Foundations of Macroeconomics, 7e (Bade/Parkin)

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Study Plan Problems and Applications

Use the following list of events, which occur in the United States one at a
time, to work Problems 1 to 4.
 Dell introduces a new supercomputer that everyone can afford.
 A major hurricane hits Florida.
 More high school graduates go to college.
 The CPI rises.
 An economic slump in the rest of the world decreases U.S. exports.
1. Sort the items into four groups: those that change the production
function, those that change the demand for labor, those that change the
supply of labor, and those that do not change the production function,
the demand for labor, or the supply of labor. Say in which direction any
changes occur.
 The new supercomputers change the production function by shifting it
upward. The hurricane changes the production function by shifting it
(at least in Florida) downward.
 The hurricane decreases the capital stock and thereby decreases the
demand for labor.
 If the new supercomputers increase workers’ productivity, the
demand for labor increases.

© 2015 Pearson Education, Inc.

84 Part 3 . THE REAL ECONOMY

 The increased number of teenagers going to college has the immediate

effect of changing the supply of labor by decreasing the supply of
labor.
 The CPI rising does not change the production function, the supply of
labor, or the demand for labor. Similarly, the economic slump in the
rest of the world does not change the production function, the supply
of labor, or the demand for labor.
2. Which of the events increase the equilibrium quantity of labor and which
decrease it?
If the new supercomputers increase the demand for labor, the equilibrium
quantity of labor increases. The increased number of teenagers in college
has the immediate effect of decreasing the equilibrium quantity of labor.
When a major hurricane hits Florida, the destruction of the capital stock
decreases the demand for labor and decreases the equilibrium quantity of
employment.
3. Which of the events raise the real wage rate and which lower it?
If the new supercomputers increase the demand for labor, the equilibrium
real wage rate rises. The increased number of teenagers in college has the
immediate effect of increasing the equilibrium real wage rate. The
hurricane decreases the demand for labor and thereby lowers the real
wage rate.
4. Which of the events increase potential GDP and which decrease it?
The new supercomputers increase potential GDP. The hurricane and the
direct impact of more teenagers attending college decrease potential GDP.

© 2015 Pearson Education, Inc.

 Chapter 8 . Potential GDP and the Natural Unemployment Rate 85

Production function Labor market

Labor Real GDP Real
hours (millions of wage rate Quantity of Quantity of
(millions) 2009 dollars) (dollars per labor labor supplied
hour) demanded
0 0 (millions of hours per year)
1 10 10 1 5
2 19 9 2 4
3 27 8 3 3
4 34 7 4 2
5 40 6 5 1

Use the information set out in the tables above about the economy of
Athabasca to work Problems 5 and 6.
5. Calculate the quantity of labor employed, the real wage rate, and
potential GDP.
The real wage rate is $8 per hour, because that is the real wage that sets
the quantity of labor demanded equal to the quantity of labor supplied.
The equilibrium quantity of labor is 3 million hours per year. The
production function shows that the potential GDP is $27 million.
6. If the labor force participation increases, explain how employment, the
real wage rate, and potential GDP change.
If the labor force participation increases, the supply of labor increases. The
increase in the supply of labor lowers the real wage and increases
employment. The increase in employment increases potential GDP.
Use the following information to work Problems 7 and 8.
Suppose that the United States cracks down on illegal immigrants and
returns millions of workers to their home countries.
7. Explain how the U.S. real wage rate, U.S. employment, and U.S. potential
GDP would change.
The supply of labor in the United States decreases, which decreases
equilibrium U.S. employment and raises the U.S. real wage rate. U.S.
potential GDP decreases. The U.S. production function is unchanged, but
equilibrium employment decreases in the United States so that U.S.
potential GDP decreases.
8. In the countries to which the immigrants return, explain how
employment, the real wage rate, and potential GDP would change.
In the countries to which the immigrants return, the supply of labor
increases, which increases equilibrium employment. The supply of labor
increases, which lowers the equilibrium real wage rate. Potential GDP

© 2015 Pearson Education, Inc.

