Resources

• Resources
  • Related articles
  • Einsteins
  • Great economists
  • How economists learn from facts
  • When economists disagree
  • Videos
  • Figures
    • Unit 1
    • Unit 2
    • Unit 3
    • Unit 4
    • Unit 5
    • Unit 6
    • Unit 7
    • Unit 8
    • Unit 9
    • Unit 10
    • Unit 11
    • Unit 12
    • Unit 13
    • Unit 14
    • Unit 15

Related articles

• Unit 1: Roshan Kishore. ‘Construction sector jobs have let down peasants’. Hindustan Times. Updated 1 April 2018.
• Unit 2: Roshan Kishore. ‘Demographic shift impacts South India’. Hindustan Times. Updated 19 January 2019.
• Unit 2: Dilip D’Souza. ‘The power of population for economies’. Livemint. Updated 6 August 2021.
• Unit 3: ‘Where does the time go? Check out fascinating new data on how Indians spend the day’. Hindustan Times. Updated 18 October 2020.
• Unit 3: Jayati Ghosh. ‘Why clubbing employment and work in India is misleading’. Hindustan Times. Updated September 7 2018.
• Unit 4: Shrija Agrawal. ‘Game Theory in Indian E-Commerce’. Livemint. Updated 29 April 2020.
• Unit 4: Rohit Prasad. ‘The tragic game theory of our standoff over farm laws’. Livemint. Updated 5 January 2021.
• Unit 4: Avinash M Tripathi. ‘Game theory explains how Veeru broke every rule of courtship and still won Basanti in Sholay’. Livemint. Updated 22 August 2017.
• Unit 5: Maitreesh Ghatak and Dilip Mookherjee. ‘Developing a Land Acquisition Policy for India’. Ideas for India. 5 September 2012.
• Unit 6: Anumeha, Yadav. ‘ILO Wage Report Paints a Sorry Picture of Economic Inequalities in India’. The Wire. Updated 20 August 2018.
• Unit 6: Niranjan Rajadhyaksha. ‘The long road out of poverty’. Livemint. Updated 5 August 2014.
• Unit 7: Niranjan Rajadhyaksha. ‘Rethinking corporate monopoly in the digital age’. Livemint. Updated 26 February 2019.
• Unit 10: George Mathew and Sunny Verma. ‘Explained: The arguments for and against a bad bank’. The Indian Express. Updated 22 January 2021.
• Unit 10: Andy Mukherjee. ‘The Future of Money Is Digital, But Is It Bitcoin?’. Bloomberg. Updated 5 March 2021.
• Unit 11: Prashanth J Perumal. ‘Is the Indian stock market in a bubble?’. The Hindu. Updated 30 July 2021.
• Unit 12: Kishore, Roshan. ‘Farm fires, onion prices expose fault lines in agriculture’. Hindustan Times. Updated 8 November 2019.
• Unit 12: Niranjan Rajadhyaksha. ‘What a carbon tax can and can’t achieve against climate change’. Livemint. Updated 15 October 2019.
• Unit 12: Shruti Rajagopalan. ‘Ronald Coase has a solution for Delhi’s air pollution’. Livemint. Updated 11 November 2019.
• Unit 12: Narayan Ramachandran. ‘Repugnant markets’. Livemint. Updated 21 October 2012.
• Unit 13: Manas Chakravarty. ‘India’s employment elasticity almost zero’. Livemint. Updated 9 December 2012.
• Unit 13: Manas Chakravarty. ‘Consumption-driven GDP growth unhealthy for India’. Livemint. Updated 3 September 2018.
• Unit 14: Tulsi Jayakumar. ‘Let data on fiscal multipliers guide budget allocations’. Livemint. Updated 27 January 2020.
• Unit 15: Niranjan Rajadhyaksha. ‘Inflation in India isnt quite the same as in other large economies’. Livemint. Updated 25 August 2021.

