, and experiments to help make econom-
ics relevant to students.
• Excel Workbooks, available for many chapters, make it easy to customize numerical
examples and produce graphs.
• Solutions are provided for all problems in the book.
Four Test Item Files

We have tailored the Test Item Files to help instructors easily and efficiently assess student
understanding of economic concepts and analyses. Test questions are annotated with the
following information:
• Difficulty: 1 for straight recall, 2 for some analysis, 3 for complex analysis
• Type: Multiple-choice, true/false, short-answer, essay
• Topic: The term or concept the question supports
• Skill: Fact, definition, analytical, conceptual
• AACSB: See description in the next section.
The Test Item Files include questions with tables that students must analyze to solve
for numerical answers. The Test Item Files also contain questions based on the graphs that
appear in the book. The questions ask students to interpret the information presented in
the graph. Many questions require students to sketch a graph on their own and interpret
curve movements.
Microeconomics Test Item File, by Randy Methenitis of Richland College: The
Microeconomics Test Item File includes over 2,700 questions. All questions are machine
gradable and are either multiple-choice or true/false. This Test Item File is for use with
the 12th edition of Principles of Microeconomics in the first year of publication. It is available
in a computerized format using TestGen EQ test-generating software and is included in
MyEconLab.
Microeconomics Test Item File Discussion and Short Answer, by Richard Gosselin
of Houston Community College: This second Test Item File includes 1,000 conceptual
Another random document with
no related content on Scribd:
“It seems to me you’re no better than a detective,” burst out Olivia,
hotly.
“Well, I hope I’m no worse,” said Ned, laconically.
Olivia turned her head away, looking hurt and anxious.
Ned, who liked and admired the girl, felt a little sorry. He moved off
with his dogs, and began to whistle; but the pain of starting again
made him break short off and draw his breath sharply through his
teeth. This attracted Olivia’s attention; she watched him as he
labored up the hill, and before he had gone very far she ran after
him.
“What’s the matter with you, Mr. Mitchell?” she asked. “You walk
lame to-night. Have you hurt yourself?”
“No. And what’s that to you if I have?” he answered curtly.
“Nothing, if you don’t think sympathy worth having.”
Ned stopped. The strong-limbed, plucky women he had got used to
in Australia, and from whom he had chosen his own wife, were
rather lacking in graceful feminine ways; so this pretty speech and
gentle tone, coming from a girl whose spirit he admired, touched and
softened him.
“What are you up to now?” he asked, gruffly enough, but not without
betraying signs of a gentler feeling than he would have owned to. “I
know better than to think you’d trouble your head about an old bear
like me if you didn’t want to get something out of me.”
“Well, I want to get the pain out of you—and perhaps a little of the
surliness too,” she added, archly.
“The first would take a doctor, and the second would take a
magician.”
“Are you going to have a doctor?”
“No. I can’t go after one myself, and my establishment doesn’t
include anybody I could send.”
“I’ll send for one. I’ll get one of the farm boys to go; or, if there isn’t
one about, Mat Oldshaw will go, I know.”
Ned looked at her cynically.
“Poor Mat,” said he. “And to think I was fool enough myself once to
run errands for a girl who thought herself as far above me as heaven
from earth. When all the time she was dying of love for another chap
too. Just the same—just the same.”
Olivia blushed and looked annoyed, but she answered, quietly—
“Mat would do a kind deed for any one, Mr. Mitchell. And I should be
sorry for him to think that it is a sign of great wisdom to be
discourteous to a woman.”
“Very good,” said Ned grimly. “Sorry I haven’t time to let you exercise
your wit on me a little longer. Good-night.”
He hobbled up the hill with great and evident difficulty, his dogs
slinking behind him. He was absolutely faint with pain by the time he
reached home.
It was quite dark in the cottage when he arrived, and he made his
way at once to a shelf in a passage where a box of matches and a
candle were kept. But he felt from end to end of the shelf without
being able to find either. The dogs, having become excited since
their entrance, sniffed about the floor, yelped and pulled afresh at the
leash, impeding his movements. He had shut the front door on
entering, relying on his candle and match box; so that he could not
even see the forms of the struggling animals to avoid them. Two or
three times he stumbled and set them growling as he groped his way
towards the room where he kept them shut up. A dizziness was