86 Part 3 . THE REAL ECONOMY

increases. The production function is unaffected, but equilibrium

employment increases in those countries so that potential GDP increases.
9. Two island economies, Cocoa Island and Plantation Island, are identical
in every respect except one. A survey tells us that at full employment,
people on Cocoa Island spend 1,000 hours a day on job search, while the
people on Plantation Island spend 2,000 hours a day on job search. Which
economy has the greater level of potential GDP? Which has the higher
real wage rate? And which has the higher natural unemployment rate?
Cocoa Island has the greater level of potential GDP because its labor force
spends less time searching and more time employed.
Plantation Island has the higher real wage rate. We know that Plantation
Island has the higher real wage rate because the supply of labor is less on
Plantation Island since workers spend more time searching for jobs. As
the supply of labor decreases, the real wage rate rises.
10. Decoding ‘natural’ rate of unemployment slumps in July
Unemployment is a normal feature of our economy and the
Congressional Budget Office believes the “natural” unemployment rate
increased from 5 percent in 2007 to 6 percent in 2012.
Source: The Wall Street Journal, September 7, 2012
Provide some reasons why the natural unemployment rate might have
increased.
There are several possible reasons why the natural unemployment rate
increased. First, the severe recession that occurred after 2007 has lead the
government to increase the length of time that unemployed workers can
collect unemployment benefits. These more generous unemployment
benefits increased the natural unemployment rate. Second, the real
minimum wage was higher in 2012 than in 2007. The higher real
minimum wage increases job rationing, which also leads to an increase in
the natural unemployment rate..
11. Read Eye on U.S. Potential GDP on p. 200 and then explain why U.S.
potential GDP per worker per week is greater than that in Europe. What
could induce Europeans to work the same hours as Americans and would
that close the gap between potential GPD per worker in the two
economies?
U.S. potential GDP is higher than European potential GDP for two
reasons: First, U.S. capital per worker and U.S. technology exceed those in
Europe. Consequently, the U.S. production function lies above the
European production function. Second, U.S. workers work more hours
than do European workers. Both these differences mean that U.S.
potential GDP exceeds European potential GDP.

© 2015 Pearson Education, Inc.

 Chapter 8 . Potential GDP and the Natural Unemployment Rate 87

European workers would work more hours if taxes and unemployment

benefits were lower in Europe. These changes would help close the gap
between U.S. potential GDP and European potential GDP but would not
eliminate it.

© 2015 Pearson Education, Inc.