Einsteins

• 1.2 Measuring income and living standards: Comparing income at different times, and across different countries
• 4.10 Dividing a pie (or leaving it on the table): When will an offer in the ultimatum game be accepted?
• 5.12 Measuring economic inequality: Inequality as differences among people
• 5.13 A policy to redistribute the surplus and raise efficiency: The Lorenz curve and the Gini coefficient in a class-divided economy with a large population
• 7.7 The elasticity of demand: The elasticity of demand and the marginal revenue
• 9.5 The price-setting curve: Wages and profits in the whole economy: The price-setting curve
• 9.8 Labour market equilibrium and the distribution of income: The Lorenz curve and the Gini coefficient in an economy with unemployed, employed, and employers (owners)
• 10.9 The central bank, the money market, and interest rates: Present value (PV)
• 11.1 How people changing prices to gain rents can lead to a market equilibrium: Equilibration through rent-seeking in an experimental market
• 13.1 Growth and fluctuations: Ratio scales and logarithms
• 13.2 Output growth and changes in unemployment: Okun’s law
• 14.2 The multiplier model: Calculating the multiplier
• 14.5 The multiplier model: Including the government and net exports: The multiplier in an economy with a government and foreign trade
• 15.7 Supply shocks and inflation: The price-setting curve with imported materials
• 15.8 Monetary policy: The real interest rate and the Fisher equation

Great economists

• 1.3 History’s hockey stick: Growth in income: Adam Smith
• 2.5 Modelling a dynamic economy: Innovation and profit: Joseph Schumpeter
• 4.6 Public goods, free riding, and repeated interaction: Elinor Ostrom
• 4.13 Social interactions: Conflicts in the choice among Nash equilibria: John Nash
• 5.2 Evaluating institutions and outcomes: The Pareto criterion: Vilfredo Pareto
• 6.1 Firms, markets, and the division of labour: Herbert Simon
• 6.3 Other people’s labour: Karl Marx
• 6.9 The dual economy: William Arthur Lewis
• 7.9 Price-setting, market power, and public policy: Augustin Cournot
• 8.2 The market and the equilibrium price: Alfred Marshall
• 8.8 Price-setting and price-taking firms: Joan Robinson
• 11 Introduction: Friedrich Hayek
• 12.2 External effects and bargaining: Ronald Coase
• 12.3 External effects: Policies and income distribution: Arthur Pigou
• 14.6 Fiscal policy: How governments can dampen and amplify fluctuations: John Maynard Keynes
• 15.2 Inflation results from conflicting and inconsistent claims on output: Bill Phillips

How economists learn from facts

• 1.8 Capitalism, causation and history’s hockey stick: Do institutions matter for growth in income?
• 4.8 Behavioural experiments in the lab and in the field: Laboratory experiments
• 6.4 Employment rents: Managers exert power
• 6.4 Employment rents: How large are employment rents?
• 6.8 Putting the model to work: Owners, employees, and the economy: Workers speed up when the economy slows down
• 7.2 The demand curve and willingness to pay: Estimating demand curves using surveys
• 7.8 Costs and Output: Using surveys to understand marginal costs
• 11.4 The value of an asset: Basics: The wisdom of crowds: The weight of stock (oxen) and the value of stocks
• 13.6 Why is consumption smooth?: My diet starts tomorrow
• 14.7 The multiplier and economic policymaking: The Mafia and the multiplier

When economists disagree

• 4.2 Equilibrium in the invisible hand game: Homo economicus in question: Are people entirely selfish?
• 6.4 Employment rents: ‘When economists agree’: Coase and Marx on the firm and its employees
• 11.6 Asset market bubbles: Do bubbles exist?
• 14.7 The multiplier and economic policymaking: How responsive is the economy to government spending?

Videos

• Unit 1: In our ‘Economist in action’ video, Thomas Piketty and James Heckman explain why data is fundamental to their work.
• Unit 2: Lynne Kiesling, a historian of economic thought, discusses Joseph Schumpeter.
• Unit 2: In our ‘Economist in action’ video, economic historian Bob Allen addresses the question of why Britain industrialized when others did not.
• Unit 2: In our ‘Economist in action’ video, Suresh Naidu, an economic historian, explains how population growth, technological development, and political events interacted to produce the real wage hockey stick.
• Unit 3: In our ‘Economist in action’ video, Juliet Schor addresses the question of why we work so hard.
• Unit 3: Advent of the washing machine and free time.
• Unit 4: A solution to the prisoners’ dilemma on the show Golden Balls
• Unit 4: In our ‘Economist in action’ video, Juan Camilo Cárdenas talks about his innovative use of experimental economics in real-life situations.
• Unit 7: In our ‘Economist in action’ video, Richard Freeman explains why you can’t outsource responsibility.
• Unit 8: In our ‘Economist in action’ video, Kathryn Graddy discusses fishing for perfect competition.
• Unit 10: Those seeking loans to purchase a car are often required to allow a device to be installed in the vehicle that is controlled by the bank, which will disable the ignition of the car if the loan payments are not made as required, as this New York Times video shows. The practice has not made lenders very popular.
• Unit 11: Watch our video in which Rajiv Sethi, one of the authors of this unit, demonstrates how orders are processed in a continuous double auction.
• Unit 12: Michael Sandel investigating the moral limits of his audience in his TED Talk ‘Why we shouldn’t trust markets with our civic life’.