creeping over him, which seemed from time to time almost to
overcome him, while occasionally for a moment it seemed to leave
his head again perfectly clear. He remembered, or thought he
remembered, that he had left the door of the room wide open for
ventilation; but now he went the whole length of the wall, feeling with
his disengaged hand, without finding any opening.
The hounds meanwhile were growing more excited—more
troublesome than ever; so that, in his dizzy and wearied condition he
could not move or even think with his usual precision. Their behavior,
however, at last roused a suspicion in his mind.
“Somebody’s been in here,” he muttered to himself. “And the dogs
know it by the scent.”
He had grown bewildered in the darkness, and no longer knew in
what part of the passage he was standing, as the dogs, still straining
to get free, pulled him from side to side. Suddenly he heard the faint
creaking of a door. The dizziness was coming upon him again, and
he turned, in a half-blind, stupefied way; saw, or thought he saw, a
faint light come as if through an open door, and the next moment
found himself lying on the floor, while the sound of the hasty shutting
of another door behind him fell upon his dull ears. After this he
became unconscious. When Ned came to himself, it was a long time
before he could remember, even in the vaguest manner, the
experiences he had just gone through. He fancied himself in one of
the dungeons he had read about in his boyhood, which bold, bad
barons built under their castles for unlucky prisoners who fell into
their hands. In strange contrast to the prosaic reflections which
occupied his mind in every-day waking hours, the most fantastic
fancies now passed through his brain; that he was a prisoner, flung
down here by an enemy; that fetters of red-hot iron had been
fastened to one his legs. He thought he heard the sounds of every-
day life, muffled by the thick stone ceiling between, in the castle
above him; the noises of animals; sounds of a man’s voice; then of a
woman’s. He recognized the tones of the latter, he felt sure, though
he could not remember the possessor’s name. Then suddenly a light
was struck in his dungeon and a hand touched him, and it flashed
upon him that he had come back, that he was in his own cottage
lying on the stone floor of the passage, with a grey-bearded man
kneeling beside him, and a woman’s skirt brushing against his feet.
“He must have fallen very heavily,” whispered the woman.
And Ned’s senses came fully back to him.
“Of course,” he murmured to himself, “it’s Miss Denison.”
“He can’t have fallen as heavily as that unassisted,” said the grey-
bearded man, whom Ned now knew to be the doctor.
“Do you mean that he was thrown down?” asked Olivia, in a whisper
of tragic earnestness.
“Yes. Look at the blood on the stones.”
“Oh!” The girl’s teeth chattered with horror.
There was a pause, while the doctor lifted him gently.
“That’s the leg he limps with,” said the girl.
The doctor touched the wounded limb gently, but the action made
Ned moan.
“What shall I do with the dogs?” asked Olivia, presently, in the same
low voice. “I think they are kept in one of these rooms. My father said
so.”
“Turn the brutes loose in the garden.”
But Ned, though the movement caused him acute pain in his injured
leg, struggled up on one arm and shook his head feebly.
“No, no,” he said, in a weak, husky voice; “I’m going to be ill, I know.
Take me upstairs to my room, and put the dogs into the room on the
opposite side of the landing.”
“Oh, come, we can’t have that. It wouldn’t be a proper arrangement
at all—most unhealthy,” objected the doctor.
Ned glared at him, and instantly began to try, in a dogged manner, to
get up.
“If you won’t do it, or let it be done, why, hang you! I’ll do it myself,”
he panted out.
“I’ll do it, Mr. Mitchell,” said the girl’s clear voice.
Ned heard her go upstairs, soothing and encouraging the hounds,
which scrambled and shuffled up after her.
“That’s a good plucky ’un,” he then remarked to the doctor.
And satisfied now that his savage pets were safely disposed of, he
fell back on the doctor’s arm. For there was a curious buzzing noise
in his ears, and his head felt alternately very heavy and very light. He
wanted to keep his senses clear until the young girl should come
down again, but it was only by a strong and exhausting effort that he
succeeded. As soon as she reached the bottom stair, Olivia heard
him addressing her in a faint voice.
“Thanks—thanks for what you’ve done. I’m not ungrateful. Now get
me some one—to look after me—who’s got a little nerve. For I don’t
care—how they treat me—but they must take care—of my dogs. For
somebody wants to get at my dogs, I know. And they must be
prevented—prevented. You’ll see to this. Promise me.”
“Yes, I will, I promise,” said Olivia, in a firm voice, afraid that she was
speaking to a dying man.
She had scarcely uttered the words when he again became
insensible.
