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Cover of Principles of Economics v9.0
October 2020
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Principles of Economics

Version 9.0
By John B. Taylor and Akila Weerapana

Key Features

  • Over 90 hyperlinks to videos, some of which feature John Taylor, and webpages to enrich online courses, engage students, and reinforce or augment many of the presented topics.
  • Employs several economic models to structure the presentation of key principles: Supply and Demand (Ch. 3), Competitive Equilibrium (Ch. 7), A Firm’s Production Decision (Ch. 8), Long-Run Competitive Equilibrium in an Industry (Ch. 9), Monopoly (Ch. 10), Monopolistic Competition (Ch. 11), Oligopoly (Ch. 11), Spending Allocation (Ch. 19), Labor Market (Ch. 20), Quantity Theory of Money (Ch. 22), Spending Balance (Ch. 23), and Economic Fluctuations (Ch. 24).
  • Stimulating vignettes begin each chapter and resonate with readers.
  • Crisp, clean, and conversational writing style holds students' interest.
  • Quickly establishes clear understandings of fundamental topics such as competitive markets, equilibrium and market efficiency, and the policy implications of business cycles.
  • Clear and well-crafted graphs, tables, and summaries make it easy to read and understand key data.
  • Chapter-end reading assignments based on real-life cases are contemporary and compelling.
  • Carefully selected, revised, and tested problems at the end of every chapter are grounded in real-world situations.
  • Definitions of key terms appear in the margins and are hyperlinked online.
  • Customizable.


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Principles of Economics is suitable for introductory economics courses usually called principles of economics, economics principles, introductory economics, or similar titles, taught primarily at the undergraduate level at two- and four-year colleges and universities. The course may also be taught at the MBA level. This full-length volume encompasses both microeconomics and macroeconomics and would typically be used in a full-year sequence. Separate volumes of this book titled Principles of Microeconomics and Principles of Macroeconomics are available for semester- or quarter-long courses.

Principles of Economics is co-written by two acclaimed teachers, one of whom is a globally recognized policy expert and eminent scholar. This highly regarded textbook features a remarkably accessible presentation grounded in the central idea of economics: that people make purposeful choices with scarce resources and interact with others when they make these choices. This engaging text provides simple and precise descriptions of why markets are efficient when the incentives are right and inefficient when the incentives are wrong. In addition to their impeccable credentials, both authors possess recent and extensive classroom-based experiences, which gives rise to authentic real-world examples that enliven the book’s narrative and readily connect with students.  

New in This Version

Many graphs are hyperlinked to the underlying Federal Reserve Economic Data (FRED) source. Students can easily link to the most updated data for these graphs and become familiar with manipulating data from the Federal Reserve. 

Key updates include:

  • Can AI and machine learning improve resource allocations? (Ch. 1)
  • Netflix pricing and demand elasticity. (Ch. 4)
  • Google as a monopoly. (Ch. 10)
  • Antitrust developments (RiteAid/Walgreens, Amazon, Apple, Google, and Facebook). (Ch. 12)
  • Net neutrality and differential rate pricing. (Ch. 12)
  • Tax discussions updated to align with the Tax Cut and Jobs Act of 2017. (Ch. 14 and 26)
  • Updated economic data includes increasingly positive economic data prior to 2020, initial recessionary impact of the COVID-19 pandemic as reflected in first- and second-quarter economic data, and fluctuations in labor market strength. (Ch. 17– 19)
  • New coverage of cryptocurrencies, Venezuela’s hyperinflation, negative interest rates, and Fed tapering. (Ch. 22)
  • Fully revised discussion of post-2016 recovery following the Great Recession and impact of the COVID-19 pandemic on the recovery. (Ch. 23)
  • New discussion of why inflation was absent from the Great Recession’s recovery—and what considerations might be missing from economic models as a result. (Ch. 25)
  • Updated discussion of the Fed’s balance sheet normalization and unwinding of quantitative easing (QE) from 2017–2019. Coverage of renewed growth of the Fed’s balance sheet in response to the impact of the COVID-19 pandemic and prospects for eventual unwinding. New coverage of negative interest rates in Sweden and Switzerland. (Ch. 27)
  • Explains the switch from poverty-alleviation goals from Millennium Development Goals to Sustainable Development Goals. China’s Belt and Road initiatives that propel that country to a global leader in funding development projects. (Ch. 28)
  • Explores the Trump Administration’s trade policies and their impacts, including the USMCA’s replacement of NAFTA, the brewing trade war with China, and how import tariffs impact U.S. consumers. (Ch. 29)
  • Updates specific to the COVID-19 pandemic throughout include:
    • New boxed feature on “The Price System During National Disasters.” (Section 1.3)
    • Clear illustration of differences between correlation and causation using impact of the pandemic on gas prices and miles traveled. (Section 2.2)
    • Ventilators and impact of demand on pricing. (Ch. 3 Introduction)
    • Price elasticity of supply for scarce goods in a crisis. (Section 4.4)
    • Profile of the company that produces Purell hand sanitizer. (Ch. 6 Introduction)
    • Business challenges resulting from the initial shutdown response to the pandemic. (Ch. 8 Introduction)
    • Expanded discussion of long-run equilibrium to encompass firms impacted by the pandemic. (Section 9.2)
    • Hazard pay considerations and compensating differentials. (Section 13.5)
    • Unemployment insurance during the pandemic. (Section 14.2)
    • Social distancing and mask wearing as positive externalities. Subsidies for encouraging use of masks and sanitizers. (Sections 15.2 and 15.3)
    • Impact of pandemic responses on early 2020 stock returns. (Ch. 16 Introduction)
    • General economic turmoil induced by early reactions to the pandemic including economic slowdown, increase in unemployment, recessionary impact, and initial monetary and fiscal policy responses. (Ch. 17 Introduction, Section 17.2–17.3)
    • The pandemic’s impact on unemployment. (Ch. 20 Introduction)
    • The pandemic’s impact on labor markets. (Section 20.1)
    • Fed interventions and a new round of quantitative easing (QE). (Section 22.2)
    • The pandemic-induced recession and its potential duration. (Ch. 23 Introduction and Section 23.1)
    • Passage and impact of CARES Act. (Ch. 24 Introduction)
    • Unexpected transition to the pandemic-induced recession and using the model to analyze the policy response. (Ch. 25 Introduction and Section 25.5)
    • Impact of policy responses to the pandemic on the national debt and differing policy views on the right mix of fiscal interventions (Section 26.1 and 26.2)
    • The Fed’s response to the pandemic, new balance sheet expansion, a return to zero interest rate policy, security purchases, and “Main Street” lending program. (Ch. 27 Introduction, Sections 27.1–     27.3 and 27.5)
    • Global economic shocks caused by the pandemic. (Ch. 28 Introduction)
    • National security-based trade restrictions on supply chains for personal protective equipment (PPE) in a health crisis (Section 29.7)
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Instructor’s Manual