Figures

Unit 1

• Figure 1.1a: History’s hockey stick: Gross domestic product per capita in five countries (1000–2015).
• Figure 1.2: Countries are ranked by GDP per capita from left to right. For each country the heights of the bars show average income for deciles of the population, from the poorest 10% at the front to the richest 10% at the back. The width of the bar indicates the country’s population.
• Figure 1.1b: History’s hockey stick: Living standards in five countries (1000–2015) using the ratio scale.
• Figure 1.3: The productivity of labour in producing light.
• Figure 1.4: Share of non-agricultural labour force in total labour force (1300–2015).
• Figure 1.5: The economy is part of society, which is part of the biosphere.
• Figure 1.6a: Carbon dioxide in the atmosphere (1010–2010) and global carbon emissions from burning fossil fuels (1750–2010).
• Figure 1.6b: Northern hemisphere temperatures over the long run (1000–2006).
• Figure 1.7: Mention of the word ‘capitalism’ in New York Times articles (1851–2015).
• Figure 1.8: Capitalism: Private property, markets and firms.
• Figure 1.9: The two Germanies: Planning and capitalism (1950–89).
• Figure 1.10: Divergence of GDP per capita among latecomers to the capitalist revolution (1928–2015). Note: Former Soviet Union series excludes Russian Federation post 1992.
• Figure 1.11: Shares of Asia, ‘The West’ and the ‘Rest’ in World GDP.
• Figure 1.12: World Map in 1898.
• Figure 1.13: A model of the economy: Households and firms.

Unit 2

• Figure 2.1: Real wages over seven centuries: Wages of craftsmen (skilled workers) in London (1264–2001), and the population of Britain.
• Figure 2.2: Irving Fisher’s sketch of his hydraulic model of economic equilibrium (1891).
• Figure 2.3: Different technologies for producing 100 metres of cloth.
• Figure 2.4: Technology A dominates C; technology B dominates D.
• Figure 2.5: Isocost lines when the wage is £10 and the price of coal is £20.
• Figure 2.6: The cost of using different technologies to produce 100 metres of cloth: Low relative cost of labour.
• Figure 2.7: The cost of using different technologies to produce 100 metres of cloth: high relative cost of labour.
• Figure 2.8: The cost of using different technologies to produce 100 metres of cloth.
• Figure 2.9: The change in spinning technology during the Industrial Revolution.
• Figure 2.10: Wages relative to the price of energy (early 1700s).
• Figure 2.11: Wages relative to the cost of capital goods (late sixteenth to the early nineteenth century).
• Figure 2.12: The cost of using different technologies to produce 100 metres of cloth in Britain in the seventeenth and eighteenth centuries.
• Figure 2.13: The cost of using different technologies to produce 100 metres of cloth.
• Figure 2.14a: Recorded values of the farmers’ production function: Diminishing average product of labour.
• Figure 2.14b: The farmers’ production function and the subsistence output
• Figure 2.15a: Increase in productivity of a farm due to improved technology.
• Figure 2.15b: Increase in productivity of the farm.
• Figure 2.16: The Malthusian trap: Wages and population (1280–1600s).
• Figure 2.17: The Black Death, labour supply, politics, and the wage: A Malthusian economy.
• Figure 2.18: Escaping the Malthusian trap. Note: Labour productivity and real wages are five-year centred moving averages.
• Figure 2.19: Escaping the Malthusian trap. Note: Labour productivity and real wages are five-year centred moving averages.
• Figure 2.20a: Wheat Productivity in U.S. across the period.
• Figure 2.20b: Different technologies used in US and India for producing wheat
• Figure 2.21: Per capita NSDP and fertility rates of Indian states.

