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Brief Contents
PART 1 Introduction to Economics

1 The Art and Science of Economic Analysis 1
2 Economic Tools and Economic Systems 26
3 Economic Decision Makers 46
4 Demand, Supply, and Markets 66
PART 2 Fundamentals of Macroeconomics

5 Introduction to Macroeconomics 91
6 Tracking the U.S. Economy 113
7 Unemployment and Inflation 137
8 Productivity and Growth 164
9 Aggregate Demand 187
10 Aggregate Supply 212
PART 3 Fiscal and Monetary Policy

11 Fiscal Policy 233
12 Federal Budgets and Public Policy 256
13 Money and the Financial System 280
14 Banking and the Money Supply 305
15 Monetary Theory and Policy 327
16 Macro Policy Debate: Active or Passive? 350
PART 4 International Economics

17 International Trade 375
18 International Finance 400
19 Economic Development 419
vii
Table of Contents
PART 1 Introduction to Economics Chapter 3

Economic Decision Makers 46
Chapter 1
The Art and Science of Economic Analysis 1 3-1 The Household 47
3-1a The Evolution of the Household 47 | 3-1b Households
1-1 The Economic Problem: Scarce Resources,
Maximize Utility 48 | 3-1c Households as Resource
Unlimited Wants 2 Suppliers 48 | 3-1d Households as Demanders of Goods
1-1a Resources 3 | 1-1b Goods and Services 4 | 1-1c Economic and Services 49
Decision Makers and Markets 5 | 1-1d A Simple Circular-Flow
Model 5 3-2 The Firm 49
1-2 The Art of Economic Analysis 7 3-2a The Evolution of the Firm 49 | 3-2b Types of Firms 50 |
3-2c Cooperatives 52 | 3-2d Not-for-Profit Organizations 53 |
1-2a Rational Self-Interest 7 | 1-2b Choice Requires Time and Case Study: User-Generated Products 53 | 3-2e Why Does
Information 8 | 1-2c Economic Analysis Is Marginal Analysis 8 | Household Production Still Exist? 54
1-2d Microeconomics and Macroeconomics 9
3-3 The Government 55
1-3 The Science of Economic Analysis 10
1-3a The Role of Theory 10 | 1-3b The Scientific Method 11 | 1-3c 3-3a The Role of Government 55 | 3-3b Government’s
Normative Versus Positive 12 | 1-3d Economists Tell Stories 13 Structure and Objectives 57 | 3-3c The Size and Growth of
| 1-3e Predicting Average Behavior 13 | 1-3f Some Pitfalls of Government 58 | 3-3d Sources of Government Revenue 59 |
Faulty Economic Analysis 13 | 1-3g If Economists Are So Smart, 3-3e Tax Principles and Tax Incidence 60
Why Aren’t They Rich? 14 | Case Study: College Major and 3-4 The Rest of the World 62
Annual Earnings 15
3-4a International Trade 62 | 3-4b Exchange Rates 62 | 3-4c
Appendix: Understanding Graphs 20 Trade Restrictions 63
Drawing Graphs 21 | The Slope of a Straight Line 22 | The Slope,
Units of Measurement, and Marginal Analysis 22 | The Slopes
of Curved Lines 23 | Line Shifts 25 | Appendix Questions 25 Chapter 4
Chapter 2 Demand, Supply, and Markets 66
Economic Tools and Economic Systems 26 4-1 Demand 67
2-1 Choice and Opportunity Cost 27 4-1a Law of Demand 67 | 4-1b Demand Schedule and Demand
Curve 69
2-1a Opportunity Cost 27 | Case Study: The Opportunity Cost
of College 28 | 2-1b Opportunity Cost Is Subjective 29 | 2-1c 4-2 What Shifts a Demand Curve? 70
Sunk Cost and Choice 30
4-2a Consumer Income 71 | 4-2b Prices of Other Goods 71 |
2-2 Comparative Advantage, Specialization, and Exchange 31 4-2c Consumer Expectations 72 | 4-2d Number or Composition
of Consumers 72 | 4-2e Consumer Tastes 72
2-2a The Law of Comparative Advantage 31 | 2-2b Absolute
Advantage Versus Comparative Advantage 31 | 2-2c 4-3 Supply 73
Specialization and Exchange 32 | 2-2d Division of Labor and
Gains From Specialization 33 4-3a Supply Schedule and Supply Curve 73
2-3 The Economy’s Production Possibilities 34 4-4 What Shifts a Supply Curve? 75
2-3a Efficiency and the Production Possibilities Frontier, or 4-4a State of Technology and Know-How 75 | 4-4b Resource
PPF 34 | 2-3b Inefficient and Unattainable Production 35 | 2-3c Prices 75 | 4-4c Prices of Other Goods 76 | 4-4d Producer
The Shape of the PPF 35 | 2-3d What Can Shift the PPF? 36 | Expectations 76 | 4-4e Number of Producers in the
2-3e What We Learn From the PPF 39 Market 77
2-4 Economic Systems 39 4-5 Demand and Supply Create a Market 77
2-4a Three Questions Every Economic System Must Answer 39
| 2-4b Pure Capitalism 40 | 2-4c Pure Command System 41 | 4-5a Markets 77 | 4-5b Market Equilibrium 78
2-4d Mixed and Transitional Economies 42 | 2-4e Economies
Based on Custom or Religion | 43 ix
x Contents
4-6 Changes in Equilibrium Price and Quantity 80 Appendix: National Income Accounts 134
4-6a Shifts of the Demand Curve 80 | 4-6b Shifts of the Supply National Income 134 | Personal and Disposable Income 134 |
Curve 81 | 4-6c Simultaneous Shifts of Demand and Supply Summary of National Income Accounts 135 | Summary Income
Curves 82 Statement of the Economy 135 | Appendix Questions 136
4-7 Disequilibrium 84 Chapter 7
4-7a Price Floors 84 | 4-7b Price Ceilings 85 | Case Study: Rent Unemployment and Inflation 137
Ceilings in New York City 85
7-1 Unemployment: Its Measure and Sources 138
PA RT 2 F
undamentals of 7-1a Measuring Unemployment 139 | 7-1b Labor Force
Participation Rate 141 | 7-1c Unemployment Over Time 141
Macroeconomics | 7-1d Duration of Unemployment 141 | 7-1e Unemployment
Among Various Groups 142 | 7-1f Unemployment Varies Across
Chapter 5 Occupations and Regions 145 | 7-1g International Comparisons
Introduction to Macroeconomics 91 of Unemployment 145 | 7-1h Sources of Unemployment 146
5-1 The National Economy 92 7-2 Other Unemployment Issues 149

5-1a What’s Special About the National Economy? 93 | 7-2a The Meaning of Full Employment 149 | 7-2b
5-1b The Human Body and the U.S. Economy 93 | Unemployment Compensation 149 | 7-2c Problems With
5-1c Knowledge and Performance 94 Official Unemployment Figures 151
5-2 Economic Fluctuations and Growth 95 7-3 Inflation: Its Measure and Sources 151
5-2a U.S. Economic Fluctuations 95 | 5-2b The Global
Case Study: Hyperinflation in Zimbabwe 152 | 7-3a Two Sources
Economy 98 | 5-2c Leading Economic Indicators 99
of Inflation 153 | 7-3b Historical Look at Inflation and the Price
5-3 Aggregate Demand and Aggregate Supply 99 Level 154 | 7-3c Inflation Across Metropolitan Areas 154 | 7-3d
International Comparisons of Inflation 155
5-3a Aggregate Output and the Price Level 100 | 5-3b Aggregate
Demand Curve 100 | 5-3c Aggregate Supply Curve 102 | 5-3d 7-4 Effects of Inflation 157
Equilibrium Real GDP 102
7-4a Anticipated Versus Unanticipated Inflation 157 | 7-4b
5-4 A Brief History of the U.S. Economy 103 The Transaction Costs of Variable Inflation 158 | 7-4c Inflation
5-4a The Great Depression and Before 103 | 5-4b The Age of Obscures Relative Price Changes 158 | 7-4d Inflation and
Keynes: After the Great Depression to the Early 1970s 104 | Interest Rates 159 | 7-4e Why Is Inflation So Unpopular? 160
5-4c Stagflation: 1973–1975 and 1979–1980 106 | 5-4d Somewhat
Normal Times: 1980 to 2007 107 | 5-4e The Great Recession Chapter 8
of 2007–2009 and Beyond 107 | Case Study: U.S. Economic Productivity and Growth 164
Growth Since 1929 109
8-1 Theory of Productivity and Growth 165
Chapter 6
8-1a Growth and the Production Possibilities Frontier 166 |
Tracking the U.S. Economy 113 8-1b What Is Productivity? 168 | 8-1c Labor Productivity 168 |
8-1d Per-Worker Production Function 169 | 8-1e Technological
6-1 The Product of a Nation 114
Change and Know-How 170 | 8-1f Rules of the Game 171
6-1a National Income Accounts 115 | 6-1b GDP Based on the
Expenditure Approach 116 | 6-1c Composition of Aggregate 8-2 Productivity and Growth in Practice 173
Expenditure 117 | 6-1d GDP Based on the Income Approach 118 8-2a Education and Economic Development 173 | 8-2b U.S.
Labor Productivity 174 | 8-2c Slowdown and Rebound in
6-2 Circular Flow of Income and Expenditure 119
Productivity Growth 176 | 8-2d Output per Capita 177
6-2a Income Half of the Circular Flow 119 |
6-2b Expenditure Half of the Circular Flow 120 | 8-3 Other Issues of Technology and Growth 179
6-2c Leakages Equal Injections 122 8-3a Does Technological Change Lead to Unemployment? 179 |
8-3b Research and Development 180 | 8-3c Industrial Policy 182
6-3 Limitations of National Income Accounting 122
| Case Study: Income and Happiness 183
6-3a Some Production Is Not Counted in GDP 122 | 6-3b
Leisure, Quality, and Variety 123 | 6-3c What’s Gross About
Chapter 9
Gross Domestic Product? 123 | 6-3d GDP Does Not Reflect All
Costs 124 | 6-3e GDP and Economic Welfare 125 Aggregate Demand 187
6-4 Accounting for Price Changes 125 9-1 Consumption 188
6-4a Price Indexes 125 | 6-4b Consumer Price Index 126 | 9-1a Consumption and Income 188 | 9-1b The Consumption
6-4c Problems With the CPI 127 | Case Study: Price Check on Function 189 | 9-1c Marginal Propensities to Consume and
Aisle 2 128 | 6-4d The GDP Price Index 130 | 6-4e Moving From to Save 190 | 9-1d The MPC Is the Slope of the Consumption
Fixed Weights to Chain Weights 130 Function 191
Contents xi
9-2 Nonincome Determinants of Consumption 192 11-2a Before the Great Depression 238 | 11-2b The Great
Depression and World War II 238 | 11-2c Automatic
9-2a Net Wealth 192 | 9-2b The Price Level 193 | 9-2c The
Stabilizers 239 | 11-2d From the Golden Age to Stagflation 240
Interest Rate 194 | 9-2d Consumer Expectations 194 | 9-2e The
Life-Cycle Model of Consumption and Saving 195 11-3 Limits on Fiscal Policy’s Effectiveness 241
9-3 Other Spending Components 196 11-3a Estimating the Natural Rate of Unemployment 241 | 11-3b
9-3a Investment 196 | Case Study: Investment Varies More Lags in Fiscal Policy 242 | 11-3c Discretionary Fiscal Policy and
Than Consumption 198 | 9-3b Government Purchases 199 | Permanent Income 242
9-3c Net Exports 200 11-4 Fiscal Policy from 1980 to 2007 243
9-4 Aggregate Expenditure and Income 200 11-4a Fiscal Policy During the 1980s 243 | 11-4b 1990 to 2007:
9-4a Components of Aggregate Expenditure 200 | 9-4b Real From Deficits to Surpluses Back to Deficits 243
GDP Demanded 201 | 9-4c What if Spending Exceeds Real
GDP? 202 | 9-4d What if Real GDP Exceeds Spending? 202 11-5 Fiscal Policy During and After the Great Recession 244
11-5a The Financial Crisis 245 | 11-5b President Obama’s
9-5 The Simple Spending Multiplier 203
Stimulus Package 245 | 11-5c Fiscal Policy Since 2007 246 |
9-5a An Increase in Spending 203 | 9-5b Using the Simple Case Study: Cash for Clunkers 248
Spending Multiplier 204
Appendix: Demand-Side Effects of Government
9-6 The Aggregate Demand Curve 205 Purchases and Net Taxes 252
9-6a A Higher Price Level 206 | 9-6b A Lower Price Level 206 |
Changes in Government Purchase 252 | Changes in Net Taxes
9-6c The Multiplier and Shifts in Aggregate Demand 208
252 | Summary 254 | Appendix Questions 255
Chapter 10
Aggregate Supply 212 Chapter 12
10-1 Aggregate Supply in the Short Run 213 Federal Budgets and Public Policy 256
10-1a Labor and Aggregate Supply 213 | 10-1b Potential Output 12-1 The Federal Budget Process 257
and the Natural Rate of Unemployment 214 | 10-1c What If the 12-1a Presidential and Congressional Roles 258 | 12-1b Problems
Actual Price Level Is Higher Than Expected? 215 | 10-1d Why With the Federal Budget Process 259 | 12-1c Possible Budget
Costs Rise When Output Exceeds Potential 215 | 10-1e What If Reforms 260
the Actual Price Level Is Lower Than Expected? 216 | 10-1f The
Short-Run Aggregate Supply Curve 217 12-2 Fiscal Impact of the Federal Budget 260
10-2 From the Short Run to the Long Run 218 12-2a The Rationale for Deficits 260 | 12-2b Budget Philosophies
10-2a Closing an Expansionary Gap 218 | 10-2b Closing a and Deficits 261 | 12-2c Federal Deficits Since the Birth of the
Recessionary Gap 220 Nation 261 | 12-2d Why Deficits Persist 263 | 12-2e Deficits,
Surpluses, Crowding Out, and Crowding In 263 | 12-2f The Twin
10-3 Aggregate Supply in the Long Run 222 Deficits 264 | 12-2g A Short-Lived Budget Surplus Then More
10-3a Tracing Potential Output 222 | 10-3b Wage Flexibility and Deficits 264 | 12-2h The Relative Size of the Public Sector 267
Employment 223 | Case Study: U.S. Output Gaps and Wage
12-3 The National Debt in Perspective 268
Flexibility 224
12-3a Measuring the National Debt 268 | 12-3b International
10-4 Changes in Aggregate Supply 227 Perspective on Public Debt 270 | 12-3c Interest Payments on
10-4a What If Aggregate Supply Increases? 227 | 10-4b What If the National Debt 270
Aggregate Supply Decreases? 228 | 10-4c Hysteresis and the
Natural Rate of Unemployment 229 12-4 Federal Debt and the Economy 272
12-4a Are Persistent Deficits Sustainable? 272 | 12-4b The Debt
Ceiling and Debt Default 272 | 12-4c Who Bears the Burden of
PART 3 F
iscal and Monetary Policy the Debt? 273 | 12-4d Crowding Out and Capital Formation 274 |
12-4e The National Debt and Economic Growth 275 | Case Study:
Chapter 11 Reforming Social Security and Medicare 275
Fiscal Policy 233