Another document from Scribd.com that is
random and unrelated content:
 “It is a pipe,” he whispered into Lisbeth’s ear. “Some one is inside the
rock, smoking.”
“No one could live inside a rock,” said Lisbeth, creeping closer and
standing on a stone that she, too, might sniff at the curling smoke.
Lisbeth became curious when she discovered it was the smoke from a
pipe. “You could boost me, Hans,” she said, “and I could peep in and see
if some one is inside.”
Hans told her he did not think it was nice to peek, but Lisbeth told him
it was very different from peeking into a house, and so Hans boosted her,
for he was just as curious as his sister.
Lisbeth grasped the edge of the opening in the big rock with both her
little hands, when, to the surprise of both children, it crumbled and
Lisbeth lost her balance.
Over went both of them on the soft moss, and when they sat up
Lisbeth held something in both her little hands.
“It’s cake!” she said, with wide open eyes. “No; it is gingerbread!” she
corrected, as she tasted it.
And, sure enough, it was gingerbread; the rock, instead of being stone,
was all gingerbread.
Hans and Lisbeth forgot the smoke and their curiosity in the joy of
their discovery, and soon both of them were eating as fast as they could
big pieces of the Gingerbread Rock.
Hans and Lisbeth were not greedy children. So when they had
satisfied their hunger they ran off home without taking even a piece of
the gingerbread with them to eat the next day.
They were soon in bed and asleep, and if each had not told to the other
the same story the next morning they would have been sure they had
dreamed it all.
The next night they were hungry, as usual, and when the moon was
well up in the sky out they crept again and ran into the woods.
But this time there was no curling smoke to guide them, and they tried
several rocks before they found the gingerbread. For, strange to say, the
place they had broken away did not show at all and there were so many
rocks the children could not find it.
 But at last Hans cried out with joy, “Here it is, Lisbeth!” and held up a
big piece of gingerbread he had broken off.
Lisbeth, in her hurry to get a piece, broke off much more than she
intended, and, to the surprise of both children, a big opening was made,
large enough for them to step through.
“Perhaps we may find out where the smoke came from,” said Lisbeth,
suddenly remembering the smoke they had seen the night before.
Eating as they went, both of them stepped inside the rock and walked
into a big room where, by the table, sat an old man asleep.
His glasses had tumbled off his nose and the pipe he had been
smoking was on the floor beside him, where it had tumbled. His lamp
had gone out and his paper had slipped from his hand.
Lisbeth and Hans looked at him and then at the gingerbread they held.
“It is his house,” said Hans.
“And we are eating it up! What shall we do?” asked Lisbeth, looking
very much frightened.
“Better wake him up and tell him,” said Hans, “and perhaps he will let
us bake some more and mend the place we have broken.”
“I’ll pick up his paper and pipe and brush up the ashes,” said tidy little
Lisbeth, “and you light his lamp, and perhaps he will forgive us when we
tell him we did not know it was his house we were eating.”
But instead of being cross when he awoke, the old man smiled at them
and asked, “Did you eat all you wanted of the gingerbread?”
Hans told him they were very sorry and that they did not know any
one lived inside when they ate the gingerbread.
“We will bake you some more and patch the place we made,” said
Lisbeth.
“Right through that door you will find the kitchen,” said the old man.
“Run along, if you like, and bake it.”
And such a kitchen as Hans and Lisbeth found, for Hans went along,
you may be sure, to fix the fire for his sister!
The shelves and cupboards were filled with flour and butter and eggs
and milk and cream and meat and pies, cookies, puddings, but no
gingerbread.
 “We will get breakfast first for the man,” said Lisbeth, “for I am sure
he must be hungry and it is growing light. Look out the window.”
To Hans’s surprise there was a window. Then he saw a door, and when
he looked out he found they were in a pretty white house with green
blinds and not a rock, as he had supposed.
Hans and Lisbeth became so interested in cooking they quite forgot
their own home or the unkind uncle who almost starved them, and when
the breakfast was ready they put it on the table beside the old man.
“I thought you would like your breakfast,” explained Lisbeth, “and
now we will make the gingerbread and repair your house.”
“After breakfast you may, if you like,” said the old man, “but first both
of you must eat with me.”
My, how Hans and Lisbeth did eat, for while Lisbeth had cooked only
ham and eggs enough for the old man’s breakfast, there seemed to be
quite enough for them all.
And while they are eating we will see what the miser uncle was doing,
for he had called the children at break of day and they were not to be
found.
It happened that the ground was damp and the uncle saw the prints of
their feet from the door to the road and along the road to the path in the
woods, and then the soft leaves and moss did not show where they went.