Unit 3

• Figure 3.1: Annual hours of work and income (1870–2000).
• Figure 3.2: Annual hours of free time per worker and income (2013).
• Figure 3.3: Share of men and women in labour force from 1900 to 2000.
• Figure 3.4: Hours spent by men and women in unpaid work.
• Figure 3.5: The Banarasi saree.
• Figure 3.6: Income and hours of work per day.
• Figure 3.7: How does the amount of time spent working affect Sakina’s output?
• Figure 3.8: Mapping Sakina’s preferences.
• Figure 3.9: The marginal rate of substitution.
• Figure 3.10: Opportunity costs and economic rent: Which concert will you choose?
• Figure 3.11: How does Sakina’s choice of free time affect her income?
• Figure 3.12a: How many hours does Sakina decide to work?
• Figure 3.12b: How many hours does Sakina decide to work?
• Figure 3.13: Sakina’s trade-offs.
• Figure 3.14: How technological change affects the production function.
• Figure 3.15: An improvement in technology expands Angela’s feasible set.
• Figure 3.16: Angela’s choice between free time and grain.
• Figure 3.17: Your preferred choice of free time and consumption.
• Figure 3.18: Your two trade-offs.
• Figure 3.19: The effect of additional income on your choice of free time and consumption.
• Figure 3.20: The effect of additional income for someone whose MRS doesn’t change when consumption rises.
• Figure 3.21a: The effect of a wage rise on your choice of free time and consumption.
• Figure 3.21b: The effect of a wage rise on your choice of free time and consumption.
• Figure 3.22: Applying the model to history: Increased goods and free time in the US (1900–2013).
• Figure 3.23: Estimated lifetime hours of work and leisure (1880, 1995, 2040).
• Figure 3.24: Female Labour Force Participation in India, by age group (2004, 2011, 2016).

Unit 4

• Figure 4.1: Social interactions in the invisible hand game.
• Figure 4.2a: The payoffs in the invisible hand game.
• Figure 4.2b: The payoff matrix in the invisible hand game.
• Figure 4.3a: Social interactions in the pest control game.
• Figure 4.3b: Payoff matrix for the pest control game.
• Figure 4.4: Prisoners’ dilemma (payoffs are years in prison).
• Figure 4.5: How Anil chooses to distribute his lottery winnings depends on whether he is selfish or altruistic.
• Figure 4.6: Anil’s decision to use IPC (I) or Terminator (T) as his crop management strategy depends on whether he is completely selfish or somewhat altruistic.
• Figure 4.7: Kim’s payoffs in the public goods game.
• Figure 4.8: Example: When two others contribute, Kim’s payoff is lower if she contributes too.
• Figure 4.9a: Worldwide public goods experiments: Contributions over 10 periods.
• Figure 4.9b: Worldwide public goods experiments with opportunities for peer punishment.
• Figure 4.10: Average number of late-coming parents, per week.
• Figure 4.11: Game tree for the ultimatum game.
• Figure 4.12: Acceptable offers in the ultimatum game.
• Figure 4.13: Actual offers and expected rejections in the ultimatum game.
• Figure 4.14: Fraction of offers rejected in the ultimatum game, according to offer size and the number of Responders.
• Figure 4.15: A division of labour problem with more than one Nash equilibrium.
• Figure 4.16a: Interactions in the choice of programming language.
• Figure 4.16b: Payoffs (thousands of dollars to complete the project) according to the choice of programming language.
• Figure 4.17a: The climate change game: Outcomes from the two strategies, Restrict and Business as usual (BAU).
• Figure 4.17b: The climate change hawk–dove game: Payoffs from the two strategies of Restrict and BAU (Business as usual).