Chapter 13
11-1 Theory of Fiscal Policy 234
Money and the Financial System 280
11-1a Fiscal Policy Tools 234 | 11-1b Discretionary Fiscal Policy to
Close a Recessionary Gap 235 | 11-1c Discretionary Fiscal Policy 13-1 The Birth of Money 281
to Close an Expansionary Gap 236 | 11-1d The Multiplier and the
Time Horizon 237 13-1a Barter and the Double Coincidence of Wants 281 | 13-1b
The Earliest Money and Its Functions 282 | 13-1c Properties
11-2 Fiscal Policy Up to the Stagflation of the 1970s 238 of the Ideal Money 283 | Case Study: Mackerel Economics in
Federal Prisons 284 | 13-1d Coins 285
xii Contents
13-2 Money and Banking 286 15-3 Money and Aggregate Demand in the Long Run 337
13-2a Early Banking 286 | 13-2b Bank Notes and Fiat Money 287 15-3a The Equation of Exchange 338 | 15-3b The Quantity
| 13-2c The Value of Money 287 | 13-2d When Money Performs Theory of Money 338 | 15-3c What Determines the Velocity of
Poorly 289 Money? 340 | 15-3d How Stable Is Velocity? 340
13-3 Financial Institutions in the United States 289 15-4 Targets for Monetary Policy 342
13-3a Commercial Banks and Thrifts 289 | 13-3b Birth of the 15-4a Contrasting Policies 342 | 15-4b Targets before 1982 343 |
Fed 290 | 13-3c Powers of the Federal Reserve System 290 15-4c Targets after 1982 344 | 15-4d Other Fed Responses to the
| 13-3d Banking Troubles During the Great Depression 291 | Financial Crisis 344 | 15-4e What about Inflation? 346 | 15-4f
13-3e Banks Lost Deposits When Inflation Increased 294 | 13-3f International Considerations 347
Banking Deregulation 294 | 13-3g Banks on the Ropes 295 |
13-3h Banks Recover 295
Chapter 16
13-4 Banking During and After the Great Recession Macro Policy Debate: Active or Passive? 350
of 2007–2009 297
16-1 Active Policy Versus Passive Policy 351
13-4a Subprime Mortgages and Mortgage-Backed
Securities 297 | 13-4b Bad Incentives Fueled the Financial Crisis 16-1a Closing a Recessionary Gap 351 | 16-1b Closing an
of 2008 298 | 13-4c The Troubled Asset Relief Program, or Expansionary Gap 353 | 16-1c Problems With Active Policy 354
TARP 299 | 13-4d The Dodd-Frank Act of 2010 300 | 13-4e Top | 16-1d The Problem of Lags 355 | 16-1e A Review of Policy
Banks in America and the World 301 Perspectives 357 | 16-1f Active Policies, Passive Policies, and
Presidential Politics 357
Chapter 14 16-2 The Role of Expectations 359

Banking and the Money Supply 305 16-2a Discretionary Policy and Inflation Expectations 359 |
16-2b Anticipating Policy 361 | 16-2c Policy Credibility 362 |
14-1 Money Aggregates 306 Case Study: Central Bank Independence and Price Stability 363
14-1a Narrow Definition of Money: M1 306 | Case Study: Faking
It 307 | 14-1b Broader Definition of Money: M2 308 | 14-1c Credit 16-3 Policy Rules Versus Discretion 364
Cards and Debit Cards: What’s the Difference? 309 | 14-1d Is 16-3a Limitations on Discretion 365 | 16-3b Rules and Rational
Bitcoin Money? 311 Expectations 366
14-2 How Banks Work 312 16-4 The Phillips Curve 367
14-2a Banks are Financial Intermediaries 312 | 14-2b Starting a
16-4a The Phillips Framework 368 | 16-4b The Short-Run Phillips
Bank 313 | 14-2c Reserve Accounts 314 | 14-2d Liquidity Versus
Curve 369 | 16-4c The Long-Run Phillips Curve 370 | 16-4d The
Profitability 314
Natural Rate Hypothesis 371 | 16-4e Evidence of the Phillips
14-3 How Banks Create Money 315 Curve 371
14-3a Creating Money through Excess Reserves 315 | 14-3b A

Summary of the Rounds 318 | 14-3c Reserve Requirements
and Money Expansion 318 | 14-3d Limitations on Money PART 4 I nternational Economics
Expansion 319 | 14-3e Contraction of the Money Supply 320
Chapter 17
14-4 The Fed’s Tools of Monetary Control 320 International Trade 375
14-4a Open-Market Operations and the Federal Funds
Rate 321 | 14-4b The Discount Rate 321 | 14-4c Reserve 17-1 The Gains From Trade 376
Requirements 322 | 14-4d Responding to Financial Crises 322 | 17-1a A Profile of Exports and Imports 376 | 17-1b Production
14-4e The Fed Is a Money Machine 322 Possibilities without Trade 378 | 17-1c Consumption Possibilities
Based on Comparative Advantage 380 | 17-1d Reasons for
Chapter 15 International Specialization 382
Monetary Theory and Policy 327 17-2 Trade Restrictions and Welfare Loss 384
17-2a Consumer Surplus and Producer Surplus From Market
15-1 The Demand and Supply of Money 328 Exchange 384 | 17-2b Tariffs 385 | 17-2c Import Quotas 387
15-1a The Demand for Money 329 | 15-1b Money Demand | 17-2d Quotas in Practice 388 | 17-2e Tariffs and Quotas
and Interest Rates 329 | 15-1c The Supply of Money and the Compared 389 | 17-2f Other Trade Restrictions 389
Equilibrium Interest Rate 330
17-3 Efforts to Reduce Trade Barriers 390
15-2 Money and Aggregate Demand in the Short Run 332 17-3a Freer Trade by Multilateral Agreement 390 | 17-3b
15-2a Interest Rates and Investment 332 | 15-2b Adding the World Trade Organization 391 | Case Study: Doha Round and
Short-Run Aggregate Supply Curve 333 | 15-2c Recent History Round 391 | 17-3c Common Markets 392
of the Federal Funds Rate 335 | Case Study: Greater Fed
Transparency as a Policy Tool 336
Contents xiii
17-4 Arguments for Trade Restrictions 393 Chapter 19

17-4a National Defense Argument 394 | 17-4b Infant Industry Economic Development 419
Argument 394 | 17-4c Antidumping Argument 394 | 17-4d
Jobs and Income Argument 395 | 17-4e Declining Industries 19-1 Worlds Apart 420
Argument 396 | 17-4f Problems With Trade Protection 397 19-1a Developing and Industrial Economies 421 | 19-1b Health
and Nutrition 423 | 19-1c High Birth Rates 424 | 19-1d Women
Chapter 18 in Developing Countries 426
International Finance 400 19-2 Productivity: Key to Development 426
18-1 Balance of Payments 401 19-2a Low Labor Productivity 426 | 19-2b Technology and
Education 427 | 19-2c Inefficient Use of Labor 427 | 19-2d
18-1a International Economic Transactions 401 | 18-1b The
Natural Resources 428 | 19-2e Financial Institutions 428 | 19-2f
Merchandise Trade Balance 402 | 18-1c Balance on Goods
Capital Infrastructure 429 | 19-2g Entrepreneurship 431 | 19-2h
and Services 403 | 18-1d Net Investment Income 403 | 18-1e
Rules of the Game 431 | Case Study: The Poorest Billion 433 |
Unilateral Transfers and the Current Account Balance 404
19-2i Income Distribution Within Countries 435
| 18-1f The Financial Account 405 | 18-1g Trade Deficits and
Surpluses 405 19-3 International Trade and Development 435
18-2 Foreign Exchange Rates and Markets 407 19-3a Trade Problems for Developing Countries 435 | 19-3b
Migration and the Brain Drain 436 | 19-3c Import Substitution
18-2a Foreign Exchange 407 | 18-2b The Demand for Foreign Versus Export Promotion 436 | 19-3d Trade Liberalization and
Exchange 408 | 18-2c The Supply of Foreign Exchange 409 | Special Interests 437
18-2d The Foreign Exchange Rate 409
19-4 Foreign Aid and Economic Development 438
18-3 Other Factors Influencing Foreign Exchange Markets 411
19-4a Foreign Aid 438 | 19-4b Does Foreign Aid Promote
18-3a Arbitrageurs and Speculators 411 | 18-3b Purchasing Power Economic Development? 439 | 19-4c Do Economies
Parity 411 | Case Study: The Big Mac Index 412 | 18-3c Flexible Converge? 439
Exchange Rates 414 | 18-3d Fixed Exchange Rates 414
Glossary 445
18-4 International Monetary System 415
18-4a The Bretton Woods Agreement 415 | 18-4b Demise of Index 459
the Bretton Woods System 415 | 18-4c The Current System:
Managed Float 416
Preface
E
conomics has a short history but a long past. As a distinct discipline, economics
has been around for only a few hundred years, yet civilizations have confronted
the economic problem of scarce resources and unlimited wants for millennia.
Economics, the discipline, may be centuries old, but it’s new every day, with fresh evi-
dence that refines and extends economic theory. For example, what could be newer than
how technological change is reshaping the way we live? In this edition of Economics:
A Contemporary Introduction, I draw on more than three decades of teaching and
research to convey the vitality, timeliness, and relevance of economics.
Lead by Example
Remember the last time you were in unfamiliar parts and had to ask for directions?
Along with the directions came the standard comment, “You can’t miss it!” So how
come you missed it? Because the “landmark,” so obvious to locals, was invisible to you,
a stranger. Writing a principles textbook is much like giving directions. Familiarity is a
must, but that very familiarity can cloud the author’s ability to see the material through
the fresh eyes of a new student. One could revert to a tell-all approach, but that will
bury students in information. An alternative is to opt for the minimalist approach,
writing abstractly about good x and good y, units of labor and units of capital, or the
proverbial widget. But that shorthand turns economics into a foreign language.
Good directions rely on landmarks familiar to us all—a stoplight, a fork in the
road, a white picket fence. Likewise, a good textbook builds bridges from the familiar
to the new. That’s what I try to do—lead by example. By beginning with examples that
draw on common experience, I try to create graphic images that need little explanation,
thereby eliciting from the reader that light of recognition, that “Aha!” I believe that the
shortest distance between an economic principle and student comprehension is a lively
example. Examples should convey the point quickly and directly. Having to explain
an example is like having to explain a joke—the point gets lost. Throughout the book,
I try to provide just enough intuition and institutional detail to get the point across.
But my emphasis is on economic ideas, not economic jargon.
Students show up the first day of class with at least 17 years of experience with
economic choices, economic institutions, and economic events. Each grew up in a
household—the most important economic institution in a market economy. As con-
sumers, students become well acquainted with fast-food outlets, cineplexes, car deal-
erships, online retailers, and scores of stores at the mall. Most students have supplied
labor to the job market—more than half had jobs in high school. Students also have
interacted with government—they know about sales taxes, driver’s licenses, speed
limits, public schools, and laws about texting while driving. And students have a
growing familiarity with the rest of the world. Thus, students have abundant experi-
ence with economics. This rich lode of personal experience offers a perfect starting
point. Rather than try to create for students a new world of economics—a new way
of thinking, my approach is to build on student experience—on what Alfred Marshall
called “the ordinary business of life.” I frequently remind students how much they
already know.
xv
xvi Preface
This book starts with what students bring to the party. For example, to explain
r esource substitution, rather than rely on abstract units of labor and capital, I begin with
washing a car, where the mix can vary from a drive-through car wash (much capital
and little labor) to a Saturday morning charity car wash (much labor and little capital).
Down-to-earth examples turn the abstract into the concrete to help students learn and re-
member. In this edition of Macroeconomics: A Contemporary Introduction, I add about
140 fresh examples to the exposition, bringing the total number of examples to about
300. Because instructors can cover only a portion of a textbook in the classroom, mate-
rial should be self-contained and self-explanatory. This gives instructors the flexibility to
emphasize in class topics of special interest.
What’s New With the Eleventh Edition

If there is one overarching theme with this edition, it’s the impact of technologi-
cal change on all aspects of economic life. From Spotify, to smart apps, to Uber, to
bitcoin, to interactive learning software, I underscore how technological change is
affecting the way we work, learn, play, and live. This edition builds on previous
success with additional examples, more questions along the way, and frequent sum-
maries as a chapter unfolds. By making the material both more natural and more
personal, I try to engage students in a collaborative discussion. Chapters have been
streamlined for a clearer, more intuitive presentation, with fresh examples, new
research findings, revised case studies, and additional exhibits to crystallize key
points.
Recent research suggests that students learn best by trying to recall what they have
just read. In that spirit, I pose “Checkpoint” questions after each section of a chap-
ter. And to help students grasp the material, I also break down each chapter into at
least four sections. As with the previous edition, each chapter includes a relevant case
study integrated into the narrative flow, not isolated from the mainstream. New with
this edition is an additional case study per chapter available on the companion site at
www.cengagebrain.com. Questions at the end of each chapter and after each online
case study aid student comprehension.
It goes without saying that I revised all data to reflect the most recent figures
available. Time-sensitive examples and discussions have also been updated. To make
economic principles richer and more interesting, this edition of Macroeconomics: A
Contemporary Introduction places greater emphasis on recent research. I report on
findings from 94 additional studies, nearly all appearing since my previous edition
went to press. This brings the total number of studies cited and discussed in this edi-
tion to 174. In the following chapter-by-chapter summaries, I will note the number of
fresh examples added and the number of new studies reported. I will then sample new
material and outline changes to the coverage.
Introductory Chapters: 1–4