Olivia was in sore distress as to the manner of fulfilling her promise.
On the one hand, she had to keep her word by finding a nurse for
him who would not be afraid of the hounds; on the other, she was
particularly anxious that, if he should grow delirious, his ravings
should not be heard by any one who would chatter about them.
“We must get him to bed,” said the doctor, as she stood debating this
difficulty. “The young man who came for me—is he about?”
“Mat Oldshaw? Oh, yes, I expect so. He stayed in the garden when
we came in. He wouldn’t go away without asking if there was
anything more he could do.”
“Ask him to come in, if he is there, please.”
Olivia went out into the garden. As she passed under the porch, she
saw a man slink limping away from the side of Mat, who was
standing near the gate, and pass behind a bushy screen of
evergreens. She sprang forward to the gate, but the man had gone
out of sight.
“Mat,” she asked, in a frightened voice, “who was that?”
“Nobbut a tramp,” he answered. “Nobody to freight yer. It’s ten yeer
an’ more since he wur in these parts.”
“Oh, no, it isn’t,” said Olivia, decidedly. “He was here four months
ago. His name is Abel Squires, isn’t it?”
“Ay, that be his name, sure enough,” answered Mat, with surprise.
“Wheer did you happen upon him?”
“Never mind. I want to know what he’s doing about here.”
“He wants to get a sight o’ Mester Mitchell, he says.”
“But what did he sneak away like that for when he saw me come out,
instead of waiting to ask if he could see him?”
“He doan’t want to be seen aboot here, he says.”
“Mat,” cried the girl, earnestly, after a few moments’ thought, “Mr.
Mitchell has been knocked down and hurt. The doctor wants you to
help carry him upstairs. I wonder if it was this tramp who did it.”
“Noa, Miss, but Ah knaw who did,” said a rough voice so close to her
that it startled her.
She turned and saw the one-legged man whose conversation with
Vernon Brander she had overheard in the churchyard. The ground
was so soft with recent rains that his wooden leg had made no noise
as he approached. Olivia drew her breath sharply through her teeth
and felt cold with terror as she looked at his weather-worn, strangely
inexpressive face. Here, she thought, was the man whose silence
about that miserable night’s work of ten years ago Vernon had had
so much difficulty in procuring. And he had come with the express
purpose of seeing Ned Mitchell, whom she looked upon as Vernon’s
avowed enemy.
“You know who knocked Mr. Mitchell down?” she said, faintly.
“Ay,” said Abel Squires, with a nod.
She had a fancy that this man was trying to implicate Vernon, and
she scarcely dared to frame her next question.
“You mean that you saw him do it?” she asked after a short pause.
“Ah werr standin’ in’s bit o’ garden at back theer,” said he, jerking his
head in the direction of the cottage. “An’ Ah see a mon go in, and
after a bit Ah see him coom aht. An’ if Mester Mitchell wur knocked
deaun,” he went on, doggedly, “Ah say Ah knaw t’ mon as did it. An’
it beant no good to ask me who t’was, for Ah mean to keeap me awn
counsel; Ah’m used to’t.”
Olivia did not know what to make of the man. Though his voice was
rough, his manner of speech was mild, and betrayed no hostile
feeling towards anybody.
“Are you a friend of Mr. Mitchell’s?” she asked tentatively.
“Ay,” nodded Abel, good-humoredly. “He’s never done naw harm to
me.”
Seized with a bold idea, Olivia scanned the man narrowly from head
to foot.
“Will you tell me what business brought you to see Mr. Mitchell?” she
asked, frankly.
Abel Squires examined the girl’s face closely in his turn.
“What do you knaw abaht it?” he asked, shortly.
“I know that he is trying to find out a secret; a secret which I think
you know.”
“Maybe Ah do; maybe Ah don’t; anyhow, Ah doan’t prate abaht it!”
“Then what do you want to see Mr. Mitchell for?”
“Ah think he got summat aht o’ me last toime Ah see him; Ah want to
knaw how mooch.”
The girl’s face cleared.
“Could you nurse a sick man?” she asked. “Mr. Mitchell is ill,
delirious, and I don’t want to trust him to any prattling old woman.”
“Ay,” said Abel, promptly; “Ah can do’t.”
“Come in with me, and let us see what the doctor says,” said Olivia,
leading the way into the cottage with eager footsteps.
She was surprised at her own daring in taking this step; but she
argued with herself that if the tramp, possessing Vernon’s secret, as
she knew he did, should wish to turn informer, there was no
possibility of preventing him, while he would be within reach of
Vernon’s influence as long as he was attending on the sick man. If,
on the other hand, he was loyally anxious to keep it, there could be
no better person to watch over the man from whom she wished to
keep the truth.
The doctor asked Abel a few questions, and agreed that he might be
tried as sick nurse. Tramp though he was, Squires was a man of
some intelligence, and had picked up many a scrap of practical