Unit 5

• Figure 5.1: Pareto-efficient allocations. All of the allocations except mutual use of the pesticide (T, T) are Pareto efficient.
• Figure 5.2: Independent farmer Angela’s feasible frontier, best feasible indifference curve, and choice of hours of work.
• Figure 5.3: Feasible outcomes of the interaction between Angela and Bruno.
• Figure 5.4: Technically feasible allocations.
• Figure 5.5: Coercion: The maximum technically feasible transfer from Angela to Bruno.
• Figure 5.6: Economically feasible allocations when exchange is voluntary.
• Figure 5.7a: Bruno’s take-it-or-leave-it proposal when Angela can refuse.
• Figure 5.7b: Bruno’s take-it-or-leave-it proposal when Angela can refuse.
• Figure 5.8: Pareto-efficient allocations and the distribution of the surplus.
• Figure 5.9: The effect of an increase in Angela’s bargaining power through legislation.
• Figure 5.10: Bargaining to restore Pareto efficiency.
• Figure 5.11: The fundamental determinants of economic outcomes.
• Figure 5.12: A Lorenz curve for wealth ownership.
• Figure 5.13: The distribution of spoils: Pirates and the Royal Navy.
• Figure 5.14a: The Lorenz curve and Gini coefficient for wealth ownership.
• Figure 5.14b: Comparing Gini coefficients.
• Figure 5.15: Distribution of market and disposable income in the Netherlands (2010).
• Figure 5.16: Income inequality in market and disposable income across the world.
• Figure 5.17: Efficiency and fairness.
• Figure 5.18: Bargaining in practice: How a land tenure reform in West Bengal reduced the Gini coefficient.

Unit 6

• Figure 6.1: Types of workers and their share in the workforce: India
• Figure 6.2: The firm’s actors and its decision making and information structures.
• Figure 6.3: Manisha’s employment rent for a given effort and Rs. 600 wage in an economy without an unemployment benefit.
• Figure 6.4: Manisha’s employment rent for a given effort and wage, with unemployment benefit.
• Figure 6.5: Manisha’s best response to the wage. Point J refers to the information in Figure 6.4. (wage = Rs. 600, effort = 0.5 and expected duration of unemployment if she were to lose her job = 44 weeks)
• Figure 6.6: The employer’s indifference curves: Isocost curves for effort.
• Figure 6.7: The employer sets the wage to minimize the cost of effort.
• Figure 6.8: The best response curve depends on the level of unemployment and the unemployment benefit.
• Figure 6.9a: Marginal Product, Total Product and Average Product.
• Figure 6.9b: The family’s production function on the farm.
• Figure 6.10: The dual economy: average income on the farm and in the factory.
• Figure 6.11: Hidden action problems.

Unit 7

• Figure 7.1: Per person cost of ARV courses per year (in US $).
• Figure 7.2: Decision-making process of a firm.
• Figure 7.3: Estimated demand for Apple-Cinnamon Cheerios
• Figure 7.4: Willingness to pay for antiretroviral therapy (ART) drugs.
• Figure 7.5: The demand for LP’s English course.
• Figure 7.6: Two demand curves.
• Figure 7.7: Isoprofit curves for the production of English courses.
• Figure 7.8: The profit-maximizing choice of price and quantity for English courses.
• Figure 7.9a: Calculating marginal revenue.
• Figure 7.9b: Marginal revenue, marginal cost, and profit.
• Figure 7.10: Gains from trade.
• Figure 7.11: Deadweight loss.
• Figure 7.12: The elasticity of demand for courses.
• Figure 7.13: A firm facing highly elastic demand.
• Figure 7.14: A firm facing less elastic demand.
• Figure 7.15: The elasticity of demand and the marginal revenue.
• Figure 7.16: Cost curves for different kinds of firms
• Figure 7.17: Car purchase prices in India.
• Figure 7.18: Price elasticities of demand for different types of food. See the Calories per serving to compare high and low calorie groups of each food type.

Unit 8

• Figure 8.1: The market demand curve for books.
• Figure 8.2: The supply curve for books.
• Figure 8.3: Equilibrium in the market for second-hand books.
• Figure 8.4: Supply and demand in the market for textbooks.
• Figure 8.5: The market demand curve for bread.
• Figure 8.6: The profit-maximizing price and quantity.
• Figure 8.7: The market supply curve: 20 bakeries.
• Figure 8.8: The market supply curve: Many bakeries.
• Figure 8.9: Equilibrium in the market for bread.
• Figure 8.10: Equilibrium in the bread market: Gains from trade.
• Figure 8.11a: The production of quinoa.
• Figure 8.11b: Quinoa real producer prices in Peru.
• Figure 8.11c: Global import demand for quinoa.
• Figure 8.12: Disequilibrium in demand for quinoa.
• Figure 8.13: An increase in the demand for quinoa.
• Figure 8.14: An increase in demand for quinoa.
• Figure 8.15: Average and peak prices of wheat in Europe, 1838–1845.
• Figure 8.16: World oil prices in constant prices (1865–2014) and global oil consumption (1965–2014).
• Figure 8.17: The world market for oil.
• Figure 8.18: The OPEC oil price shocks of the 1970s: OPEC decreases output.
• Figure 8.19: The oil price shocks of 2000–8: Economic growth increases world demand.
• Figure 8.20: The effect of a 30% salt tax.
• Figure 8.21: Taxation and deadweight loss.
• Figure 8.22: The effect of a fat tax on the retail market for butter.
• Figure 8.23: The effect of a fat tax on the consumer and producer surplus for butter.
• Figure 8.24: Price-setting and price-taking firms.
• Figure 8.25: Increases in demand have ambiguous effects on price.

