1. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Growth, Welfare, and the American Economy

2. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. “The best short answer is to better prepare you for the future. Economic history provides you with a clear perspective on the forces of change and a good understanding of the lessons of the past. The study of economic history also provides lessons on nation building and ways to analyze policies and institutions that affect the nation as well as you personally” -Walton & Rockoff

3. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. “The skills developed in studying economic history- critically analyzing the economic record, drawing conclusions from it based on economic theory, and writing up the results in clear English- are valuable skills in many lines of everyday work.” -Walton & Rockoff See Black, Sanders, and Taylor (2003) “The Economic Reward for Studying Economics”

4. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. “The longer back you look, the farther into the future you can see.” -Winston Churchill (1956)

5. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. “Economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessor to draw correct conclusions.” -John M. Keynes

6. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Five propositions for economic reasoning: 1)People choose, and individual choices are the source of social outcomes 2)Choices impose costs 3)Incentives matter 4)Institutions matter, and the “rules of the game” influence choices 5)Understanding based on knowledge and evidence imparts value to opinions

7. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The rate of change is greater today than any previous point in time Douglass North contends that 1750 was a major turning point in human existence

8. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

15. Sources of productivity advances: 1)Technology (knowledge) 2)Specialization and division of labor 3)Economies of scale 4)Organization and resource allocation 5)Human capital (education and health)

16. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. “Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction.” -Douglass North

17. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Institutional determinants: 1)Rule of law, coupled with limited government and open political participation 2)Rights to private property that are clearly defined and consistently enforced 3)Open, competitive markets with the freedom of entry and exit, widespread access to capital and information, low transaction costs, mobile resource inputs, and reliable contract enforcement 4)An atmosphere of individual freedom in which education and health are accessible and valued

18. © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.