knowledge in the wanderings in which his life had been almost
wholly spent. Before the doctor and Olivia had left the house, they
felt that the patient was in no unskilful hands, while the hounds were
under control of a man entirely without fear.
As she left the cottage, after listening fearfully for some minutes to
the incoherent mutterings of its unlucky tenant, Olivia met Mat, who
was dutifully waiting in the garden to learn whether she had any
more work for him. She stopped short on seeing him, and said, “Oh!”
in some confusion.
“What is it?” asked Mat, whose loyal admiration for her made him
quick of apprehension. “You want summat more done. Whatever it
mebbe, Ah’m ready to do ’t.”
“You are good, Mat,” she said, gratefully, with a bright blush.
“Nobody is ever as ready to help me as you, or so quick to know
when one wants help.”
“Ah knaw more’n that,” said Mat, encouraged by her praise. “Ah
knaw, Ah guess, what you want done.”
The color in Olivia’s cheeks grew deeper than ever. She said
nothing, however; so Mat, after a short pause, went on—
“You want somebody to knaw what happened.”
Olivia laughed bashfully. “You’re an accomplished thought reader,
Mat. Who is the person?”
“Parson Vernon.”
“Well, don’t you think he ought to know, as—as he’s a friend of Mr.
Mitchell’s?”
“Ay,” said Mat. “Ah’ll go straight off to him neow.”
“Thank you, Mat. And be sure you don’t forget to tell him that Abel
Squires is going to nurse him.”
“Ah’ll mahnd that. Good-night, Miss Olivia.”
“Good-night, Mat. I don’t know what I should have done without you
this evening.”
Mat blushed. “You knaw, Miss,” he said, in a bashful, strangled voice,
“you’re as welcome as t’ flowers in Meay to aught as Ah can do—
neow and any toime.”
And he pulled off his cap awkwardly without looking at her, and ran
off down the hill before he had even stopped to replace it; while Miss
Denison, much more leisurely, started on her way home to the farm.
Long before Ned Mitchell’s illness was over, poor Olivia had grave
reason to repent her choice of an attendant. Old Sarah Wall, who
had been in the habit of coming in for a couple of hours daily to do
the cleaning, was now installed permanently on the ground floor,
which she had all to herself. The front door was kept on the chain,
and to all inquirers it was Mrs. Wall’s duty to answer that Mr. Mitchell
was getting on very well, but was not allowed to see any one. If any
further questions were put to her, or a wish expressed to see his
attendant, she put on a convenient deafness, and presently shut the
door. No one was admitted but the doctor, even when Ned was well
enough to sit up at the front window, with one or other of his fierce
hounds at the side of his chair, and his odd-looking attendant in the
back ground. The evident good understanding which existed
between master and man filled Olivia with foreboding, and caused
still deeper anxiety to Vernon Brander, who, having called at the
cottage day after day, and failed to extract any information from
Sarah Wall, deliberately walked round to the back garden and
climbed into one of the windows of the upper floor by means of the
water butt. Here he came face to face with Abel Squires, who,
hearing the noise, came out of his master’s room to find out the
cause. He tried to retreat on seeing Vernon, but the latter seized his
arm and detained him.
“Look here,” said he, in a low voice, but very sternly; “you’ve broken
faith, I see.”
Abel’s wooden face never changed.
“Well,” said he doggedly, “Ah doan’t say Ah haven’t. Boot it was
forced aht o’ me when Ah wur droonk. That’s all Ah have to say.”
And to demonstrate this he folded his arms tightly, and met the
clergyman’s eyes stubbornly and without flinching.
“So that man knows everything?” asked Vernon, in a low voice,
glancing at the door of Ned Mitchell’s room.
“Pretty nigh all as Ah knaw.”
Vernon’s face was livid. He leaned against the window-sill and
looked out fixedly into the Vicarage garden.
“He can’t do anything,” he muttered.
“He means to try,” said Abel. “Hast tha seen t’ dogs?”
“No, but I’ve heard about them; and they won’t help him much,”
answered Vernon, quietly.
“Tarn’t easy to trick ’un,” said Abel, warningly. “He’s none so over
sharp, but he’s sure.”
Vernon said nothing to this; after a short pause, he bade Abel good-
day very shortly, and went downstairs. Old Sarah Wall was standing
at the door, in colloquy with some one outside. She cried out when
she felt a man’s hand on her shoulder; and Vernon, hastily telling her
to be quiet, drew back the chain and let himself out. He started in his
turn on finding himself face to face with Olivia Denison. Being
overwhelmed with anxiety on his account, it was only a natural result
of her girlish modesty that she should appear freezingly cold and
distant in her manner towards him, even though her curt greeting
caused him evident pain. After the exchange of a very few indifferent