Unit 9

• Figure 9.1: Real weekly earnings for males in Western Australia (left axis), world price of iron-ore and unemployment rate in Australia (right axis), (1989–2015).
• Figure 9.2: The labour market.
• Figure 9.3: Labour market statistics for Norway and Spain (averages over 2000–2015).
• Figure 9.4: The wage-setting curve: Labour discipline and unemployment in the economy as a whole.
• Figure 9.5: Deriving the wage-setting curve: Varying the unemployment rate in the economy.
• Figure 9.6: A wage-setting curve estimated for the US economy (1979–2013).
• Figure 9.7: The three departments determine the firm’s hiring.
• Figure 9.8: The firm’s profit-maximizing choice of price, quantity, and employment.
• Figure 9.9: The price-setting curve.
• Figure 9.10: The price-setting curve.
• Figure 9.11: Equilibrium in the labour market.
• Figure 9.12: Equilibrium and demand-deficient (cyclical) unemployment.
• Figure 9.13: A firm raises output and employment following a cut in wages.
• Figure 9.14: A firm raises output and employment following an increase in demand as a result of monetary or fiscal policy.
• Figure 9.15a: The firm: Adjustment to equilibrium unemployment at X via fiscal or monetary policy.
• Figure 9.15b: The firm: Adjustment to equilibrium unemployment at X via wage and price cuts.
• Figure 9.15c: Aggregate labour market: cyclical and equilibrium unemployment.
• Figure 9.16: The distribution of income at labour market equilibrium.
• Figure 9.17: The effect of an increase in the extent of competition faced by firms: The price-setting curve shifts up and inequality falls.
• Figure 9.18: The effect of immigration on unemployment.
• Figure 9.19: Share of employees whose wages are covered by collective bargaining agreements (early 2010s).
• Figure 9.20: The union sets the firm’s wage.
• Figure 9.21: The bargained wage-setting curve when there is no union voice effect.
• Figure 9.22: Collective wage bargaining coverage and unemployment across the OECD.
• Figure 9.23: Union sets the firm’s wage and employees reciprocate.
• Figure 9.24: The bargained wage-setting curve and labour market equilibrium when there is a union voice effect.
• Figure 9.25: Deriving the wage-setting curve: Varying the unemployment benefit level in the economy.
• Figure 9.26: Differences between the labour market and competitive goods markets.

Unit 10

• Figure 10.1: Currency in circulation India (2014–2020).
• Figure 10.2: Wealth, income, depreciation, and consumption: The bathtub analogy.
• Figure 10.3: Borrowing, the interest rate, and the feasible set.
• Figure 10.4a: Consumption smoothing: Diminishing marginal returns to consumption.
• Figure 10.4b: Pure impatience.
• Figure 10.5: Moving consumption over time by borrowing.
• Figure 10.6: Reservation indifference curves and endowments.
• Figure 10.7: Smoothing consumption by storing and lending.
• Figure 10.8: Investing in a high-return project.
• Figure 10.9: Borrowing to invest in a high-return project.
• Figure 10.10: Storage, lending, investment, and borrowing provide Marco with many feasible sets.
• Figure 10.11: Options for the individual (Marco) who starts with assets.
• Figure 10.12: A balance sheet.
• Figure 10.13: Julia’s balance sheets.
• Figure 10.14a: Marco deposits $100 in Abacus Bank.
• Figure 10.14b: Marco pays $20 to Gino.
• Figure 10.14c: Bonus Bank gives Gino a loan of $100.
• Figure 10.14d: Gino pays Marco $10.
• Figure 10.14e: The total money in the banking system has grown.
• Figure 10.14f: Bonus Bank does not have enough base money to pay $50 to Abacus Bank.
• Figure 10.15: Banks, the central bank, borrowers, and savers.
• Figure 10.16: A simplified bank balance sheet.
• Figure 10.17: State Bank of India’s balance sheet in 2019 (Rs. crore).
• Figure 10.18: Honda Motor Company’s balance sheet in 2013 (¥m).
• Figure 10.19: Non-Performing Assets in India (2001–18).
• Figure 10.20: Interest rates and consumption spending.
• Figure 10.21: Principal–agent problems: The credit market and the labour market.
• Figure 10.22: Wealth, project quality, and credit.
• Figure 10.23: Inequality in a borrowing and lending economy. Note: The Gini coefficient when there are no borrowers excluded is 0.57; when 40 are excluded, it is 0.70.