As with earlier editions, background material common to both macro- and microeco-
nomics is covered in the first four chapters. Limiting introductory material to four
chapters saves precious class time, particularly at those institutions where students may
take macro and micro courses in either order (and so must cover introductory chapters
twice). New or revised features in the introductory chapters include:
Ch. 1: The Art and Science of Economic Analysis I add nine fresh examples and
report on three new studies. This chapter provides more detail on the implications of
Preface xvii
rational self-interest. For example, a physician who owns a pharmacy prescribes more
medication than other physicians, and a physician who owns a nuclear scanner is seven
times more likely to prescribe such a scan.
Ch. 2: Economic Tools and Economic Systems I add seven fresh examples and report
on four new studies. I note that an economy’s productive capacity depends not only on the
state of technology but also on the level of know-how. Know-how can boost production
even if technology and resources are unchanged. By improved know-how, a steel mini-
mill, for example, doubled production with no change in technology or the work force.
The significance of know-how carries throughout this revision.
Ch. 3: Economic Decision Makers I add four fresh examples and report on three
new studies. Unlike other principles books, I discuss the role of cooperatives, such as
Sunkist, and the not-for-profit sector more generally, such as the Texas Medical Center,
which employs more than 100,000 people, exceeding employment at major corpora-
tions such as Apple, Google, and Chevron.
Ch. 4: Demand, Supply, and Markets I add eight fresh examples and report on two
new studies. In explaining the effect of a price change on quantity demanded, I note
that the more important the item is as a share of the consumer’s budget, the bigger the
income effect. That’s why, for example, consumers increase other purchases when the
price of gasoline plunges, as happened in 2015.
Macroeconomic Chapters: 5–16

Rather than focus on the differences among competing schools of thought, I use the
aggregate demand and aggregate supply model to underscore the fundamental distinc-
tion between the active approach, which views the economy as unstable and in need of
government intervention when it gets off track, and the passive approach, which views
the economy as essentially stable and self-correcting. Again, all macro data have been
updated to reflect the most recent figures available. Equilibrium values for real GDP
and the price level used in theoretical models throughout the macro chapters match
actual values prevailing in the U.S. economy.
Wherever possible, I rely on student experience and intuition to help explain mac-
roeconomic abstractions such as aggregate demand and aggregate supply. For example,
to explain how employment can temporarily exceed its natural rate, I note how stu-
dents, as the term draws to a close, can temporarily shift into a higher gear, studying for
exams and finishing term papers. To reinforce the link between income and consump-
tion, I point out how easy it is to figure out the relative income of a neighborhood just
by driving through it. And to offer students a feel for the size of the federal budget,
I note that if all 4.6 thousand tons of gold stored in Fort Knox could be sold at prevail-
ing prices, the proceeds would run the federal government for about two weeks.
Chapters in this edition follow the same order as in the previous e dition. New or
revised features in the macroeconomics chapters include:
Ch. 5: Introduction to Macroeconomics I add four fresh examples. A new section,
“The Global Economy,” discusses the interdependence among national economies over
the last three decades.
Ch. 6: Tracking the U.S. Economy I add five fresh examples and report on a new
study. I note that in 2014 the United Kingdom and Italy began counting spending on
prostitution and illegal drugs in their GDP estimates. I also add a pie chart showing the
composition of the CPI.
Ch. 7: Unemployment and Inflation I add six fresh examples and report on 13 new
studies. I also add a bar chart showing that the unemployment rate declines as the level
of education increases. (But graduating from college is key, because college dropouts
have the same unemployment rate as high school graduates.)
xviii Preface
Ch. 8: Productivity and Growth I add eight fresh examples and report on 15 new
studies. As an example of technological progress, I note that putting an hour of video
online cost about $400 in the late 1990s but less than two cents today. To elevate
the importance of social capital, I move that discussion from the final chapter to this
chapter.
Ch. 9: Aggregate Demand I add three fresh examples and report on five new stud-
ies. I simplify the chapter title from “Aggregate Expenditure and Aggregate Demand,”
to “Aggregate Demand,” to reflect the content and match the title of the next chapter,
“Aggregate Supply.” I add “The Life-Cycle Hypothesis” as a new section and key term,
but include evidence from behavioral economics at odds with this hypothesis.
Ch. 10: Aggregate Supply I add two fresh examples and report on a new study.
“Hysteresis and the Natural Rate of Unemployment” is a new section, with hysteresis
as a key term.
Ch. 11: Fiscal Policy I add two fresh examples and report on four new studies.
“Fiscal Policy from 2007 to 2014” is a new section discussing the effects of federal
spending and deficits on jobs and economic growth. This section includes a new exhibit
showing deficit financing by year as a share of federal outlays by year. After the spike
in federal spending in 2009, that spending remained flat over the next five years even
in nominal dollars.
Ch. 12: Federal Budgets and Public Policy I add two fresh examples and report on
three new studies. I have a new subsection on federal budget sequestration and include
that as a key term.
Ch. 13: Money and the Financial System I add five fresh examples and report on
six new studies. An exhibit shows that China is now home to four of the world’s five
largest banks. While the United States may have some financial institutions considered
“too big to fail,” only one U.S. bank ranks among the world’s ten largest.
Ch. 14: Banking and the Money Supply I add three fresh examples and report on
two new studies. Two new pie charts now show consumer payment systems in 2013
and projected in 2018. In keeping with an emphasis on technological change, I add a
section entitled “Is Bitcoin Money?” examining this digital currency.
Ch. 15: Monetary Theory and Policy I add two fresh examples and report on a new
study. I say more about quantitative easing and about the Fed’s payment of interest on
bank reserves held at the Fed.
Ch. 16: Macro Policy Debate: Active or Passive I add three fresh examples and
report on three new studies. A new section discusses “Active Policies, Passive Policies,
and Presidential Politics.”
International Chapters: 17–19

This edition reflects the growing impact of the world economy on U.S. economic wel-
fare. International issues are introduced early and discussed often. For example, the rest
of the world is introduced in Chapter 1 and profiled in Chapter 3. Comparative advan-
tage and the production possibilities frontier are discussed from a global perspective
in Chapter 2. International coverage is woven throughout the text. By comparing the
U.S. experience with that of other countries around the world, students gain a better
perspective about such topics as unionization trends, antitrust policies, pollution, con-
servation, environmental laws, research and development, tax rates, the distribution of
income, economic growth, productivity, unemployment, inflation, central bank inde-
pendence, government spending, and federal debt. Exhibits show comparisons across
countries of various economic measures—everything from the percentage of paper that
gets recycled to public outlays relative to GDP. International references are scattered
throughout the book, including a number of relevant case studies.
Preface xix
Again, every effort is made to give students a feel for the numbers. For example, to
convey the importance of U.S. consumers in the world economy, I note that Americans
represent less than 5 percent of the world’s population but buy 38 percent of the diamond
jewelry sold worldwide. New or revised features in the international chapters include:
Ch. 17: International Trade I add 12 fresh examples and report on eight new studies.
People prefer having a choice of products, and international trade helps broaden that
choice. Yet another benefit of international trade is that trading partners are less likely to
go to war because war with trading partners would involve more economic loss. Bilateral
agreement, multilateral agreement, and common market are upgraded to key terms.
Ch. 18: International Finance I add three fresh examples and report on two new
studies. Foreigners find America an attractive place to invest because U.S. capital mar-
kets are the deepest and most liquid in the world. Fiscal problems in eurozone nations
such as Greece have taken some of the shine off the euro. I note that arbitrage opportu-
nities are short lived; most are available for less than a second. High-speed computers
act on such opportunities instantly.
Ch. 19: Economic Development I add 12 fresh examples and report on 18 new
studies. Education is valued more in some economies than in others. For example,
some teachers in Mexico can legally sell their tenured positions or pass them on to
their children.
Student-Friendly Features
In some principles textbooks, chapters are broken up by boxed material, qualifying foot-
notes, and other distractions that disrupt the flow of the material. Students aren’t sure
when or if they should read such segregated elements. But this book has a natural flow.
Each chapter opens with a few off-beat questions and then follows with a logical narra-
tive. Case studies appear in the natural sequence of the chapter. Students can thus read
each chapter from the opening questions to the conclusion and summary. I also adhere to
a “just-in-time” philosophy, introducing material just as it’s needed to build an argument.
Footnotes are used to cite sources, not to qualify or extend material in the text.
This edition is more visual than its predecessors, with more exhibits to reinforce key
findings. Exhibit titles convey the central points, and more exhibits now have summary
captions. Captions have been edited for clarity and brevity. The point is to make the exhib-
its more self-contained. Students learn more if concepts are presented both in words and
in exhibits.
Additional summary paragraphs have been added throughout each chapter; these sum-
maries begin with the bold-faced identifier “To Review.” As noted earlier, each section now
is followed by “Checkpoint” questions. Economic jargon has been reduced. Although the
number of terms defined in the margin has increased modestly, definitions have been pared
to make them clearer and less like entries from a dictionary. In short, economic principles
are now more transparent (a textbook should not be like some giant Easter egg hunt, where
it’s up to the student to figure out what the author is trying to say). Overall, the eleventh
edition is a cleaner presentation, a straighter shot into the student’s brain.
Color is used systematically within graphs, charts, and tables to ensure that stu-
dents can easily see what’s going on. Throughout the book, demand curves are blue
and supply curves are red. Color shading distinguishes key areas of many graphs, and
color identifies outcomes in others. For example, economic profit and welfare gains are
always shaded blue and economic loss and welfare losses are always shaded pink. In
short, color is more than mere eye candy—it is coordinated consistently and with fore-
thought to help students learn (a dyslexic student once told me she found the book’s
color guide quite helpful). Students benefit from these visual cues.
xx Preface
The Support Package

The teaching and learning support package that accompanies Economics: A Con
temporary Introduction provides instructors and students with focused, accurate, and
innovative supplements to the textbook.
Instructor’s Manual The Instructor’s Manual provides chapter outlines, teaching ideas,
experiential exercises for many chapters, and solutions to all end-of-chapter problems.
Instructor Resources on the Product Support Web Site. This site at www.cengagebrain.
com features the essential resources for instructors, password protected, in
downloadable format: the Instructor’s Manual in Word, the Teaching Assistance
Manual (discussed next), the online case studies, the test banks, and PowerPoint
lecture and exhibit slides.
Teaching Assistance Manual Written and revised by me, the Teaching Assistance Manual
provides additional support beyond the Instructor’s Manual. It is especially useful to new
instructors, graduate assistants, and teachers interested in generating more class discussion.
This manual offers (1) overviews and outlines of each chapter, (2) chapter objectives and
quiz material, (3) material for class discussion, (4) topics warranting special attention, (5)
supplementary examples, and (6) “What if?” discussion questions. Appendices provide
guidance on (1) presenting material; (2) generating and sustaining class discussion; (3)
preparing, administering, and grading quizzes; and (4) coping with the special problems
confronting foreign graduate assistants.
Test Banks Thoroughly revised for currency and accuracy, the microeconomics and
macroeconomics test banks contain over 6,000 questions in multiple-choice and true-
false formats. All multiple-choice questions are rated by degree of difficulty, and are
labeled with learning outcomes tags.
Cengage Learning Testing Powered by Cognero.

This is a flexible, online system that allows you to:
• author, edit, and manage test bank content from multiple Cengage Learning
solutions
• create multiple test versions in an instant
• deliver tests from your LMS, your classroom or wherever you want
Start right away!
Cengage Learning Testing Powered by Cognero works on any operating system or browser.
• No special installs or downloads needed
• Create tests from school, home, the coffee shop—anywhere with Internet access
What will you find?
• Simplicity at every step. A desktop-inspired interface features drop-down menus
and familiar, intuitive tools that take you through content creation and manage-
ment with ease.
• Full-featured test generator. Create ideal assessments with your choice of 15 ques-
tion types (including true/false, multiple choice, opinion scale/Likert, and essay).
Multi-language support, an equation editor, and unlimited metadata help ensure
your tests are complete and compliant.
• Cross-compatible capability. Import and export content into other systems.
Preface xxi
Microsoft PowerPoint Lecture Slides Lecture slides contain tables and graphs from
the textbook, and are intended to enhance lectures and help integrate technology into
the classroom.
Microsoft PowerPoint Figure Slides These PowerPoint slides contain key figures from
the text. Instructors who prefer to prepare their own lecture slides can use these figures
as an alternative to the text’s PowerPoint lecture slides.
The Teaching Economist Since 1990, I have edited The Teaching Economist,
a newsletter aimed at making teaching more interesting and more fun. The
newsletter discusses imaginative ways to present topics—for example, how to
“sensationalize” economic concepts, useful resources on the Internet, economic
applications from
science fiction, recent research in teaching and learning,
and more generally, ways to teach just for the fun of it. A regular feature of
The Teaching Economist, “The Grapevine,” o ffers teaching ideas suggested by
colleagues from across the country. The latest issue—and back issues—of The
Teaching Economist are available online at cengage.com/economics/mceachern/
theteachingeconomist.
Additional Case Studies Online As mentioned earlier, this edition’s companion site now
includes an additional case study for each chapter followed by a Checkpoint question.
To access this material, log into www.cengagebrain.com, search for McEachern, then
find the 11th edition.
Aplia Started in 2000 by economist and instructor Paul Romer, more students are
currently using an Aplia Integrated Textbook Solution for principles of economics
than are using all other web-based learning programs combined. Because the
assignments in Aplia are automatically graded, you can assign homework more
frequently to ensure your students are putting forth a full effort and getting the
most out of your class. Assignments are closely tied to the text and each McEachern
Aplia course has a digital edition of the textbook embedded right in the Aplia
program. This digital text is now in the Aplia Text format, which gives students
the same interactive experience they get on Web sites they use in their personal
lives.
MindTap for McEachern