Thinking they had run away and gone into the woods, their uncle
hurried along, calling their names at the top of his voice.
As he came near the Gingerbread Rock the children heard him and
began to tremble. “It is uncle,” said Hans. “He will be very angry
because we have not done our work.”
“Sit still,” said the old man as the children started to leave the table,
and, taking his pipe, the old man sat down under a little opening like a
tiny window and began to smoke.
Soon the children could hear their uncle climbing up outside, and they
knew he had seen the smoke just as they had the night before, and was
trying to look in.
Then they heard him tumble just as Lisbeth had when the Gingerbread
Rock broke off in her hands, and they knew he had discovered it was
good to eat, for all was still for a few minutes.
 Nothing was heard again for a long time, and then the sound of some
one breaking off big pieces was heard, and when Hans and Lisbeth
climbed up, as the old man told them to do, and looked out of the
opening they saw their uncle with a shovel and a wheelbarrow.
He was breaking off big pieces of gingerbread and filling the barrow
as fast as he could.
But when he had filled it he could not move it, for it was no longer
gingerbread, but stone he had to carry.
The old man motioned to the children to keep quiet, and he opened a
door they had not noticed and went out.
Just what he said the children never knew. But they soon found out
that instead of being poor, as they had thought, their miser uncle had
taken all the silver and gold their parents had left and hidden it in his
cellar under the stones.
The miser uncle disappeared and was never seen again, and the old
man, who was really a wizard, told them where to go and what to do
with their wealth. So they were happy ever after.
Of course, they never forgot the Gingerbread Rock or the kind old
man. But because he was a wizard they knew they would never see him
again, for fairies and witches and wizards are all enchanted and
disappear in a very strange manner.
“Our good fortune came to us because we tried to be kind to the old
man, I am sure,” said Hans one day, when they were talking about the
Gingerbread Rock.
“Yes, and because we wanted to repair the damage we had done he
knew we did not mean to do any harm,” said Lisbeth; “but I shall never
eat gingerbread again without thinking of him.”
“Nor I,” said Hans.
 PRINCE ROUL’S BRIDE
nce upon a time in a far-off land there lived by an ocean an ogre and
O his wife.
Their home was a cave in a big white rock which was so white it
shone like a light even in the darkest night, and many a ship had thought
it a harbor in a storm and been wrecked by the shore where the ogre
lived.
And this was the way he lived, because the ships carried rich cargoes
and the ogre lost no time in helping himself to all that he could find,
while the sailors were glad to escape in lifeboats when they saw the
dreadful-looking ogre, who was so big and strong he could lift a ship.
In the same country, miles and miles away from the ogre’s cave, lived
a rich king, who had a son named Roul, and one day while the Prince
was out hunting he passed in the woods a cabin where lived a poor girl
named Leta.
But while Leta was very poor she was also very pretty, and as the
Prince rode past he saw her at the window and raised his plumed hat and
smiled.
The next day Prince Roul again rode to the woods and this time he did
not pass Leta’s cabin. He stopped his horse in front of her door and asked
for a drink of water.
He had thought Leta pretty through the window, but when he beheld
her this time he completely lost his heart, and day after day he went to
the cottage and talked to pretty Leta.
 After a while the King told his son it was time he was looking for a
wife, as he wanted to see him married before he died and know that his
wife was worthy to be a queen.
So the King gave a feast which lasted for weeks, and princesses from
far and near were asked that Prince Roul might choose for himself a
wife, for, as I said before, the King was very rich and all the kings in the
other countries were anxious, of course, to have Prince Roul for a son-in-
law.
But Prince Roul did not choose a wife from among the beautiful
princesses, for he was already in love with pretty Leta, and while he
knew full well his father would never give his consent to their marriage,
he was determined he would wed no one else.
On the last day of the feast the King told him he would have to
choose. “You have before you the beautiful women of the land,” said the
King. “Make your choice at once, and the wedding shall take place this
night.”
“Father, you have not brought to me the most beautiful woman in the
world,” replied Prince Roul. “If you had I should have asked her to be
my wife before this.”
“What do you mean?” asked the King. “All the princesses in the land
are here.”
“Ah yes, that is true,” replied the Prince, “but the most beautiful
woman in the world is not a princess, as you think of them, but she is a
Princess for all that. Father, she is the Princess of my heart and I cannot
marry any other woman.”
Then the King made the Prince tell him who she was that he loved so