Unit 11

• Figure 11.1: Bargaining power and prices in the Kerala wholesale fish market (14 January 1997). (Note: Two markets had the same outcome, with a price of Rs. 6.2 per kg.)
• Figure 11.2: An increase in demand in a competitive market: Opportunities for rent-seeking.
• Figure 11.3: Vernon Smith’s experimental results.
• Figure 11.4: The price-quantity relationship for a single buyer in the Ancona fish market.
• Figure 11.5: The aggregate price-quantity relationship in the Ancona market.
• Figure 11.6: The market for bread in the short run and the long run.
• Figure 11.7: Reliance Industry Limited’s share price and volume traded (16 April 2020).
• Figure 11.8: Good news about profitability.
• Figure 11.9: A continuous double auction order book: Bid and ask prices for Reliance Industries Limited (RIL) shares.
• Figure 11.10: The tech bubble: Nasdaq Composite Index (1995–2004).
• Figure 11.11: The beginning of a bubble in FCC shares.
• Figure 11.12: Positive vs negative feedback.
• Figure 11.13: A stable equilibrium in the market for FCC shares.
• Figure 11.14: An unstable equilibrium.
• Figure 11.15: The collapse of FCC’s share price.
• Figure 11.16: The value of Bitcoin (2013–2021).
• Figure 11.17: Excess demand for tickets.
• Figure 11.18: Housing rents and economic rents.
• Figure 11.19: Examples of stationary rents.

Unit 12

• Figure 12.1: Marginal costs of rice production under the Rice-Wheat Cropping System (RWCS).
• Figure 12.2: The farmers’ choice of rice output.
• Figure 12.3: Market failure: Air pollution.
• Figure 12.4: The gains from bargaining.
• Figure 12.5: Using a tax to achieve Pareto efficiency.
• Figure 12.6: The farmers compensate the city-dwellers.
• Figure 12.7: Water pollution market failure, with remedies.
• Figure 12.8: Private goods and public goods.
• Figure 12.9: Examples of market failure, with remedies.
• Figure 12.10: Asymmetric-information market failures, with remedies.
• Figure 12.11: Project quality and wealth of borrower.
• Figure 12.12: Credit market failures, with remedies.
• Figure 12.13: Market failures with remedies.
• Figure 12.14: Market failures and information problems.

Unit 13

• Figure 13.1: Changes in unemployment and wellbeing during the financial crisis: Evidence from the US states (2007–2010).
• Figure 13.2: India GDP per capita (1885–2016).
• Figure 13.3: UK GDP growth and unemployment rate (1875–2014).
• Figure 13.4a: The ratio scale and an exponential function.
• Figure 13.4b: The linear scale in natural logs and a linear function.
• Figure 13.5: Okun’s law for selected economies.
• Figure 13.6: The circular flow model: Three ways to measure GDP.
• Figure 13.7: Decomposition of GDP in 2016 for India, Bangladesh, and China.
• Figure 13.8: Contributions to percentage change in real GDP in Bhutan in 2018.
• Figure 13.9: The role of agriculture in the fluctuations of the aggregate economy in India (1960–2018).
• Figure 13.10: Consumption smoothing through our lifetime.
• Figure 13.11: Consumption when credit constraints bind: An anticipated rise in income.
• Figure 13.12: Credit-constrained and unconstrained households: An unanticipated temporary fall in income.
• Figure 13.13: Consumption when households are weak-willed: An anticipated fall in income.
• Figure 13.14: Investment in new technologies and the dotcom bubble (1991–2015).
• Figure 13.15: Negative expectations of future demand create a vicious circle.
• Figure 13.16: Positive expectations of future demand create a virtuous circle.
• Figure 13.17: Investment decisions as a coordination game.
• Figure 13.18: Investment and business confidence in the Eurozone (1996–2012).
• Figure 13.19a: Growth rates of consumption, investment, and GDP in the UK and US, per cent per annum (1956–2012).
• Figure 13.19b: Growth rates of consumption, investment, and GDP in India and Sri Lanka (1961–2020).
• Figure 13.20a: UK GDP growth (1875–2014).
• Figure 13.20b: UK unemployment rate (1875–2014).
• Figure 13.20c: UK inflation rate (1875–2014).
• Figure 13.21: Inflation levels and volatility in high- and low-income economies.