• Personalized teaching becomes yours through a Learning Path built with key stu-
dent objectives and your syllabus in mind. Control what students see and when
they see it.
• Analytics and reports provide a snapshot of class progress, time in course, engage-
ment and completion rates.
• An additional case study per chapter along with a Checkpoint question.
• Aplia generic homework and math and graphing tutorials.
• Homework; Concept Clips videos with assessment; online exercises; Checkpoint
Q&A; end of chapter questions and problems.
• Adaptive Test Prep to help students master chapter concepts.
Custom Solutions Create a text as unique as your course quickly, simply, and
affordably. Custom Solutions allows you to add your personal touch to Economics: A
Contemporary Introduction with a course-specific cover and up to 32 pages of your
own content, at no additional cost. Contact your sales consultant to learn more about
this and other custom options to fit your course.
xxii Preface
Acknowledgments
Many people contributed to this book’s development. I gratefully acknowledge the
insights, comments, and criticisms of those who have reviewed the book for this and
previous editions or provided feedback on particular points. Their remarks changed
my thinking on many points and improved the book.
Steve Abid, John J. Bethune, Stephen Cobb,

Grand Rapids Community College Barton College Xavier University
Basil Al-Hashimi, Trisha L. Bezmen, Francis P. Connolly,
Mesa Community College–Red Mountain Old Dominion University Nassau Community College
Polly Reynolds Allen, Jay Bhattacharya, Doug Conway,
University of Connecticut Okaloosa Walton Community College Mesa Community College
Mary Allender, Gerald W. Bialka, Mary E. Cookingham,
University of Portland University of North Florida Michigan State University
Jeffrey Alstete, Roberta Biby, James P. Cover,
Iona College Grand Valley State University University of Alabama
Hassan Y. Aly, William Bogart, James Cox,
Ohio State University Case Western Reserve University DeKalb College
Ted Amato, Andrew A. Bonacic, Jerry Crawford,
University of North Carolina, Charlotte Adirondack College Arkansas State University
Donna Anderson, Kenneth Boyer, Thomas Creahan,
University of Wisconsin, La Crosse Michigan State University Morehead State University
Richard Anderson, David Brasfield, Carl Davidson,
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Rollins College Grand View College Chestnut Hill College
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University of Colorado at Colorado Baylor University Carroll College
Springs Charles Callahan III, David Denslow,
Andy Barnett, SUNY College at Brockport University of Florida
Auburn University Giorgio Canarella, Kruti R. Dholakia,
Bharati Basu, California State University, Los Angeles Grayson County College
Central Michigan University Shirley Cassing, Albert Duncan,
Lauri J. Bates, University of Pittsburgh Borough of Manhattan Community
Bryant University Shi-fan Chu, College of CUNY
Lee Beard, University of Nevada–Reno Mary Sue DuPuy,
Southwest Indian Polytechnical Institute Ronald Cipcic, Arizona Western College
Klaus Becker, Kalamazoo Valley Community College Gary Dymski,
Texas Tech University Larry Clarke, University of California–Riverside
Getachew Begashaw, Brookhaven College John Eastwood,
Harper College Rebecca Cline, Northern Arizona University
Charles Bennett, Middle Georgia College John Edgren,
Gannon University Eastern Michigan University
Preface xxiii
John C. Edward, Robert Gordon, Calvin Hoy,

Bentley University San Diego State University County College of Morris
Ron D. Elkins, Fred Graham, George Hughes,
Central Washington University American University University of Hartford
Kenneth G. Elzinga, Philip Graves, Jennifer Imazeki,
University of Virginia University of Colorado, Boulder San Diego State University
Donald Elliott, Jr., Gary Greene, Beth Ingram,
Southern Illinois University Manatee Community College University of Iowa
G. Rod Erfani, Harpal S. Grewal, Susan Iredale,
Transylvania University Claflin College Cuesta College
Gisela Meyer Escoe, Carolyn Grin, Paul Isley,
University of Cincinnati Grand Rapids Community College Grand Valley State University
Mark Evans, Daniel Gropper, Joyce Jacobsen,
California State University, Bakersfield Auburn University Wesleyan University
Jamie Falcon, Simon Hakim, Nancy Jianakoplos,
University of Maryland Baltimore County Temple University Colorado State University
Gregory Falls, Robert Halvorsen, Claude Michael Jonnard,
Central Michigan University University of Washington Fairleigh Dickinson University
Eleanor Fapohunda, Nathan Eric Hampton, Nake Kamrany,
SUNY College at Farmingdale St. Cloud State University University of Southern California
Mohsen Fardmanesh, Mehdi Haririan, Bryce Kanago,
Temple University Bloomsburg University Miami University
Paul Farnham, Oskar Harmon, John Kane,
Georgia State University University of Connecticut SUNY College at Oswego
Rudy Fichtenbaum, William Hart, David Kennett,
Wright State University Miami University Vassar College
T. Windsor Fields, Baban Hasnat, William Kern,
James Madison University SUNY College at Brockport Western Michigan University
Fathali Firoozi, Travis Lee Hayes, Robert Kleinhenz,
University of Texas at San Antonio Chattanooga State Technical Community California State University, Fullerton
Linda R. Fisher, College Faik Koray,
Quinnipiac University Julia Heath, Louisiana State University
Rodney Fort, University of Memphis Joseph Kotaska,
Washington State University James Heisler, Monroe Community College
Richard Fowles, Hope College Barry Kotlove,
University of Utah James Henderson, Edmonds Community College
Roger Frantz, Baylor University Marie Kratochvil,
San Diego State University Michael Heslop, Nassau Community College
Julie Gallaway, Northern Virginia Community Joseph Lammert,
Southwest Montana State University College Raymond Walters College
Gary Galles, James R. Hill, Philip J. Lane,
Pepperdine University Central Michigan University Fairfield University
Edward Gamber, Jane Smith Himarios, Steven P. Lanza,
Lafayette College University of Texas, Arlington University of Connecticut
Adam Gifford, Calvin Hoerneman, Christopher Lee,
California State University, Northridge Delta College Saint Ambrose University, Davenport
J. P. Gilbert, Tracy Hofer, Jim Lee,
MiraCosta College University of Wisconsin, Stevens Point Fort Hays State University
Robert Gillette, George E. Hoffer, Dennis Leyden,
University of Kentucky Virginia Commonwealth University University of North Carolina, Greensboro
Art Goldsmith, Dennis Hoffman, Carl Liedholm,
Washington and Lee University Arizona State University Michigan State University
Rae Jean Goodman, Bruce Horning, Hyoung-Seok Lim,
U.S. Naval Academy Fordham University Ohio State University
xxiv Preface
C. Richard Long, Milton Mitchell, Richard Saba,

Georgia State University University of Wisconsin, Oshkosh Auburn University
Ken Long, Shannon Mitchell, Simran Sahi,
New River Community College Virginia Commonwealth University University of Minnesota, Twin Cities
Michael Magura, Brian Mock, Richard Salvucci,
University of Toledo Indiana Wesleyan University Trinity University
Thomas Maloy, Barry Morris, Rexford Santerre,
Muskegon Community College University of North Alabama University of Connecticut
Gabriel Manrique, Tina Mosleh, George D. Santopietro,
Winona State University Ohlone College Radford University
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Davenport College Fairfield University University of Central Oklahoma
Robert Margo, Paul Natke, Ward Sayre,
Vanderbilt University Central Michigan University Kenyon College
Nelson Mark, Rick Nelson, Ted Scheinman,
Ohio State University Lansing Community College Mt. Hood Community College
Richard Martin, Heather Newsome, Peter Schwartz,
Agnes Scott College Baylor University University of North Carolina, Charlotte
Peter Mavrokordatos, Farrokh Nourzad, Carol A. Scotese,
Tarrant County College Marquette University Virginia Commonwealth University
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University of Cincinnati University of Minnesota, Duluth San Diego State University
Bruce McCrea, Norman P. Obst, Roger Sherman,
Lansing Community College Michigan State University University of Houston
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Arizona State University Upper Iowa University Central Michigan University
KimMarie McGoldrick, Joan Q. Osborne, Alden Shiers,
University of Richmond Palo Alto College California Polytechnic State University
David McKee, Jeffrey Phillips, Virginia Shingleton,
Kent State University Thomas College Valparaiso University
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University of New Orleans Florida National University California State University, Chico
Mark McNeil, Jeffrey D. Prager, William Shughart II,
Irvine Valley College East Central College University of Mississippi
Michael A. McPherson, Fernando Quijano, Paul Sicilian,
University of North Texas Dickinson State University Grand Valley State University
Scott Eric Merryman, Jaishankar Raman, Charles Sicotte,
University of Oregon Valparaiso University Rock Valley College
Michael Metzger, Reza Ramazani, Calvin Siebert,
University of Central Oklahoma St. Michael’s University University of Iowa
Art Meyer, Carol Rankin, Michele Sims,
Lincoln Land Community College Xavier University Arizona Western College
Carrie Meyer, Mitch Redlo, Gerald P. W. Simons,
George Mason University Monroe Community College Grand Valley State University
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Housatonic Community College Mississippi State University University of Phoenix
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Murray State University Delta College DeKalb College
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Morehead State University West Texas A&M University Duke University
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University of Nevada, Las Vegas Wayne State University Brigham Young University
Bruce D. Mills, Mark Rush, Jane Speyrer,
Troy State University, Montgomery University of Florida University of New Orleans
Preface xxv
Joanne Spitz, Steven Trost, Michael White,

University of Massachusetts Virginia Polytechnic Institute St. Cloud State University
Denise Stanley Lee J. Van Scyoc, Richard Winkelman,
California State University, Fullerton University of Wisconsin, Oshkosh Arizona State University
Mark Stegeman, Percy Vera, Stephan Woodbury,
Virginia Polytechnic Institute Sinclair Community College Michigan State University
Houston Stokes, Han X. Vo, Kenneth Woodward,
University of Illinois, Chicago Winthrop University Saddleback College
Robert Stonebreaker, Jin Wang, Patricia Wyatt,
Indiana University of Pennsylvania University of Wisconsin, Stevens Point Bossier Parish Community College
Michael Stroup, Gregory Wassall, Peter Wyman,
Stephen Austin State University Northeastern University Spokane Falls Community College
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Pace University Eastern Illinois University Morehead State University
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University of South Alabama Xavier University University of Wisconsin, Eau Claire
Linghui Tang, Bernard Weinrich, Michael J. Youngblood,
Drexel University St. Louis Community College Rock Valley College
Donna Thompson, Donald Wells, William Zeis,
Brookdale Community College University of Arizona Bucks Community College
Jill Trask, Robert Whaples,
Tarrant County College Wake Forest University
John Tribble, Mark Wheeler,
Russell Sage College Western Michigan University
I also thank the many contributions and comments from the group of instructors
who participated in the Online Survey of my book, or responded to our phone surveys:
John Abell, Ali Erhan, Martin Milkman,

Randolph College Aquinas College Murray State University
Richard U. Agesa, Erwin F. Erhardt, III, Kaustav Misra,
Marshall University University of Cincinnati Mississippi State University
John Beck, Jeff Florea, Phillip Mixon,
Gonzaga University Madisonville Community College Troy University
John Bellettiere IV, Ronald Gunderson, Paul Olmsted,
San Diego State University Northern Arizona University Moorpark College
Randall Bennett, George Hoffer, John Rapczak,
Gonzaga University Virginia Commonwealth University Community College of Rhode Island
Bettina Berch, Judy Hurtt, Richard Rouch,
Borough of Manhattan Community College East Central Community College Volunteer State Community College
Andrew M. Bonacic, Charles James, Martin Sabo,
Adirondack College Washington State University University of Colorado at Denver
Kathryn L. Brownell, E.M. Jankovic, Ahmad Saranjam,
Jefferson Community College Fairfield University Northeastern University
Joseph Daniels, Leland Kempe, Michelle Sims,
Marquette University CSU Fresno Arizona Western College
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Indian River State College St. Petersburg College Indian River State College
Mary Sue DePuy, Nazma Latif-Zaman, Sourushe Zandvakili,
Arizona Western College Providence College University of Cincinnati
John C. Edward J. Franklin Lee,
Bentley University Pitt Community College
Dennis S. Edwards, Harry Miley,
Coastal Carolina University South Carolina State University
xxvi Preface
The talented professionals at Cengage Learning provided invaluable editori-

al, administrative, and sales support. I owe a special debt to Julia Chase, Senior
Content/Media Developer, who nurtured the manuscript through reviews, revi-
sions, editing, and production. She also helped with photography selection and
coordinated the work of others who contributed to the publishing package. For the
fresh look of the book, I owe a debt to Michelle Kunkler, Senior Art Director. I am
also grateful to the Senior Content Product Manager, Colleen Farmer. The actual
production of this book was expertly handled by Cenveo Publisher Services, espe-
cially Rajachitra Suresh, who coordinated the manuscript through its several stag-
es. Her good cheer and steady guidance made things go smoothly. I would also like
to thank Sarah Greber, Senior Marketing Communications Manager, who has been
especially helpful with the publications of my newsletter, The Teaching Economist.
I am most grateful to Erin Joyner, VP, GM Social Science & Qualitative Business;
Michael Worls, Product Director; Michael Parthenakis, Senior Product Manager and
problem solver; Kasie Jean, Digital Content Designer; and John Carey, the Senior Mar-
keting Manager whose knowledge of the book dates back to the beginning. As good
as the book may be, all our efforts would be wasted unless students get to read it. To
that end, I greatly appreciate the dedicated service and sales force of Cengage Learning,
who have contributed in a substantial way to the book’s success.
Finally, I owe an abiding debt to my wife, Pat, who provided abundant encourage-
ment and support along the way.
William A. McEachern
The Art and Science
of Economic Analysis 1
Bernd Vogel/AGE Fotostock
• In what way are people who pound on vending machines relying on theory?
• Why are comic-strip and TV characters like those in FoxTrot, The Simpsons,
and Family Guy missing a finger on each hand? And where is Dilbert’s
mouth?
• Which college majors pay the most?
• Why is a good theory like a California Closet?
• What’s the big idea with economics?
• Finally, how can it be said that in economics “what goes around comes
around”?
These and other questions are answered in this chapter, which introduces the art
and science of economic analysis.
Y
ou have been reading and hearing about economic issues for years—
unemployment, inflation, poverty, recessions, federal deficits, college tuition,
airfares, stock prices, computer prices, smartphone prices, gas prices. When
explanations of such issues go into any depth, your eyes may glaze over and you may tune
out, the same way you do when a weather forecaster tries to explain high-pressure fronts
colliding with moisture carried in from the coast.
What many people fail to realize is that economics is livelier than the dry accounts of-
fered by the news media. Economics is about making choices, and you make economic
choices every day—choices about whether to get a part-time job or focus on your studies,
live in a dorm or off campus, take a course in accounting or one in history, get married or
stay single, pack a lunch or buy a sandwich. You already know much more about economics
than you realize. You bring to the subject a rich personal experience, an experience that
will be tapped throughout the book to reinforce your understanding of the basic ideas.
Topics discussed in this chapter include:

• The economic problem • The scientific method
• Marginal analysis • Normative versus positive analysis
• Rational self-interest • Some pitfalls of economic thinking
The Economic Problem: Scarce

1-1
Resources, Unlimited Wants
Would you like a new car, a nicer home, a smarter phone, tastier meals, more
free time, a more interesting social life, more spending money, more leisure, more
sleep? Who wouldn’t? But even if you can satisfy some of these desires, others keep
popping up. The problem is that, although your wants, or desires, are virtually
unlimited, the resources available to satisfy these wants are scarce. A resource is
scarce when it is not freely available—that is, when its price exceeds zero. Because
resources are scarce, you must choose from among your many wants, and whenever
you choose, you must forgo satisfying some other wants. The problem of scarce
resources but unlimited wants exists to a greater or lesser extent for each of the
7.4 billion people on Earth. Everybody—cab driver, farmer, brain surgeon, dictator,
shepherd, student, politician—faces the problem. For example, a cab driver uses
time and other scarce resources, such as the taxi, knowledge of the city, driving
economics skills, and gasoline, to earn income. That income, in turn, buys housing, grocer-
The study of how people use ies, clothing, trips to Disney World, and thousands of other goods and services
their scarce resources to that help satisfy some of the driver’s unlimited wants. Economics examines how
satisfy their unlimited wants people use their scarce resources to satisfy their unlimited wants. Let’s pick apart
Chapter 1 The Art and Science of Economic Analysis 3
the definition, beginning with resources, then goods and services, and finally focus resources
on the heart of the matter—economic choice, which results from scarcity. The inputs, or factors of
production, used to produce
the goods and services that
1-1a Resources people want; consist of labor,
capital, natural resources, and
Resources are the inputs, or factors of production, used to produce the goods and ser- entrepreneurial ability
vices that people want. Goods and services are scarce because resources are scarce.
labor
Resources sort into four broad categories: labor, capital, natural resources, and en-
The physical and mental effort
trepreneurial ability. Labor is human effort, both physical and mental. Labor includes used to produce goods and
the effort of the cab driver and the brain surgeon. Labor itself comes from a more services
fundamental resource: time. Without time we can accomplish nothing. We allocate our
time to alternative uses: We can sell our time as labor, or we can spend our time doing capital
other things, like sleeping, eating, studying, playing sports, going online, attending class, The buildings, equipment, and
human skills used to produce
watching TV, or just relaxing with friends. goods and services
Capital includes all human creations used to produce goods and services. Economists
often distinguish between physical capital and human capital. Physical capital con- natural resources
sists of factories, tools, machines, computers, buildings, airports, highways, and other All gifts of nature used to
human creations used to produce goods and services. Physical capital includes the cab produce goods and services;
includes renewable and
driver’s taxi, the surgeon’s scalpel, and the building where your economics class meets exhaustible resources
(or, if you are taking this course online, your computer and online connectors). Human
capital consists of the knowledge and skill people acquire to increase their productivity, entrepreneurial ability
such as the cab driver’s knowledge of city streets, the surgeon’s knowledge of human The imagination required to
anatomy, and your knowledge of economics. develop a new product or
process, the skill needed to
Natural resources include all gifts of nature, such as bodies of water, trees, oil re-
organize production, and the
serves, minerals, even animals. Natural resources can be divided into renewable re- willingness to take the risk of
sources and exhaustible resources. A renewable resource can be drawn on indefinitely profit or loss
if used conservatively. Thus, timber is a renewable resource if felled trees are replaced to
entrepreneur
regrow a steady supply. The air and rivers are renewable resources if they are allowed
A profit-seeking decision
sufficient time to cleanse themselves of any pollutants. More generally, biological re- maker who starts with an idea,
sources such as fish, game, livestock, forests, rivers, groundwater, grasslands, and soil organizes an enterprise to
are renewable if managed properly. An exhaustible resource—such as oil or coal—does bring that idea to life, and
not renew itself and so is available in a limited amount. Once burned, each barrel of oil assumes the risk of the
or ton of coal is gone forever. The world’s oil and coal deposits are exhaustible. operation
A special kind of human skill called entrepreneurial ability is the talent required wages
to dream up a new product or find a better way to produce an existing one, organize Payment to resource owners
production, and assume the risk of profit or loss. This special skill comes from an en- for their labor
trepreneur. An entrepreneur is a profit-seeking decision maker who starts with an idea,
interest
organizes an enterprise to bring that idea to life, and then assumes the risk of operation.
Payment to resource owners
An entrepreneur pays resource owners for the opportunity to employ their resources in for the use of their capital
the firm. Every firm in the world today, such as Ford, Microsoft, Google, and Facebook,
began as an idea in the mind of an entrepreneur. rent
Resource owners are paid wages for their labor, interest for the use of their Payment to resource owners
capital, and rent for the use of their natural resources. Entrepreneurial ability is for the use of their natural
resources
rewarded by profit, which equals the revenue from items sold minus the cost of
the resources employed to make those items. Sometimes the entrepreneur suffers a profit
loss. Resource earnings are usually based on the time these resources are employed. Reward for entrepreneurial
Resource payments therefore have a time dimension, as in a wage of $10 per hour, ability; sales revenue minus
interest of 6 percent per year, rent of $600 per month, or profit of $10,000 per resource cost
year.
4 Part 1 Introduction to Economics
1-1b Goods and Services

Resources are combined in a variety of ways to produce goods and services. A
farmer, a tractor, 50 acres of land, seeds, and fertilizer combine to grow the good:
corn. One hundred musicians, musical instruments, chairs, a conductor, a mu-
sical score, and a music hall combine to produce the service: Beethoven’s Fifth
good Symphony. Corn is a good because it is something you can see, feel, and touch; it
A tangible product used to requires scarce resources to produce; and it satisfies human wants. The book you
satisfy human wants are now holding, the chair you are sitting in, the clothes you are wearing, and your
service next meal are all goods. The performance of the Fifth Symphony is a service be-
An activity, or intangible cause it is intangible, yet it uses scarce resources to satisfy human wants. Lectures,
product, used to satisfy movies, concerts, phone service, wireless connections, yoga lessons, dry cleaning,
human wants and haircuts are all services.
Because goods and services are produced using scarce resources, they are themselves
scarce. A good or service is scarce if the amount people desire exceeds the amount
available at a zero price. Because we cannot have all the goods and services we would
like, we must continually choose among them. We must choose among more pleasant
living quarters, better meals, nicer clothes, more reliable transportation, faster comput-
scarcity ers, smarter phones, and so on. Making choices in a world of scarcity means we must
Occurs when the amount pass up some goods and services. Exhibit 1 shows the options of one individual facing
people desire exceeds the scarcity. But not everything is scarce. In fact, some things we would prefer to have less
amount available at a zero of. For example, we would prefer to have less garbage, less spam email, fewer telemar-
price
keting calls, and less pollution. Things we want none of even at a zero price are called
bads, the opposite of goods.
EXHIBIT 1 Scarcity Means You Must Choose Among Options
laola/Shutterstock.com, colia/Shutterstock.com, Utekhina Anna/Shutterstock.com, james weston/Shutterstock.com,

Elena Elisseeva/Shutterstock.com, zimmytws/Shutterstock.com
A few goods and services seem free because the amount available at a zero price
exceeds the amount people want. For example, air and seawater often seem free be-
cause we can breathe all the air we want and have all the seawater we can haul away.
Yet, despite the old saying “The best things in life are free,” most goods and services
are scarce, not free, and even those that appear to be free come with strings attached.
For example, clean air and clean seawater have become scarce. Goods and services
that are truly free are not the subject of economics. Without scarcity, there would be
no economic problem and no need for prices.
Sometimes we mistakenly think of certain goods as free because they involve no ap-
parent cost to us. Napkins seem to be free at Starbucks. Nobody stops you from taking
a fistful. Supplying napkins, however, costs the company millions each year and prices
reflect that cost. Some restaurants make special efforts to keep napkin use down—such
as packing them tightly into the dispenser or making you ask for them. And Starbucks
recently reduced the thickness of its napkins.
You may have heard the expression “There is no such thing as a free lunch.” There
is no free lunch because all goods and services involve a cost to someone. The lunch
may seem free to you, but it draws scarce resources away from the production of other
goods and services, and whoever provides a free lunch often expects something in re-
turn. A Russian proverb makes a similar point but with a bit more bite: “The only place
you find free cheese is in a mousetrap.” Albert Einstein once observed, “Sometimes one
pays the most for things one gets for nothing.”
1-1c Economic Decision Makers and Markets

There are four types of decision makers in the economy: households, firms, govern-
ments, and the rest of the world. Their interaction determines how an economy’s re-
sources are allocated. Households play the starring role. As consumers, households
demand the goods and services produced. As resource owners, households supply
labor, capital, natural resources, and entrepreneurial ability to firms, governments,
and the rest of the world. Firms, governments, and the rest of the world demand the
resources that households supply and then use these resources to supply the goods
and services that households demand. The rest of the world includes foreign house-
holds, foreign firms, and foreign governments that supply resources and products
to U.S. demanders and demand resources and products from U.S. suppliers.
Markets are the means by which buyers and sellers carry out exchange at mutually market
agreeable terms. By bringing together the two sides of exchange, markets determine A set of arrangements by
price, quantity, and quality. Markets are often physical places, such as supermarkets, which buyers and sellers carry
department stores, shopping malls, yard sales, flea markets, and swap meets. But mar- out exchange at mutually
agreeable terms
kets also include other mechanisms by which buyers and sellers communicate, such as
classified ads, radio and television ads, telephones, bulletin boards, online sites, and product market
face-to-face bargaining. These market mechanisms provide information about the A market in which a good or
quantity, quality, and price of products offered for sale. Goods and services are bought service is bought and sold
and sold in product markets. Resources are bought and sold in resource markets. The resource market
most important resource market is the labor, or job, market. Think about your own A market in which a resource
experience looking for a job, and you’ll already have some idea of that market. is bought and sold
1-1d A Simple Circular-Flow Model circular-flow model

A diagram that traces the flow
Now that you have learned a bit about economic decision makers and markets, con- of resources, products,
sider how all these interact. Such a picture is conveyed by the circular-flow model, income, and revenue among
which describes the flow of resources, products, income, and revenue among economic economic decision makers
6 Part 1 Introduction to Economics
decision makers. The simple circular-flow model focuses on the primary interaction in
a market economy—that between households and firms. Exhibit 2 shows households
on the left and firms on the right; please take a look.
Households supply labor, capital, natural resources, and entrepreneurial ability to
firms through resource markets, shown in the lower portion of the exhibit. In return,
households demand goods and services from firms through product markets, shown
on the upper portion of the exhibit. Viewed from the business end, firms demand
labor, capital, natural resources, and entrepreneurial ability from households through
resource markets, and firms supply goods and services to households through product
markets.
The flows of resources and products are supported by the flows of income and
expenditure—that is, by the flow of money. So let’s add money. The demand and sup-
ply of resources come together in resource markets to determine what firms pay for
EXHIBIT 2 The Simple Circular-Flow Model for Households and Firms
Product
markets
Go
s o ds
u ct Re
ve
d
an
nu
o
Pr
d
e e
se
r
rv
tu
ice
di
en
s
Exp
Households Firms
it
Lab entre
rof
,p
or,
nt
ca pren
re
pit
t,
co
es
In
r
te
al, eur
m in
es
tu e ,
na
es
rc
ia ral g u
l a re Wa so
bil so Re
ity urc
es, Resource
markets
Households earn income by supplying resources to resource markets, as as shown in the upper portion of the model. Households spend their in-
shown in the lower portion of the model. Firms demand these resources come to demand these goods and services. This spending flows through
to produce goods and services, which they supply to product markets, product markets as revenue to firms.
resources. These resource prices—wages, interest, rent, and profit—flow as income

to households. The demand and supply of products come together in product mar-
kets to determine what households pay for goods and services. This expenditure on
goods and services flows as revenue to firms. Resources and products flow in one
direction—in this case, counterclockwise—and the corresponding payments flow in the
other direction—clockwise. What goes around comes around. Take a little time now to
trace the logic of the circular flows.
CHECKPOINT
Identify and describe the movement of resources and products through the circular-
flow model.
1-2 The Art of Economic Analysis

An economy results as millions of individuals attempt to satisfy their unlimited wants.
Because their choices lie at the heart of the economic problem—coping with scarce r esources
but unlimited wants—these choices deserve a closer look. Learning about the forces that
shape economic choices is the first step toward understanding the art of economic analysis.
1-2a Rational Self-Interest