words, Vernon raised his cap stiffly and left her; while she, angry with
him, still more angry with herself, walked slowly down the hill, more
anxious, more miserable on his account than ever.
It was on the ninth day after the beginning of his illness that Ned
Mitchell, whose impatience to be well materially retarded his
recovery, could at last bear confinement no longer, and seized the
opportunity of a short absence of Abel’s in the village to make his
way once more down to St. Cuthbert’s churchyard. He wanted to
take his hounds with him, but decided that it would be rash to do so
until he was more sure of his own powers of reaching his destination.
For he found, much to his own disgust, that he felt weak and giddy.
However, he set out on his walk as quickly as he could, taking his
way over the fields to escape observation. Evening was closing in—
an evening in late June, warm and balmy. He chose to set down to
the summer heat the dizziness which he felt creeping over him long
before the ruined tower of St. Cuthbert’s came in sight.
When he reached the lane which divided the last field from the
churchyard, his head swam and he staggered across the road and
caught the gate for support. After a minute’s rest, he raised his head
and looked over into the enclosure. Was he delirious again? Had the
wild fancies of his illness come back to torment him? He saw before
him, instead of broken, moss-grown headstones, rank weeds, and
misshapen mounds of earth and rubbish, a churchyard as neat and
trim as that of Rishton itself, with tombstones set straight in the
ground, well gravelled paths, and borders of flowers. The churchyard
wall was garnished along the top with broken glass, and two notice
boards, respectively at the right- and left-hand of the gate, bore
these words: “Visitors are requested not to pluck the flowers,” and
“Dogs not admitted.”
This last inscription reassured Ned as to the state of his own brain.
He laughed savagely to himself, and after a few minutes’ rest, which
he spent in grim contemplation of the altered churchyard, he turned
to go home.
Whether he had “got his second wind,” or whether the rage he felt
stimulated his powers, Ned returned home much faster than he
came. Just outside the cottage gate he met Sarah Wall, wringing her
hands and muttering to herself in deepest distress.
“What’s the matter with the woman?” asked Ned, in his surliest
tones.
“Oh, sir! the dogs, the dogs! It warn’t my fault; it warn’t indeed! How
they got out I know no more than the babe unborn!”
“Get out!” shouted Ned, with fury. “What the d——. You wretched old
woman. Are they lost? Have they got away?”
“Oh, sir, don’tee speak like that; don’tee look so; it warn’t my fault.
Abel should have been there to look after ’em.”
Ned kept down his rage until he got out of her what he wanted to
know.
“What happened then? Tell me at once, quietly. Where are the
dogs?”
“Oh, sir, they’re in there,” said the old woman, pointing with a
trembling finger to the cottage. “And now if you was to flay me alive
could I tell you how—”
But Ned did not stay to listen. He was up the garden path and
through the porch before she could utter half a dozen words. An oath
and a howl of rage burst from his lips at the sight which met his eyes.
Stretched on the floor of the stone passage lay the dead bodies of
the two bloodhounds, foam and blood still on their jaws, their attitude
showing that they had expired in great agony. Ned hung over them
for a moment, touched them; they were scarcely cold. Then he stood
bolt upright with a livid face.
“They have been poisoned!” he whispered, in a harsh, gurgling
voice.
CHAPTER XXI.
Ned Mitchell was not the sort of man to waste much time in the
indulgence of an outbreak of passion. After a few minutes’
contemplation of the dead bodies of his hounds, he pulled himself
together and prepared for action. There had flashed into his mind the
recollection of the evening on which his illness began. He had
forgotten until that moment all the details of his arrival home, his
groping about for a light, the sounds he had heard as of a person
moving in one of the rooms, and the glimpse he had caught of an
opening door as he fell senseless to the floor. It now occurred to him
for the first time, as he went over the small incidents of that night one
by one, that the fall from the effects of which he was suffering was
caused by a heavy blow from some one who had forced an entrance
into the little cottage during his absence.
“A murderous blow!” he muttered to himself as—alone, in the dusk,
with his dead hounds encumbering the ground at his feet—he
staggered along by the walls, reproducing the sensations he had felt
just before his fall. “It must have been in here that he was hidden,”
he went on to himself, as he found himself at the door of the room
where he had first kept his hounds. “For it was on my right hand as I
came in that I heard the noise; I am sure of it.” Speaking thus, slowly,
