1. The Economy and Business Activity

7. Figure 1.01 Output of the U.S. economy, 1869-1996

8. Figure 1.02 Average labor productivity in the United States, 1900-1998

9. Figure 1.03 The U.S. unemployment rate, 1890-1998

10. Figure 1.04 Consumer prices in the United States, 1800-1998

11. Figure 1.05 U.S exports and imports, 1869-1998

12. Figure 1.06 U.S. Federal government spending and tax collections, 1869-1999

14. Job creation and job destruction in U.S. manufacturing .

15. Interest rates and bankruptcies in the Netherlands .

16. Volatility in the oil markets

18. The Circular Flow of Income

19. The circular flow of income The interdependence of goods markets and factor markets

20. The interdependence of goods and factor markets FIRMS (suppliers of goods and services, demanders of factor services) HOUSEHOLDS (demanders of goods and services, suppliers of factor services)

21. The circular flow of income Consumption, injections, withdrawals and equilibrium

22. The circular flow of income Firms Households Factor payments Consumption of domestically produced goods and services (C d )

23. Factor payments Consumption of domestically produced goods and services (C d ) The circular flow of income WITHDRAWALS INJECTIONS Investment ( I ) Government expenditure ( G ) Export expenditure ( X ) BANKS, etc Net saving ( S ) GOV. Net taxes ( T ) ABROAD Import expenditure ( M )

24. The interdependence of goods and factor markets P Q P Q (1) Consumer demand (4) Factor supply (3) Factor demand (2) Producer supply O O Q 1 P 1 Q F 2 P F 2 Q 2 P 2 P F 1 Q F 1 D 2 D 2 £ £ £ £ Factor services Goods Goods Factor services S S D 1 D 1