dearly, and when he learned Leta was a poor girl who lived in the woods
close by, he was very angry and told the Prince he should never wed her.
All the beautiful princesses were sent home, and the angry King called
his servants to him and commanded that they should go to the woods and
find this girl who had upset his plans for his son.
“Find her and chase her out of the woods; drive her into another land
where the Prince will never find her,” he told them.
But the King had forgotten one very important thing, and that was his
son, for he should have made him a prisoner before he gave such an
order. This he did not do, and Prince Roul, who overheard what his
father had said, lost no time in jumping on his horse and making his way
to the woods ahead of the servants of the King.
“Jump up behind me,” he said to Leta when she came out of the cabin,
and away they rode, the feet of Prince Roul’s horse scarcely touching the
ground as they fled.
The King’s servants were not long in discovering that the Prince had
outwitted them, but they gave chase and away they went through the
woods, while poor frightened little Leta clung to the Prince, wondering
what it was all about.
On and on they rode, but to Leta clinging to her lover, it seemed they
flew over the ground and through the woods. She could see the bright
trimmings of the servants’ coats glistening in the sun, and she knew they
were gaining on them.
By this time Prince Roul had told her that his father, the King, had
tried to make him marry a princess, but that he would marry no one but
the girl he loved and that was herself.
When Leta heard this she was more frightened than ever, for she knew
now that she was the cause of all this trouble and that the servants must
be chasing them to take Roul from her.
Leta put her hand to her breast. Yes; it was there—the little paper with
the powder a fairy had given her a long time ago, because Leta had left a
beautiful rose on its stem she was about to pick when she discovered a
little fairy sleeping inside the rose.
“If you ever are in trouble, open this paper and throw the powder
around you,” the fairy had told her. “It will protect you from all harm.”
Leta had never before needed protection, and she was not thinking so
much of herself now as of her lover, wondering what the King would do
if he did not obey him.
Just then the horse on which they were riding came to a full stop with
such force that Leta was thrown to the ground and the next thing she
knew over the side of a cliff leaped the horse with the Prince on his back.
The ocean was below, but before the horse and his rider had reached it
Leta drew from her dress the magic powder and threw it over the cliff.
“Make the ocean dry,” she screamed as she threw the powder, and, to
her surprise, as she threw it over she went, too, and the next instant she
stood beside Prince Roul on dry land before a beautiful white castle and
the ocean was miles away.
The cliff over which they had gone was the white rock where the ogre
and the ogress lived, but when Leta threw the powder she had also
summoned the little fairy who had given it to her and she had changed
the big white cave into a castle.
When the King’s servants came dashing up to the cliff they saw
nothing of the Prince or his horse, and the bottom of the cliff was so far
below that they felt sure they had been destroyed, and they rode home to
the King with the sad news.
The King’s grief was deep and bitter, for he really loved his son very
much, and now when it was too late he cried out that he wished he had
let the Prince marry the girl he loved; if only he had him alive that would
be all he would ask.
The little fairy did not make herself visible to either Leta or the Prince,
but if they could have seen with fairy eyes they would have seen the
fairy flying ahead of them into the castle, touching everything with her
magic wand as she went.
When Leta entered the door, which was open, for they had called and
no one answered, she stood spellbound by what she saw.
The long white marble hall had a floor of silver and marble and the
doors were silver also.
The Prince, who was used to beautiful things, was quite surprised at
all the splendor, too.
Opening a big silver door, they entered a room hung with silver and
deep-blue curtains, and on a silver table Leta saw a big white envelop.
When she looked at it she read her own name.
Wondering who could have left it, she opened it and read: “Princess
Leta, this is your castle; it is the gift of the fairies who love roses.”
“Your father will not object now to having me for the wife of his son,”
she said, with a blush, as she gave the note to the Prince, and then they
ran like two happy children through the beautiful castle that had come to
them so strangely.
In the deep dungeons under the castle they found all the wealth that
the ogre had taken from the ships, and after they had become used to
their new home they gave it all to the poor, and so the ogre’s stolen
wealth did not help him, and while it could not be given back to those
who had lost it, it did much good.
And what became of the old ogre and his wife, you are wondering. I
will tell you. When the fairy changed the cave into a castle she changed