to himself, he at last turned the handle and went into the unused
room. It was musty and close, and he had to open the windows
before he could breathe easily. He had a match box in his pocket;
striking a light, he examined every corner of the empty room with the
utmost care, and discovered at last, close to the wall in a nook where
the light from the windows scarcely penetrated, two dried-up, evil-
smelling scraps of meat. “Ah!” said he to himself. “Poisoned, of
course! And as the first attempt wouldn’t do, he had to try again.”
He removed the meat carefully from the room, and hid it away for
further examination. Poor, trembling Mrs. Wall having by this time
returned to her place in the kitchen, he went in and asked her, in a
dry voice, if she had heard anybody about the place in his absence.
“No, sir,” quavered she. “Indeed I didn’t.”
“You were out, of course?”
“No, sir; at least, I’d only gone just half-way down t’ hill as far as t’
post office, to get in a pound of sugar because you’re out of it, sir;
and I give you my word, sir, I’d never ha’ gone if I hadn’t ha’ thought
as Abel was upstairs, and—”
“And you came back just a minute or two before I did?”
“Yes, sir; not so very long.”
“Not long at all, or you’d have had the whole village up here, poking
and prying into every corner, I know,” said Ned, grimly. “And when
you opened the door you saw the dogs lying as they are lying now?”
“Yes, sir.”
“And you’ve heard nobody about?”
“No, sir; at least, no, not to-day.”
“Not to-day! Then you have heard somebody in the place since I’ve
been ill?”
“Oh, no, sir, not nobody to matter—nobody at all. Only one day, as I
wur talking to Miss Denison from t’ Hall, as wur at t’ door asking
about you, I wur pushed aside quite sudden like; and when I looked
it wur parson Brander.”
She lowered her voice to a whisper as she uttered the name. For in
spite of her cautious way of putting it, Sarah Wall felt a decided
suspicion that the Vicar of St. Cuthbert’s, against whom her prejudice
was strong, was at the root of this business.
“I don’t know where he come from, sir,” she croaked on, rather
mysteriously. “But it wasn’t through t’ door, for it wur on t’ chain.”
Ned, having got out of her all she had tell, turned with an abrupt nod,
left the kitchen, and again went out into the garden. Abel Squires,
who was hobbling up the hill on his crutch, redoubled his pace when
he saw his master at the gate.
“So ye’re aht, Ah see,” he called out, as soon as he was near
enough. “Ah guessed how ’t would be as soon as ma back wur
turned.”
As he drew nearer he saw by his master’s face, not only that he was
greatly fatigued, but that something serious had happened.
In a few short sentences Ned told him the events which had
occurred in his absence: his visit to St. Cuthbert’s, the finding of the
dogs’ bodies, and the discovery of meat which he believed to be
poisoned.
“Wall tells me,” said he, “that Vernon Brander got into the place one
day while I was laid up.”
Abel nodded.
“Reight enough: so he did. Got in at t’ ooper floor by t’ water boott.”
“What reason did he give?”
“Wanted to knaw heow mooch you knew. So Ah told him. He’s been
going abaht loike a churchyard ghost ever since. Ah met ’un just
neow on’s way oop to t’ Vicarage.”
“To the Vicarage?”
“Ay.”
“Well, I’m going up there now.”
And he turned and began to walk up the hill. Abel hopped after him,
assuming his most persuasive mien.
“Doan’t ’e, Mester Mitchell—doan’t ’e,” he entreated. “It’s naught but
cruelty to him as hasn’t done it; an’ as for him as has, you’ve got
plenty in store for him wi’out worriting of him now.”
Ned paid not the slightest heed to these remonstrances, but went on
his way, still closely attended by Abel the length of the Vicarage
garden wall.
Abel redoubled his pleadings as they caught sight of the two
brothers and Mrs. Brander walking in the garden.
“Look ’e here, Mester Mitchell,” said he, in a rough voice that, plead
as he would, could get no softer. “Ah’ve kept away from Rishton ten
year fur to please parson Vernon, ’cause Ah’m t’ only chap as see
what happened that neight, an’ he wouldn’t trust me to hawd ma
toongue. What Ah could do fur ten year, couldn’t you do fur a
neight?”
Still Ned walked stolidly on, vouchsafing no answer, until the party in
the garden caught sight of them, and the Vicar of Rishton came
down to the side gate to meet them. As he drew near, Abel, after one
futile attempt to drag Ned bodily away, tried to escape himself. But
Mr. Brander was too quick and too strong for him.
“Why, who have we here?” he said, curiously, seizing Squires by the
arm, and looking into his wooden face. “Isn’t it Abel Squires, the man
who picked up my father’s signet ring on the Sheffield road?”
“Ay, sir,” said Abel, very bashfully, while he persistently avoided
meeting the vicar’s eye.
“I thought so,” said the vicar, good-humoredly. And without noticing