Unit 14

• Figure 14.1: Fluctuations in output and the size of government in the US (1870–2015).
• Figure 14.2: The aggregate consumption function.
• Figure 14.3: Fear and household consumption in the US during the global financial crisis (2008 Q1–2009 Q4).
• Figure 14.4: Goods market equilibrium: The multiplier diagram.
• Figure 14.5: The multiplier in action: An investment-led recession.
• Figure 14.6: Aggregate demand in the Great Depression
• Figure 14.7: Household wealth: Key concepts.
• Figure 14.8: The Great Depression: Households cut consumption to restore their target broad wealth.
• Figure 14.9: Investment, expected rate of profit, and the interest rate in an economy with two firms.
• Figure 14.10a: The aggregate economy, where the expected rate of profit rises for a given set of projects (supply effect).
• Figure 14.10b: The aggregate economy, where the desired capacity rises for each project (demand effect).
• Figure 14.10c: Aggregate investment function: Effects of the interest rate and profit expectations.
• Figure 14.11a: Fiscal expansion can offset a decline in private consumption.
• Figure 14.11b: Government austerity can worsen a recession.
• Figure 14.12: The role of the private sector and the government in the business cycle.
• Figure 14.13: Using Mafia proximity to estimate the multiplier.
• Figure 14.14: Using US stimulus highway spending to estimate the multiplier.
• Figure 14.15: India government debt as a percentage of GDP (1981–2019).
• Figure 14.16: Successes and failures of the French fiscal stimulus (1980–1983).
• Figure 14.17: The supply side of the aggregate economy: The labour market.
• Figure 14.18: The supply side and the demand side of the aggregate economy.
• Figure 14.19: Business cycle fluctuations around equilibrium unemployment.
• Figure 14.20: Models to study the aggregate economy.

Unit 15

• Figure 15.1: Inflation and presidential election victory in the US (1912–2012).
• Figure 15.2: Three causes of inflation: changes in bargaining power.
• Figure 15.3: Phillips’s original curve: Wage inflation and unemployment (1861–1913).
• Figure 15.4a: Inflation and conflict over the pie: Stable price level at labour market equilibrium.
• Figure 15.4b: Inflation and conflict over the pie at low and high unemployment.
• Figure 15.4c: Bargaining gaps, inflation, and the Phillips curve.
• Figure 15.4d: The short- and medium-run models: Aggregate demand, employment, and inflation.
• Figure 15.5: The Phillips curve and the policymaker’s preferences.
• Figure 15.6: Phillips curves in the US (1960–2014).
• Figure 15.7: Bargaining gaps, expected inflation, and the Phillips curve.
• Figure 15.8: Unstable Phillips curves: Expected inflation and the bargaining gap.
• Figure 15.9: Inflation expectations and Phillips curves.
• Figure 15.10: Inflation, expected inflation, and the bargaining gap.
• Figure 15.11: An oil shock and the price-setting curve.
• Figure 15.12: UK GDP growth and real oil prices (1950–2015).
• Figure 15.13: UK Inflation and unemployment rate (1950–2015).
• Figure 15.14: Monetary policy transmission mechanisms.
• Figure 15.15: The use of monetary policy to stabilize the economy in a recession.
• Figure 15.16: A cut in Australia’s interest rate.
• Figure 15.17: The policy mix: Fiscal and monetary policy in the US following the collapse of the tech bubble.
• Figure 15.18: A policy intervention to restore employment and output after a fall in investment.
• Figure 15.19: Countries who had inflation-targeting central banks by 2012.
• Figure 15.20: Inflation and central bank independence: OECD countries.
• Figure 15.21: The economy’s inflation-stabilizing unemployment rate.
• Figure 15.22: Price responses to rising employment and capacity utilization.