A key economic assumption is that individuals, in making choices, rationally select
what they perceive to be in their best interests. By rational, economists mean simply
that people try to make the best choices they can, given the available time and infor-
mation. People may not know with certainty which alternative will turn out to be the
best. They simply select the alternatives they expect will yield the most satisfaction and
happiness. In general, rational self-interest means that each individual tries to maximize rational self-interest
the expected benefit achieved with a given cost or to minimize the expected cost of Each individual tries to
achieving a given benefit. Thus, economists begin with the assumption that people look maximize the expected
out for their self-interest. For example, a physician who owns a pharmacy prescribes benefit achieved with a given
cost or to minimize the
8 percent more drugs on average than a physician who does not own a pharmacy.1 A expected cost of achieving a
physician who owns a nuclear scanner (used to look inside the human body) is seven given benefit
times more likely to recommend a scan than a physician who does not own a nuclear
scanner.2 And as one more example of self-interest, the USA Today weekly football poll
asks coaches to list the top 25 teams in the country. It is no surprise that coaches distort
their selections to favor their own teams and their own conferences. And, to make their
own records look better, coaches inflate the rankings of teams they have beaten.3
Rational self-interest should not necessarily be viewed as blind materialism, pure
selfishness, or greed. We all know people who are tuned to radio station WIIFM (What’s
In It For Me?). For most of us, however, self-interest often includes the welfare of our
family, our friends, and perhaps the poor of the world. Even so, our concern for others
1.
Brian Chen, Paul Gertler, and Chuh-Yuh Yang, “Moral Hazard and Economies of Scope in Physician
Ownership of Complementary Medical Services,” NBER Working Paper No. 19622 (November 2013).
2.
Sandeep Jouhar, Doctored: The Disillusionment of an American Physician (Farrar, Straus, and Giroux,
2014), p. 96.
3.
Matthew Kotchen and Matthew Potoski, “Conflicts of Interest Distort Public Evaluations: Evidence from
the Top 25 Ballots of NCAA Football Coaches,” Journal of Economic Behavior & Organization, 107
(November 2014): 51–63.
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DANCE ON STILTS AT THE GIRLS’ UNYAGO, NIUCHI
Newala, too, suffers from the distance of its water-supply—at least

the Newala of to-day does; there was once another Newala in a lovely
valley at the foot of the plateau. I visited it and found scarcely a trace
of houses, only a Christian cemetery, with the graves of several
missionaries and their converts, remaining as a monument of its
former glories. But the surroundings are wonderfully beautiful. A
thick grove of splendid mango-trees closes in the weather-worn
crosses and headstones; behind them, combining the useful and the
agreeable, is a whole plantation of lemon-trees covered with ripe
fruit; not the small African kind, but a much larger and also juicier
imported variety, which drops into the hands of the passing traveller,
without calling for any exertion on his part. Old Newala is now under
the jurisdiction of the native pastor, Daudi, at Chingulungulu, who,
as I am on very friendly terms with him, allows me, as a matter of
course, the use of this lemon-grove during my stay at Newala.
FEET MUTILATED BY THE RAVAGES OF THE “JIGGER”
(Sarcopsylla penetrans)
The water-supply of New Newala is in the bottom of the valley,

some 1,600 feet lower down. The way is not only long and fatiguing,
but the water, when we get it, is thoroughly bad. We are suffering not
only from this, but from the fact that the arrangements at Newala are
nothing short of luxurious. We have a separate kitchen—a hut built
against the boma palisade on the right of the baraza, the interior of
which is not visible from our usual position. Our two cooks were not
long in finding this out, and they consequently do—or rather neglect
to do—what they please. In any case they do not seem to be very
particular about the boiling of our drinking-water—at least I can
attribute to no other cause certain attacks of a dysenteric nature,
from which both Knudsen and I have suffered for some time. If a
man like Omari has to be left unwatched for a moment, he is capable
of anything. Besides this complaint, we are inconvenienced by the
state of our nails, which have become as hard as glass, and crack on
the slightest provocation, and I have the additional infliction of
pimples all over me. As if all this were not enough, we have also, for
the last week been waging war against the jigger, who has found his
Eldorado in the hot sand of the Makonde plateau. Our men are seen
all day long—whenever their chronic colds and the dysentery likewise
raging among them permit—occupied in removing this scourge of
Africa from their feet and trying to prevent the disastrous
consequences of its presence. It is quite common to see natives of
this place with one or two toes missing; many have lost all their toes,
or even the whole front part of the foot, so that a well-formed leg
ends in a shapeless stump. These ravages are caused by the female of
Sarcopsylla penetrans, which bores its way under the skin and there
develops an egg-sac the size of a pea. In all books on the subject, it is
stated that one’s attention is called to the presence of this parasite by
an intolerable itching. This agrees very well with my experience, so
far as the softer parts of the sole, the spaces between and under the
toes, and the side of the foot are concerned, but if the creature
penetrates through the harder parts of the heel or ball of the foot, it
may escape even the most careful search till it has reached maturity.
Then there is no time to be lost, if the horrible ulceration, of which
we see cases by the dozen every day, is to be prevented. It is much
easier, by the way, to discover the insect on the white skin of a
European than on that of a native, on which the dark speck scarcely
shows. The four or five jiggers which, in spite of the fact that I
constantly wore high laced boots, chose my feet to settle in, were
taken out for me by the all-accomplished Knudsen, after which I
thought it advisable to wash out the cavities with corrosive
sublimate. The natives have a different sort of disinfectant—they fill
the hole with scraped roots. In a tiny Makua village on the slope of
the plateau south of Newala, we saw an old woman who had filled all
the spaces under her toe-nails with powdered roots by way of
prophylactic treatment. What will be the result, if any, who can say?
The rest of the many trifling ills which trouble our existence are
really more comic than serious. In the absence of anything else to
smoke, Knudsen and I at last opened a box of cigars procured from
the Indian store-keeper at Lindi, and tried them, with the most
distressing results. Whether they contain opium or some other
narcotic, neither of us can say, but after the tenth puff we were both
“off,” three-quarters stupefied and unspeakably wretched. Slowly we
recovered—and what happened next? Half-an-hour later we were
once more smoking these poisonous concoctions—so insatiable is the
craving for tobacco in the tropics.
Even my present attacks of fever scarcely deserve to be taken
seriously. I have had no less than three here at Newala, all of which
have run their course in an incredibly short time. In the early
afternoon, I am busy with my old natives, asking questions and
making notes. The strong midday coffee has stimulated my spirits to
an extraordinary degree, the brain is active and vigorous, and work
progresses rapidly, while a pleasant warmth pervades the whole
body. Suddenly this gives place to a violent chill, forcing me to put on
my overcoat, though it is only half-past three and the afternoon sun
is at its hottest. Now the brain no longer works with such acuteness
and logical precision; more especially does it fail me in trying to
establish the syntax of the difficult Makua language on which I have
ventured, as if I had not enough to do without it. Under the
circumstances it seems advisable to take my temperature, and I do
so, to save trouble, without leaving my seat, and while going on with
my work. On examination, I find it to be 101·48°. My tutors are
abruptly dismissed and my bed set up in the baraza; a few minutes
later I am in it and treating myself internally with hot water and
lemon-juice.
Three hours later, the thermometer marks nearly 104°, and I make
them carry me back into the tent, bed and all, as I am now perspiring
heavily, and exposure to the cold wind just beginning to blow might
mean a fatal chill. I lie still for a little while, and then find, to my
great relief, that the temperature is not rising, but rather falling. This
is about 7.30 p.m. At 8 p.m. I find, to my unbounded astonishment,
that it has fallen below 98·6°, and I feel perfectly well. I read for an
hour or two, and could very well enjoy a smoke, if I had the
wherewithal—Indian cigars being out of the question.
Having no medical training, I am at a loss to account for this state
of things. It is impossible that these transitory attacks of high fever
should be malarial; it seems more probable that they are due to a
kind of sunstroke. On consulting my note-book, I become more and
more inclined to think this is the case, for these attacks regularly
follow extreme fatigue and long exposure to strong sunshine. They at
least have the advantage of being only short interruptions to my
work, as on the following morning I am always quite fresh and fit.
My treasure of a cook is suffering from an enormous hydrocele which
makes it difficult for him to get up, and Moritz is obliged to keep in
the dark on account of his inflamed eyes. Knudsen’s cook, a raw boy
from somewhere in the bush, knows still less of cooking than Omari;
consequently Nils Knudsen himself has been promoted to the vacant
post. Finding that we had come to the end of our supplies, he began
by sending to Chingulungulu for the four sucking-pigs which we had
bought from Matola and temporarily left in his charge; and when
they came up, neatly packed in a large crate, he callously slaughtered
the biggest of them. The first joint we were thoughtless enough to
entrust for roasting to Knudsen’s mshenzi cook, and it was
consequently uneatable; but we made the rest of the animal into a
jelly which we ate with great relish after weeks of underfeeding,
consuming incredible helpings of it at both midday and evening
meals. The only drawback is a certain want of variety in the tinned
vegetables. Dr. Jäger, to whom the Geographical Commission
entrusted the provisioning of the expeditions—mine as well as his
own—because he had more time on his hands than the rest of us,
seems to have laid in a huge stock of Teltow turnips,[46] an article of
food which is all very well for occasional use, but which quickly palls
when set before one every day; and we seem to have no other tins
left. There is no help for it—we must put up with the turnips; but I
am certain that, once I am home again, I shall not touch them for ten
years to come.
Amid all these minor evils, which, after all, go to make up the
genuine flavour of Africa, there is at least one cheering touch:
Knudsen has, with the dexterity of a skilled mechanic, repaired my 9
× 12 cm. camera, at least so far that I can use it with a little care.
How, in the absence of finger-nails, he was able to accomplish such a
ticklish piece of work, having no tool but a clumsy screw-driver for
taking to pieces and putting together again the complicated
mechanism of the instantaneous shutter, is still a mystery to me; but
he did it successfully. The loss of his finger-nails shows him in a light
contrasting curiously enough with the intelligence evinced by the
above operation; though, after all, it is scarcely surprising after his
ten years’ residence in the bush. One day, at Lindi, he had occasion
to wash a dog, which must have been in need of very thorough
cleansing, for the bottle handed to our friend for the purpose had an
extremely strong smell. Having performed his task in the most
conscientious manner, he perceived with some surprise that the dog
did not appear much the better for it, and was further surprised by
finding his own nails ulcerating away in the course of the next few
days. “How was I to know that carbolic acid has to be diluted?” he
mutters indignantly, from time to time, with a troubled gaze at his
mutilated finger-tips.
Since we came to Newala we have been making excursions in all
directions through the surrounding country, in accordance with old
habit, and also because the akida Sefu did not get together the tribal
elders from whom I wanted information so speedily as he had
promised. There is, however, no harm done, as, even if seen only
from the outside, the country and people are interesting enough.
The Makonde plateau is like a large rectangular table rounded off
at the corners. Measured from the Indian Ocean to Newala, it is
about seventy-five miles long, and between the Rovuma and the
Lukuledi it averages fifty miles in breadth, so that its superficial area
is about two-thirds of that of the kingdom of Saxony. The surface,
however, is not level, but uniformly inclined from its south-western
edge to the ocean. From the upper edge, on which Newala lies, the
eye ranges for many miles east and north-east, without encountering
any obstacle, over the Makonde bush. It is a green sea, from which
here and there thick clouds of smoke rise, to show that it, too, is
inhabited by men who carry on their tillage like so many other
primitive peoples, by cutting down and burning the bush, and
manuring with the ashes. Even in the radiant light of a tropical day
such a fire is a grand sight.
Much less effective is the impression produced just now by the
great western plain as seen from the edge of the plateau. As often as
time permits, I stroll along this edge, sometimes in one direction,
sometimes in another, in the hope of finding the air clear enough to
let me enjoy the view; but I have always been disappointed.
Wherever one looks, clouds of smoke rise from the burning bush,
and the air is full of smoke and vapour. It is a pity, for under more
favourable circumstances the panorama of the whole country up to
the distant Majeje hills must be truly magnificent. It is of little use
taking photographs now, and an outline sketch gives a very poor idea
of the scenery. In one of these excursions I went out of my way to
make a personal attempt on the Makonde bush. The present edge of
the plateau is the result of a far-reaching process of destruction
through erosion and denudation. The Makonde strata are
everywhere cut into by ravines, which, though short, are hundreds of
yards in depth. In consequence of the loose stratification of these
beds, not only are the walls of these ravines nearly vertical, but their
upper end is closed by an equally steep escarpment, so that the
western edge of the Makonde plateau is hemmed in by a series of
deep, basin-like valleys. In order to get from one side of such a ravine
to the other, I cut my way through the bush with a dozen of my men.
It was a very open part, with more grass than scrub, but even so the
short stretch of less than two hundred yards was very hard work; at
the end of it the men’s calicoes were in rags and they themselves
bleeding from hundreds of scratches, while even our strong khaki
suits had not escaped scatheless.
NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAHUTA
I see increasing reason to believe that the view formed some time
back as to the origin of the Makonde bush is the correct one. I have
no doubt that it is not a natural product, but the result of human
occupation. Those parts of the high country where man—as a very
slight amount of practice enables the eye to perceive at once—has not
yet penetrated with axe and hoe, are still occupied by a splendid
timber forest quite able to sustain a comparison with our mixed
forests in Germany. But wherever man has once built his hut or tilled
his field, this horrible bush springs up. Every phase of this process
may be seen in the course of a couple of hours’ walk along the main
road. From the bush to right or left, one hears the sound of the axe—
not from one spot only, but from several directions at once. A few
steps further on, we can see what is taking place. The brush has been
cut down and piled up in heaps to the height of a yard or more,
between which the trunks of the large trees stand up like the last
pillars of a magnificent ruined building. These, too, present a
melancholy spectacle: the destructive Makonde have ringed them—
cut a broad strip of bark all round to ensure their dying off—and also
piled up pyramids of brush round them. Father and son, mother and
son-in-law, are chopping away perseveringly in the background—too
busy, almost, to look round at the white stranger, who usually excites
so much interest. If you pass by the same place a week later, the piles
of brushwood have disappeared and a thick layer of ashes has taken
the place of the green forest. The large trees stretch their
smouldering trunks and branches in dumb accusation to heaven—if
they have not already fallen and been more or less reduced to ashes,
perhaps only showing as a white stripe on the dark ground.
This work of destruction is carried out by the Makonde alike on the
virgin forest and on the bush which has sprung up on sites already
cultivated and deserted. In the second case they are saved the trouble
of burning the large trees, these being entirely absent in the
secondary bush.
After burning this piece of forest ground and loosening it with the
hoe, the native sows his corn and plants his vegetables. All over the
country, he goes in for bed-culture, which requires, and, in fact,
receives, the most careful attention. Weeds are nowhere tolerated in
the south of German East Africa. The crops may fail on the plains,
where droughts are frequent, but never on the plateau with its
abundant rains and heavy dews. Its fortunate inhabitants even have
the satisfaction of seeing the proud Wayao and Wamakua working
for them as labourers, driven by hunger to serve where they were
accustomed to rule.
But the light, sandy soil is soon exhausted, and would yield no
harvest the second year if cultivated twice running. This fact has
been familiar to the native for ages; consequently he provides in
time, and, while his crop is growing, prepares the next plot with axe
and firebrand. Next year he plants this with his various crops and
lets the first piece lie fallow. For a short time it remains waste and
desolate; then nature steps in to repair the destruction wrought by
man; a thousand new growths spring out of the exhausted soil, and
even the old stumps put forth fresh shoots. Next year the new growth
is up to one’s knees, and in a few years more it is that terrible,
impenetrable bush, which maintains its position till the black
occupier of the land has made the round of all the available sites and
come back to his starting point.
The Makonde are, body and soul, so to speak, one with this bush.
According to my Yao informants, indeed, their name means nothing
else but “bush people.” Their own tradition says that they have been
settled up here for a very long time, but to my surprise they laid great
stress on an original immigration. Their old homes were in the
south-east, near Mikindani and the mouth of the Rovuma, whence
their peaceful forefathers were driven by the continual raids of the
Sakalavas from Madagascar and the warlike Shirazis[47] of the coast,
to take refuge on the almost inaccessible plateau. I have studied
African ethnology for twenty years, but the fact that changes of
population in this apparently quiet and peaceable corner of the earth
could have been occasioned by outside enterprises taking place on
the high seas, was completely new to me. It is, no doubt, however,
correct.
The charming tribal legend of the Makonde—besides informing us
of other interesting matters—explains why they have to live in the
thickest of the bush and a long way from the edge of the plateau,
instead of making their permanent homes beside the purling brooks
and springs of the low country.
“The place where the tribe originated is Mahuta, on the southern
side of the plateau towards the Rovuma, where of old time there was
nothing but thick bush. Out of this bush came a man who never
washed himself or shaved his head, and who ate and drank but little.
He went out and made a human figure from the wood of a tree
growing in the open country, which he took home to his abode in the
bush and there set it upright. In the night this image came to life and
was a woman. The man and woman went down together to the
Rovuma to wash themselves. Here the woman gave birth to a still-
born child. They left that place and passed over the high land into the
valley of the Mbemkuru, where the woman had another child, which
was also born dead. Then they returned to the high bush country of
Mahuta, where the third child was born, which lived and grew up. In
course of time, the couple had many more children, and called
themselves Wamatanda. These were the ancestral stock of the
Makonde, also called Wamakonde,[48] i.e., aborigines. Their
forefather, the man from the bush, gave his children the command to
bury their dead upright, in memory of the mother of their race who
was cut out of wood and awoke to life when standing upright. He also
warned them against settling in the valleys and near large streams,
for sickness and death dwelt there. They were to make it a rule to
have their huts at least an hour’s walk from the nearest watering-
place; then their children would thrive and escape illness.”
The explanation of the name Makonde given by my informants is
somewhat different from that contained in the above legend, which I
extract from a little book (small, but packed with information), by
Pater Adams, entitled Lindi und sein Hinterland. Otherwise, my
results agree exactly with the statements of the legend. Washing?
Hapana—there is no such thing. Why should they do so? As it is, the
supply of water scarcely suffices for cooking and drinking; other
people do not wash, so why should the Makonde distinguish himself
by such needless eccentricity? As for shaving the head, the short,
woolly crop scarcely needs it,[49] so the second ancestral precept is
likewise easy enough to follow. Beyond this, however, there is
nothing ridiculous in the ancestor’s advice. I have obtained from
various local artists a fairly large number of figures carved in wood,
ranging from fifteen to twenty-three inches in height, and
representing women belonging to the great group of the Mavia,
Makonde, and Matambwe tribes. The carving is remarkably well
done and renders the female type with great accuracy, especially the
keloid ornamentation, to be described later on. As to the object and
meaning of their works the sculptors either could or (more probably)
would tell me nothing, and I was forced to content myself with the
scanty information vouchsafed by one man, who said that the figures
were merely intended to represent the nembo—the artificial
deformations of pelele, ear-discs, and keloids. The legend recorded
by Pater Adams places these figures in a new light. They must surely
be more than mere dolls; and we may even venture to assume that
they are—though the majority of present-day Makonde are probably
unaware of the fact—representations of the tribal ancestress.
The references in the legend to the descent from Mahuta to the
Rovuma, and to a journey across the highlands into the Mbekuru
valley, undoubtedly indicate the previous history of the tribe, the
travels of the ancestral pair typifying the migrations of their
descendants. The descent to the neighbouring Rovuma valley, with
its extraordinary fertility and great abundance of game, is intelligible
at a glance—but the crossing of the Lukuledi depression, the ascent
to the Rondo Plateau and the descent to the Mbemkuru, also lie
within the bounds of probability, for all these districts have exactly
the same character as the extreme south. Now, however, comes a
point of especial interest for our bacteriological age. The primitive
Makonde did not enjoy their lives in the marshy river-valleys.
Disease raged among them, and many died. It was only after they
had returned to their original home near Mahuta, that the health
conditions of these people improved. We are very apt to think of the
African as a stupid person whose ignorance of nature is only equalled
by his fear of it, and who looks on all mishaps as caused by evil
spirits and malignant natural powers. It is much more correct to
assume in this case that the people very early learnt to distinguish
districts infested with malaria from those where it is absent.
This knowledge is crystallized in the
ancestral warning against settling in the
valleys and near the great waters, the
dwelling-places of disease and death. At the
same time, for security against the hostile
Mavia south of the Rovuma, it was enacted
that every settlement must be not less than a
certain distance from the southern edge of the
plateau. Such in fact is their mode of life at the
present day. It is not such a bad one, and
certainly they are both safer and more
comfortable than the Makua, the recent
intruders from the south, who have made USUAL METHOD OF
good their footing on the western edge of the CLOSING HUT-DOOR
plateau, extending over a fairly wide belt of
country. Neither Makua nor Makonde show in their dwellings
anything of the size and comeliness of the Yao houses in the plain,
especially at Masasi, Chingulungulu and Zuza’s. Jumbe Chauro, a
Makonde hamlet not far from Newala, on the road to Mahuta, is the
most important settlement of the tribe I have yet seen, and has fairly
spacious huts. But how slovenly is their construction compared with
the palatial residences of the elephant-hunters living in the plain.
The roofs are still more untidy than in the general run of huts during
the dry season, the walls show here and there the scanty beginnings
or the lamentable remains of the mud plastering, and the interior is a
veritable dog-kennel; dirt, dust and disorder everywhere. A few huts
only show any attempt at division into rooms, and this consists
merely of very roughly-made bamboo partitions. In one point alone
have I noticed any indication of progress—in the method of fastening
the door. Houses all over the south are secured in a simple but
ingenious manner. The door consists of a set of stout pieces of wood
or bamboo, tied with bark-string to two cross-pieces, and moving in
two grooves round one of the door-posts, so as to open inwards. If
the owner wishes to leave home, he takes two logs as thick as a man’s
upper arm and about a yard long. One of these is placed obliquely
against the middle of the door from the inside, so as to form an angle
of from 60° to 75° with the ground. He then places the second piece
horizontally across the first, pressing it downward with all his might.
It is kept in place by two strong posts planted in the ground a few
inches inside the door. This fastening is absolutely safe, but of course
cannot be applied to both doors at once, otherwise how could the
owner leave or enter his house? I have not yet succeeded in finding
out how the back door is fastened.
MAKONDE LOCK AND KEY AT JUMBE CHAURO