the lowering expression of Ned’s face, he turned and shook his
hand. “Glad to see you about again, Mr. Mitchell. I must tell you a
story about our friend here,” he continued, putting a kind hand on the
tramp’s shoulder. “Years ago, when I was scarcely more than a boy,
my father lost a signet ring one night as he was returning home from
a sick bed. It was an old-fashioned thing; much too large for his
finger. He never expected to see it again; but a fortnight afterwards
who should turn up but Abel Squires, inquiring of the servants if
anybody in the house had lost a ring. He had picked it up, and
having no means of advertising his find, had perseveringly called at
house after house on the outskirts of Sheffield where he found it,
until he at last got directed to my father as the owner. He was so
much struck by the circumstance that he declared it should be
treasured up for ever by the head of the family as a reminder that the
world had contained at least one ideally honest man.”
“You’re t’ head of t’ family, yet you don’t wear it though, parson,” said
Abel, glancing at his hands.
He had listened in much confusion to the account, changing from his
wooden leg to his sound one and back again, and looking as if the
vicar’s speech contained some revelation particularly painful for him
to hear.
The vicar, who had been touched by his excessive modesty, was
surprised at this retort.
“No, I don’t wear it now,” he said, laughing genially. “I did though,
until I had the misfortune to lose it myself, some years ago. It was
too large for me, as it had been for my father, and I never knew how
it had gone. And you were not about to find it for me.”
“Nay, sir,” was all Abel said, with one shy glance at the bystanders.
They had formed a strange group while the vicar’s recital lasted.
Each one seemed to know that something serious was impending,
and to listen, in silence not all attentive, to the vicar’s innocently told
reminiscences. He was the only person at ease in the little circle.
Ned was standing solid and square, listening to Mr. Brander’s little
story with a contemptuous face; Vernon Brander, who seemed of late
to be growing daily more lean, more haggard, kept his eyes fixed
upon Ned with an expression of undisguised apprehension; while
Mrs. Brander, whose great black eyes were flashing with excitement
to which she allowed no other vent, looked steadily from one to the
other of the rest of the group, as she stood a little away from them
all, motionless and silent, like a beautiful statue.
When the vicar’s prattle had come to an end, there was a pause. He
seemed himself to become at last aware that the minds about him
were occupied with some more serious matter, and he turned to Ned
with a look of inquiry—
“Is anything the matter, Mr. Mitchell?” he asked. “You look less happy
than a man should do who has just been released from the
confinement of a sick bed. Can I advise you or counsel you in any
way? Would you like to come into my study?”
Ned raised his head and looked at him like a bull in the arena.
“No,” he said, savagely, “the garden will do for what I have to say. It’s
only this: My bloodhounds have been poisoned”—a little shiver of
intense excitement seemed to run through the group—“And by the
same hand that killed my sister. Now I give the man who did both
those acts till this time to-morrow to confess publicly that he’s been a
great hypocrite for ten years, with good words on his lips and bad
thoughts in his heart. But if in those four-and-twenty hours he don’t
confess, then he shall be buried at the country’s expense before the
year’s out.”
There was dead silence after this speech, which Ned delivered, not
in his usual coarse, loud tones, but in husky, spasmodic jerks, and
with the manner of a man bitterly in earnest. The vicar listened with
great attention; Abel Squires seemed to wish, but not to dare, to
move away; Vernon shook from head to foot with high nervous
excitement; while Mrs. Brander moved to the side of her brother-in-
law, and stole her hand within his arm.
Not a look, not a movement, was lost on Ned, whose features
suddenly broke up into a grim and horrible smile as he noted the
action of the lady. It was a smile of cunning, of mockery. But Mr.
Brander had treated him with dislike and contempt.
“You think,” said the vicar of Rishton at last, “that the man who
poisoned your dogs was the same who made away with your sister?”
“I don’t think; I know.”
“I don’t want to be hard on you, Mitchell. But it seems to me that you
feel the latter loss the more acutely of the two.”
“It showed,” returned Ned, doggedly “that the fellow is no better
minded now than he was then.”
“You might say so if they were human beings whose lives he had
taken,” said the vicar, continuing his gentle remonstrance. “As they
were only dogs, I am inclined to take a more lenient view; while
admitting that this unknown person——”
“No, not unknown,” interpolated Ned.