Instructor’s Manual

The Instructor’s Manual guides you through the main concepts of each chapter and important elements such as learning objectives, key terms, and key takeaways. Can include answers to chapter exercises, group activity suggestions, and discussion questions.

Instructor’s Manual

PowerPoint Lecture Notes

PowerPoint Lecture Notes

A PowerPoint presentation highlighting key learning objectives and the main concepts for each chapter are available for you to use in your classroom. You can either cut and paste sections or use the presentation as a whole.

PowerPoint Lecture Notes

Test Generator - powered by Cognero

Test Generator - powered by Cognero

FlatWorld has partnered with Cognero, a leading online assessment system, that allows you to create printable tests from FlatWorld provided content.

Test Bank Files for Import to Learning Management Systems

Test Bank Files for Import to Learning Management Systems

For your convenience, we've packaged our test items for easy import into Learning Management Systems like Blackboard, Brightspace/D2L, Canvas, Moodle, or Respondus.

Test Item File

Test Item File

Need assistance in supplementing your quizzes and tests? Our test-item files (in Word format) contain many multiple-choice, fill-in-the-blank, and short-answer questions.

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John B. Taylor Stanford University

John B. Taylor (PhD Stanford University) is one of the field’s most inspiring teachers. As the Raymond Professor of Economics at Stanford University, his distinctive instructional methods have made him a legend among introductory economics students and have won him both the Hoagland and Rhodes prizes for teaching excellence. Professor Taylor is also widely recognized for his research on the foundations of modern monetary theory and policy. One of his well-known research contributions is a rule—now widely called the Taylor Rule—used at central banks around the world. Taylor has had an active career in public service, including a four-year stint as the head of the International Affairs division at the United States Treasury, where he had responsibility for currency policy, international debt, and oversight of the International Monetary Fund and the World Bank and worked closely with leaders and policymakers from countries throughout the world. He has also served as economic adviser to the governor of California, to the U.S. Congressional Budget Office, and to the President of the United States and has served on several boards and as a consultant to private industry. Professor Taylor began his career at Princeton, where he graduated with highest honors in economics. He then received his Ph.D. from Stanford and taught at Columbia, Yale, and Princeton before returning to Stanford.

Akila Weerapana Wellesley College

Akila Weerapana (PhD Stanford) is Associate Professor of Economics at Wellesley College. He was born and raised in Sri Lanka and came to the United States to do his undergraduate work at Oberlin College, where he earned a B.A. with highest honors in Economics and Computer Science in 1994. He received his Ph.D. in Economics from Stanford in 1999, writing his dissertation on monetary economics under the mentorship of John Taylor. Since then, Professor Weerapana has taught in the Economics Department at Wellesley College. His teaching interests span all levels of the department’s curriculum, including introductory and intermediate macroeconomics, international finance, monetary economics, and mathematical economics. He was awarded Wellesley’s Pinanski Prize for Excellence in Teaching in 2002. He also enjoys working with thesis students. In addition to teaching, Professor Weerapana has research interests in macroeconomics, specifically in the areas of monetary economics, international finance, and political economy.


Changes made on 2/22/21:

Section 19.1:

Figure 19.2, text in figure was changed from NX/Y to X/Y.

Section 19.4:

Equation just before Figure 19.11, text in figure was changed from NX/Y to X/Y.

Equation just before Review, text in figure was changed from NX/Y to X/Y.

Section 19.5:

Problems, #2, text in figure was changed from NX/Y to X/Y.

Changes made on 9/2/21:

Section 25.5, Figure 25.11 was corrected.

Section 26.3, Figure 26.13 was corrected.

Section 27.4, Table 27.2 updated for clarity.

Section 29.4, Figure 29.6, caption was corrected to read “Regardless of the size of the market, cost per unit declines as the number of firms increases” rather than “firms decline.”

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