This is the general way of closing a house. The Makonde at Jumbe
Chauro, however, have a much more complicated, solid and original
one. Here, too, the door is as already described, except that there is
only one post on the inside, standing by itself about six inches from
one side of the doorway. Opposite this post is a hole in the wall just
large enough to admit a man’s arm. The door is closed inside by a
large wooden bolt passing through a hole in this post and pressing
with its free end against the door. The other end has three holes into
which fit three pegs running in vertical grooves inside the post. The
door is opened with a wooden key about a foot long, somewhat
curved and sloped off at the butt; the other end has three pegs
corresponding to the holes, in the bolt, so that, when it is thrust
through the hole in the wall and inserted into the rectangular
opening in the post, the pegs can be lifted and the bolt drawn out.[50]
MODE OF INSERTING THE KEY
With no small pride first one householder and then a second

showed me on the spot the action of this greatest invention of the
Makonde Highlands. To both with an admiring exclamation of
“Vizuri sana!” (“Very fine!”). I expressed the wish to take back these
marvels with me to Ulaya, to show the Wazungu what clever fellows
the Makonde are. Scarcely five minutes after my return to camp at
Newala, the two men came up sweating under the weight of two
heavy logs which they laid down at my feet, handing over at the same
time the keys of the fallen fortress. Arguing, logically enough, that if
the key was wanted, the lock would be wanted with it, they had taken
their axes and chopped down the posts—as it never occurred to them
to dig them out of the ground and so bring them intact. Thus I have
two badly damaged specimens, and the owners, instead of praise,
come in for a blowing-up.
The Makua huts in the environs of Newala are especially
miserable; their more than slovenly construction reminds one of the
temporary erections of the Makua at Hatia’s, though the people here
have not been concerned in a war. It must therefore be due to
congenital idleness, or else to the absence of a powerful chief. Even
the baraza at Mlipa’s, a short hour’s walk south-east of Newala,
shares in this general neglect. While public buildings in this country
are usually looked after more or less carefully, this is in evident
danger of being blown over by the first strong easterly gale. The only
attractive object in this whole district is the grave of the late chief
Mlipa. I visited it in the morning, while the sun was still trying with
partial success to break through the rolling mists, and the circular
grove of tall euphorbias, which, with a broken pot, is all that marks
the old king’s resting-place, impressed one with a touch of pathos.
Even my very materially-minded carriers seemed to feel something
of the sort, for instead of their usual ribald songs, they chanted
solemnly, as we marched on through the dense green of the Makonde
bush:—
“We shall arrive with the great master; we stand in a row and have
no fear about getting our food and our money from the Serkali (the
Government). We are not afraid; we are going along with the great
master, the lion; we are going down to the coast and back.”
With regard to the characteristic features of the various tribes here
on the western edge of the plateau, I can arrive at no other
conclusion than the one already come to in the plain, viz., that it is
impossible for anyone but a trained anthropologist to assign any
given individual at once to his proper tribe. In fact, I think that even
an anthropological specialist, after the most careful examination,
might find it a difficult task to decide. The whole congeries of peoples
collected in the region bounded on the west by the great Central
African rift, Tanganyika and Nyasa, and on the east by the Indian
Ocean, are closely related to each other—some of their languages are
only distinguished from one another as dialects of the same speech,
and no doubt all the tribes present the same shape of skull and
structure of skeleton. Thus, surely, there can be no very striking
differences in outward appearance.
Even did such exist, I should have no time
to concern myself with them, for day after day,
I have to see or hear, as the case may be—in
any case to grasp and record—an
extraordinary number of ethnographic
phenomena. I am almost disposed to think it
fortunate that some departments of inquiry, at
least, are barred by external circumstances.
Chief among these is the subject of iron-
working. We are apt to think of Africa as a
country where iron ore is everywhere, so to
speak, to be picked up by the roadside, and
where it would be quite surprising if the
inhabitants had not learnt to smelt the
material ready to their hand. In fact, the
knowledge of this art ranges all over the
continent, from the Kabyles in the north to the
Kafirs in the south. Here between the Rovuma
and the Lukuledi the conditions are not so
favourable. According to the statements of the
Makonde, neither ironstone nor any other
form of iron ore is known to them. They have
not therefore advanced to the art of smelting
the metal, but have hitherto bought all their
THE ANCESTRESS OF
THE MAKONDE
iron implements from neighbouring tribes.
Even in the plain the inhabitants are not much
better off. Only one man now living is said to
understand the art of smelting iron. This old fundi lives close to
Huwe, that isolated, steep-sided block of granite which rises out of
the green solitude between Masasi and Chingulungulu, and whose
jagged and splintered top meets the traveller’s eye everywhere. While
still at Masasi I wished to see this man at work, but was told that,
frightened by the rising, he had retired across the Rovuma, though
he would soon return. All subsequent inquiries as to whether the
fundi had come back met with the genuine African answer, “Bado”
(“Not yet”).
BRAZIER
Some consolation was afforded me by a brassfounder, whom I

came across in the bush near Akundonde’s. This man is the favourite
of women, and therefore no doubt of the gods; he welds the glittering
brass rods purchased at the coast into those massive, heavy rings
which, on the wrists and ankles of the local fair ones, continually give
me fresh food for admiration. Like every decent master-craftsman he
had all his tools with him, consisting of a pair of bellows, three
crucibles and a hammer—nothing more, apparently. He was quite
willing to show his skill, and in a twinkling had fixed his bellows on
the ground. They are simply two goat-skins, taken off whole, the four
legs being closed by knots, while the upper opening, intended to
admit the air, is kept stretched by two pieces of wood. At the lower
end of the skin a smaller opening is left into which a wooden tube is
stuck. The fundi has quickly borrowed a heap of wood-embers from
the nearest hut; he then fixes the free ends of the two tubes into an
earthen pipe, and clamps them to the ground by means of a bent
piece of wood. Now he fills one of his small clay crucibles, the dross
on which shows that they have been long in use, with the yellow
material, places it in the midst of the embers, which, at present are
only faintly glimmering, and begins his work. In quick alternation
the smith’s two hands move up and down with the open ends of the
bellows; as he raises his hand he holds the slit wide open, so as to let
the air enter the skin bag unhindered. In pressing it down he closes
the bag, and the air puffs through the bamboo tube and clay pipe into
the fire, which quickly burns up. The smith, however, does not keep
on with this work, but beckons to another man, who relieves him at
the bellows, while he takes some more tools out of a large skin pouch
carried on his back. I look on in wonder as, with a smooth round
stick about the thickness of a finger, he bores a few vertical holes into
the clean sand of the soil. This should not be difficult, yet the man
seems to be taking great pains over it. Then he fastens down to the
ground, with a couple of wooden clamps, a neat little trough made by
splitting a joint of bamboo in half, so that the ends are closed by the
two knots. At last the yellow metal has attained the right consistency,
and the fundi lifts the crucible from the fire by means of two sticks
split at the end to serve as tongs. A short swift turn to the left—a
tilting of the crucible—and the molten brass, hissing and giving forth
clouds of smoke, flows first into the bamboo mould and then into the
holes in the ground.
The technique of this backwoods craftsman may not be very far
advanced, but it cannot be denied that he knows how to obtain an
adequate result by the simplest means. The ladies of highest rank in
this country—that is to say, those who can afford it, wear two kinds
of these massive brass rings, one cylindrical, the other semicircular
in section. The latter are cast in the most ingenious way in the
bamboo mould, the former in the circular hole in the sand. It is quite
a simple matter for the fundi to fit these bars to the limbs of his fair
customers; with a few light strokes of his hammer he bends the
pliable brass round arm or ankle without further inconvenience to
the wearer.
SHAPING THE POT
SMOOTHING WITH MAIZE-COB
CUTTING THE EDGE