The vicar went on without noticing the interruption.
“—had no right either to trespass on your premises or destroy your
dogs, allowance must be made for the state of mind of a desperate
man, who believes, rightly or wrongly, that these animals will be used
to discover his guilt.”
“Well, vicar,” said Ned, who had been staring straight into the
clergyman’s face with a cynical smile, “I’ve said my say; that’s what I
came here for. Now it’s done, I’ll wish you, and your good lady, and
Mr. Vernon there, a very good-night.”
The vicar held out his hand.
“Good-night. You will not be offended with me for saying that I hope
Heaven will soften your heart,” he said in a low voice, in the gentle,
almost apologetic tones which he always used when touching upon
religious matters.
“No, I’m not offended,” said Ned, in a hard, mocking voice.
“And will you come to our haymaking to-morrow?” Mr. Brander
continued in a lighter tone. “It will be a very simple sort of festivity,
but it may serve as a change from your hermit-like solitude and your
gloomy reflections.”
Ned began to shake his head rather contemptuously, muttering
something rather surlily about being “too old to pick buttercups.”
“Mr. Williams, of the Towers, will be here,” went on the vicar, as
pleasantly as ever. “He is exceedingly anxious to make your
acquaintance.”
The expression of Ned’s face changed.
“Is that the Mr. Williams who has been bothering so about repairing
the old church down there—St. Cuthbert’s?” he asked, with affected
carelessness.
And the vicar’s expression changed also.
“I believe he did talk about it at one time; but as my brother objected
to it, he had to give up the idea,” he said, in a low voice, glancing at
Vernon, who was talking to Mrs. Brander.
“Ah!” said Ned, with a look down at his boots and a nod. “Yes, I’ll
come, vicar, and thank you kindly for your invitation,” he said, more
graciously. “I can’t make hay, but I’ll be most happy to stand about
and look pretty,” he added, with a short laugh.
Raising his hat ceremoniously to Mrs. Brander, whom he admired,
and whose indifferently concealed dislike therefore irritated him, Ned
Mitchell turned on his heel without so much as a glance at Vernon,
and made his way down the hill to his cottage, leaning on the arm of
Abel Squires, who had bade “t’ gentle fowk” a humble and bashful
farewell, and hastened to the support of his patient, upon whom the
fatigue and excitement of the evening had begun to tell heavily.
Solemnly and almost in silence, Meredith Brander and his wife then
parted from Vernon, who took his lonely way over the fields in a state
of suppressed excitement so acute that on reaching St. Cuthbert’s
Vicarage he was highly feverish, with a burning head, hot, dry hands,
and a mouth that seemed parched and withered. He lay awake for
the greater part of the night. Next morning, his old housekeeper, not
hearing him rise as usual, went up to his room, and found him in a
restless, uneasy sleep. Seeing that something was wrong with him,
and deciding that it was the result of overwork, Mrs. Warmington
applied a characteristically rough-and-ready remedy. She ransacked
his wardrobe, selecting everything that was fit to wear, and quitted
the room as softly as she had entered it, leaving pinned to his pillow
the following note:—
“I see you have had no sleep and are unwell. So I have
taken away your clothes and locked the door. If you are
ready to promise to stay in bed all the morning, and not to
go out to-day, knock three times, and I will bring up your
breakfast.”
When he woke up, Vernon gave the three knocks, after very little
hesitation. He felt so ill that he was glad of an excuse to spend an
idle day—glad too that in this way he could escape the ordeal of the
haymaking at his brother’s, and a meeting with Olivia Denison. For,
haunted as he was by the remembrance of her gentle touch, of her
softly uttered words of sympathy as he sat beside her by Mrs.

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ParT i Introduction To Economics 1 ParT iV Further Macroeconomics

ParT ii Concepts and Problems in 17 Alternative Views in Macroeconomics 317

7 Unemployment, Inflation, and Long-Run 19 Open-Economy Macroeconomics: The Balance of

ParT i Introduction To Economics 1

1 The Scope and Method of

2 The Economic Problem: Scarcity

4 Demand and Supply Economics in PracticE Macroeconomics in

7 Unemployment, Inflation, and

9 The Government and Fiscal

8 Aggregate Expenditure and Budget 177

The federal reserve System 198 Monetary Policy effects 234

The Nonaccelerating Inflation Rate of firms: investment and employment

14 Financial Crises, Stabilization, Productivity and the Business Cycle 294

15 Household and Firm Behavior in

new Classical Macroeconomics 323

Economics in PracticE Cell Phones Increase Random Experiments 402

21 Critical Thinking about

Selection Bias 400

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