FINISHING THE BOTTOM
LAST SMOOTHING BEFORE

BURNING
FIRING THE BRUSH-PILE

LIGHTING THE FARTHER SIDE OF
THE PILE
TURNING THE RED-HOT VESSEL
NYASA WOMAN MAKING POTS AT MASASI

Pottery is an art which must always and everywhere excite the
interest of the student, just because it is so intimately connected with
the development of human culture, and because its relics are one of
the principal factors in the reconstruction of our own condition in
prehistoric times. I shall always remember with pleasure the two or
three afternoons at Masasi when Salim Matola’s mother, a slightly-
built, graceful, pleasant-looking woman, explained to me with
touching patience, by means of concrete illustrations, the ceramic art
of her people. The only implements for this primitive process were a
lump of clay in her left hand, and in the right a calabash containing
the following valuables: the fragment of a maize-cob stripped of all
its grains, a smooth, oval pebble, about the size of a pigeon’s egg, a
few chips of gourd-shell, a bamboo splinter about the length of one’s
hand, a small shell, and a bunch of some herb resembling spinach.
Nothing more. The woman scraped with the
shell a round, shallow hole in the soft, fine
sand of the soil, and, when an active young
girl had filled the calabash with water for her,
she began to knead the clay. As if by magic it
gradually assumed the shape of a rough but
already well-shaped vessel, which only wanted
a little touching up with the instruments
before mentioned. I looked out with the
MAKUA WOMAN closest attention for any indication of the use
MAKING A POT. of the potter’s wheel, in however rudimentary
SHOWS THE a form, but no—hapana (there is none). The
BEGINNINGS OF THE embryo pot stood firmly in its little
POTTER’S WHEEL
depression, and the woman walked round it in
a stooping posture, whether she was removing
small stones or similar foreign bodies with the maize-cob, smoothing
the inner or outer surface with the splinter of bamboo, or later, after
letting it dry for a day, pricking in the ornamentation with a pointed
bit of gourd-shell, or working out the bottom, or cutting the edge
with a sharp bamboo knife, or giving the last touches to the finished
vessel. This occupation of the women is infinitely toilsome, but it is
without doubt an accurate reproduction of the process in use among
our ancestors of the Neolithic and Bronze ages.
There is no doubt that the invention of pottery, an item in human
progress whose importance cannot be over-estimated, is due to
women. Rough, coarse and unfeeling, the men of the horde range
over the countryside. When the united cunning of the hunters has
succeeded in killing the game; not one of them thinks of carrying
home the spoil. A bright fire, kindled by a vigorous wielding of the
drill, is crackling beside them; the animal has been cleaned and cut
up secundum artem, and, after a slight singeing, will soon disappear
under their sharp teeth; no one all this time giving a single thought
to wife or child.
To what shifts, on the other hand, the primitive wife, and still more
the primitive mother, was put! Not even prehistoric stomachs could
endure an unvarying diet of raw food. Something or other suggested
the beneficial effect of hot water on the majority of approved but
indigestible dishes. Perhaps a neighbour had tried holding the hard
roots or tubers over the fire in a calabash filled with water—or maybe
an ostrich-egg-shell, or a hastily improvised vessel of bark. They
became much softer and more palatable than they had previously
been; but, unfortunately, the vessel could not stand the fire and got
charred on the outside. That can be remedied, thought our
ancestress, and plastered a layer of wet clay round a similar vessel.
This is an improvement; the cooking utensil remains uninjured, but
the heat of the fire has shrunk it, so that it is loose in its shell. The
next step is to detach it, so, with a firm grip and a jerk, shell and
kernel are separated, and pottery is invented. Perhaps, however, the
discovery which led to an intelligent use of the burnt-clay shell, was
made in a slightly different way. Ostrich-eggs and calabashes are not
to be found in every part of the world, but everywhere mankind has
arrived at the art of making baskets out of pliant materials, such as
bark, bast, strips of palm-leaf, supple twigs, etc. Our inventor has no
water-tight vessel provided by nature. “Never mind, let us line the
basket with clay.” This answers the purpose, but alas! the basket gets
burnt over the blazing fire, the woman watches the process of
cooking with increasing uneasiness, fearing a leak, but no leak
appears. The food, done to a turn, is eaten with peculiar relish; and
the cooking-vessel is examined, half in curiosity, half in satisfaction
at the result. The plastic clay is now hard as stone, and at the same
time looks exceedingly well, for the neat plaiting of the burnt basket
is traced all over it in a pretty pattern. Thus, simultaneously with
pottery, its ornamentation was invented.
Primitive woman has another claim to respect. It was the man,
roving abroad, who invented the art of producing fire at will, but the
woman, unable to imitate him in this, has been a Vestal from the
earliest times. Nothing gives so much trouble as the keeping alight of
the smouldering brand, and, above all, when all the men are absent
from the camp. Heavy rain-clouds gather, already the first large
drops are falling, the first gusts of the storm rage over the plain. The
little flame, a greater anxiety to the woman than her own children,
flickers unsteadily in the blast. What is to be done? A sudden thought
occurs to her, and in an instant she has constructed a primitive hut
out of strips of bark, to protect the flame against rain and wind.
This, or something very like it, was the way in which the principle
of the house was discovered; and even the most hardened misogynist
cannot fairly refuse a woman the credit of it. The protection of the
hearth-fire from the weather is the germ from which the human
dwelling was evolved. Men had little, if any share, in this forward
step, and that only at a late stage. Even at the present day, the
plastering of the housewall with clay and the manufacture of pottery
are exclusively the women’s business. These are two very significant
survivals. Our European kitchen-garden, too, is originally a woman’s
invention, and the hoe, the primitive instrument of agriculture, is,
characteristically enough, still used in this department. But the
noblest achievement which we owe to the other sex is unquestionably
the art of cookery. Roasting alone—the oldest process—is one for
which men took the hint (a very obvious one) from nature. It must
have been suggested by the scorched carcase of some animal
overtaken by the destructive forest-fires. But boiling—the process of
improving organic substances by the help of water heated to boiling-
point—is a much later discovery. It is so recent that it has not even
yet penetrated to all parts of the world. The Polynesians understand
how to steam food, that is, to cook it, neatly wrapped in leaves, in a
hole in the earth between hot stones, the air being excluded, and
(sometimes) a few drops of water sprinkled on the stones; but they
do not understand boiling.
To come back from this digression, we find that the slender Nyasa
woman has, after once more carefully examining the finished pot,
put it aside in the shade to dry. On the following day she sends me
word by her son, Salim Matola, who is always on hand, that she is
going to do the burning, and, on coming out of my house, I find her
already hard at work. She has spread on the ground a layer of very
dry sticks, about as thick as one’s thumb, has laid the pot (now of a
yellowish-grey colour) on them, and is piling brushwood round it.
My faithful Pesa mbili, the mnyampara, who has been standing by,
most obligingly, with a lighted stick, now hands it to her. Both of
them, blowing steadily, light the pile on the lee side, and, when the
flame begins to catch, on the weather side also. Soon the whole is in a
blaze, but the dry fuel is quickly consumed and the fire dies down, so
that we see the red-hot vessel rising from the ashes. The woman
turns it continually with a long stick, sometimes one way and
sometimes another, so that it may be evenly heated all over. In
twenty minutes she rolls it out of the ash-heap, takes up the bundle
of spinach, which has been lying for two days in a jar of water, and
sprinkles the red-hot clay with it. The places where the drops fall are
marked by black spots on the uniform reddish-brown surface. With a
sigh of relief, and with visible satisfaction, the woman rises to an
erect position; she is standing just in a line between me and the fire,
from which a cloud of smoke is just rising: I press the ball of my
camera, the shutter clicks—the apotheosis is achieved! Like a
priestess, representative of her inventive sex, the graceful woman
stands: at her feet the hearth-fire she has given us beside her the
invention she has devised for us, in the background the home she has
built for us.
At Newala, also, I have had the manufacture of pottery carried on
in my presence. Technically the process is better than that already
described, for here we find the beginnings of the potter’s wheel,
which does not seem to exist in the plains; at least I have seen
nothing of the sort. The artist, a frightfully stupid Makua woman, did
not make a depression in the ground to receive the pot she was about
to shape, but used instead a large potsherd. Otherwise, she went to
work in much the same way as Salim’s mother, except that she saved
herself the trouble of walking round and round her work by squatting
at her ease and letting the pot and potsherd rotate round her; this is
surely the first step towards a machine. But it does not follow that
the pot was improved by the process. It is true that it was beautifully
rounded and presented a very creditable appearance when finished,
but the numerous large and small vessels which I have seen, and, in
part, collected, in the “less advanced” districts, are no less so. We
moderns imagine that instruments of precision are necessary to
produce excellent results. Go to the prehistoric collections of our
museums and look at the pots, urns and bowls of our ancestors in the
dim ages of the past, and you will at once perceive your error.
MAKING LONGITUDINAL CUT IN
BARK
DRAWING THE BARK OFF THE LOG
REMOVING THE OUTER BARK

BEATING THE BARK
WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

SOFT
MANUFACTURE OF BARK-CLOTH AT NEWALA

To-day, nearly the whole population of German East Africa is
clothed in imported calico. This was not always the case; even now in
some parts of the north dressed skins are still the prevailing wear,
and in the north-western districts—east and north of Lake
Tanganyika—lies a zone where bark-cloth has not yet been
superseded. Probably not many generations have passed since such
bark fabrics and kilts of skins were the only clothing even in the
south. Even to-day, large quantities of this bright-red or drab
material are still to be found; but if we wish to see it, we must look in
the granaries and on the drying stages inside the native huts, where
it serves less ambitious uses as wrappings for those seeds and fruits
which require to be packed with special care. The salt produced at
Masasi, too, is packed for transport to a distance in large sheets of
bark-cloth. Wherever I found it in any degree possible, I studied the
process of making this cloth. The native requisitioned for the
purpose arrived, carrying a log between two and three yards long and
as thick as his thigh, and nothing else except a curiously-shaped
mallet and the usual long, sharp and pointed knife which all men and
boys wear in a belt at their backs without a sheath—horribile dictu!
[51]
Silently he squats down before me, and with two rapid cuts has
drawn a couple of circles round the log some two yards apart, and
slits the bark lengthwise between them with the point of his knife.
With evident care, he then scrapes off the outer rind all round the
log, so that in a quarter of an hour the inner red layer of the bark
shows up brightly-coloured between the two untouched ends. With
some trouble and much caution, he now loosens the bark at one end,
and opens the cylinder. He then stands up, takes hold of the free
edge with both hands, and turning it inside out, slowly but steadily
pulls it off in one piece. Now comes the troublesome work of
scraping all superfluous particles of outer bark from the outside of
the long, narrow piece of material, while the inner side is carefully
scrutinised for defective spots. At last it is ready for beating. Having
signalled to a friend, who immediately places a bowl of water beside
him, the artificer damps his sheet of bark all over, seizes his mallet,
lays one end of the stuff on the smoothest spot of the log, and
hammers away slowly but continuously. “Very simple!” I think to
myself. “Why, I could do that, too!”—but I am forced to change my
opinions a little later on; for the beating is quite an art, if the fabric is
not to be beaten to pieces. To prevent the breaking of the fibres, the
stuff is several times folded across, so as to interpose several
thicknesses between the mallet and the block. At last the required
state is reached, and the fundi seizes the sheet, still folded, by both
ends, and wrings it out, or calls an assistant to take one end while he
holds the other. The cloth produced in this way is not nearly so fine
and uniform in texture as the famous Uganda bark-cloth, but it is
quite soft, and, above all, cheap.
Now, too, I examine the mallet. My craftsman has been using the
simpler but better form of this implement, a conical block of some
hard wood, its base—the striking surface—being scored across and
across with more or less deeply-cut grooves, and the handle stuck
into a hole in the middle. The other and earlier form of mallet is
shaped in the same way, but the head is fastened by an ingenious
network of bark strips into the split bamboo serving as a handle. The
observation so often made, that ancient customs persist longest in
connection with religious ceremonies and in the life of children, here
finds confirmation. As we shall soon see, bark-cloth is still worn
during the unyago,[52] having been prepared with special solemn
ceremonies; and many a mother, if she has no other garment handy,
will still put her little one into a kilt of bark-cloth, which, after all,
looks better, besides being more in keeping with its African
surroundings, than the ridiculous bit of print from Ulaya.
MAKUA WOMEN

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PART 1 Introduction to Economics

PART 2 Fundamentals of Macroeconomics

PART 3 Fiscal and Monetary Policy

PART 4 International Economics

PART 1 Introduction to Economics Chapter 3

5-1 The National Economy 92 7-2 Other Unemployment Issues 149

Fiscal Policy 233

Chapter 14 16-2 The Role of Expectations 359

14-3a Creating Money through Excess Reserves 315 | 14-3b A

17-4 Arguments for Trade Restrictions 393 Chapter 19

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Topics discussed in this chapter include:

• Marginal analysis • Normative versus positive analysis

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The Economic Problem: Scarce

1-1b Goods and Services

EXHIBIT 1 Scarcity Means You Must Choose Among Options

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1-1c Economic Decision Makers and Markets

1-1d A Simple Circular-Flow Model circular-flow model

EXHIBIT 2 The Simple Circular-Flow Model for Households and Firms

resources. These resource prices—wages, interest, rent, and profit—flow as income

1-2 The Art of Economic Analysis

1-2a Rational Self-Interest

Newala, too, suffers from the distance of its water-supply—at least

The water-supply of New Newala is in the bottom of the valley,

NATIVE PATH THROUGH THE MAKONDE BUSH, NEAR

MAKONDE LOCK AND KEY AT JUMBE CHAURO

MODE OF INSERTING THE KEY

With no small pride first one householder and then a second

Some consolation was afforded me by a brassfounder, whom I

SMOOTHING WITH MAIZE-COB

CUTTING THE EDGE

LAST SMOOTHING BEFORE

FIRING THE BRUSH-PILE

TURNING THE RED-HOT VESSEL

NYASA WOMAN MAKING POTS AT MASASI

DRAWING THE BARK OFF THE LOG

REMOVING THE OUTER BARK

WORKING THE BARK-CLOTH AFTER BEATING, TO MAKE IT

MANUFACTURE OF BARK-CLOTH AT NEWALA

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