the ogre and ogress into two big silver statues in the big hall, one at each
end, like huge mummies, holding a big light in their hands, which lighted
the long hall of the castle.
Then one day Prince Roul and Princess Leta rode away to the palace
of the old King, and when he saw his son he wept for joy and hugged
him to his heart, and Leta’s pretty face won the old King’s heart at once,
so they all lived happily ever after.
But while the old King wanted them to make the palace their home,
Prince Roul and Leta could not give up their white castle by the sea, so
part of the year they lived in the white castle, and when Prince Roul
grew old and his grandchildren begged for a story, the King told them of
Prince Roul’s bride and the wonderful leap they took over the cliff which
forms the back of the castle.
 SUNEV
here was once a poor peasant and his wife who had a very beautiful
T daughter named Sunev. So beautiful was she that her hair rivaled the
sun in its golden brightness. Her eyes were like the blue sky and her
lips were so red that the roses beheld her with envy. Her skin was so
white and fair that the winter snow was not whiter. Her teeth were like
the pearls. And when an old witch named Zitna, who lived in the forest
near by, saw Sunev one day she became enraged because she was more
beautiful than her own daughter.
Witch Zitna had thought till then that her own daughter was the most
beautiful creature in the world, for the witch child was as dark as Sunev
was fair, and Witch Zitna wished the Prince of Esor, who was looking for
a wife, to wed her.
She knew that the Prince had sent out his servants far and near to look
for the most beautiful lady in the country for his wife, and if Sunev were
brought before the Prince of Esor her daughter would never be chosen.
There was only one thing to do, and that was to entice the lovely
Sunev into the forest and there change her into the shape of an animal
and leave her to her fate.
The wicked Witch Zitna watched her chance, and one day, when
Sunev was sent into the forest to gather wood, Witch Zitna slipped out
from behind a tree and touched her with her magic stick, changing her
into a tiger.
 Poor little Sunev was so frightened when she beheld her paws she fell
on the ground and began to moan and cry and all the birds and animals
of the forest came running to see what had happened.
The witch, in her haste, forgot to deprive Sunev of her power to talk,
so when the birds and animals wanted to know what was the matter she
told them she did not know, but something dreadful had happened and
she was no longer a girl, but a tiger, and was afraid to go home.
The birds and animals can understand any language, and, being now
part animal herself, Sunev had no trouble in understanding them.
“Do not cry,” they told her. “It must be the work of Witch Zitna, but
we will protect you, and when the hunters come we will warn you so you
may hide until they go. Eat the berries and nuts and we will find you a
nice place to sleep, so dry your eyes and some way may be found to
restore you to your own shape.”
Sunev did as the birds and animals told her, for there was no other
way, and soon she became fond of her forest home and all her new
friends.
Witch Zitna now proceeded to have her beautiful daughter seen by the
messengers of the Prince of Esor, and they carried her off to his palace,
sure they had found at last a wife that would suit their royal master.
Of course the parents of little Sunev looked everywhere for her, but
she could not be found, and when they saw the tiger coming toward them
they fled, for they did not know that the beautiful and graceful tiger-skin
held their own child.
The Prince of Esor, when he saw the witch child, thought that she was
beautiful, but he had wished for a wife that was as fair, so he decided to
wait, and sent out his servants again to look for a lady with golden hair.
Witch Zitna was enraged when she heard this, for she knew that until
her daughter was safely married to the Prince she was not safe.
The reason for this was that every night Venus, the goddess of beauty,
came to the forest to look for the graceful tiger the fairies had told her
about, for, while Sunev looked like a tiger, she had more grace and
beauty than a real tiger, though they are graceful, too.
Venus did not wish even a tiger to rival her in being graceful, so she
wanted to see this wonderful animal that she might learn from it more
charm.
 One night Sunev was walking through the forest in the moonlight
when Venus, in the form of a tree, beheld her.
Knowing at once that the graceful tiger was a mortal changed, she
called her attendants, who were not far away, and, changing herself back
to her own beautiful form, she spoke to Sunev.
“What is your name, beautiful creature, and why are you in this
form?” she asked.
It was the first time any one but the birds and animals had spoken to
her since Witch Zitna had changed her, and poor little Sunev began to
cry for joy.
Venus soothed her and soon Sunev told her all she knew of her sad
plight. But when she told the goddess her name a flash of anger came to
the eyes of Venus.
“Old Witch Zitna has done this,” said the goddess. “She shall pay for
it, for, my dear, your name is mine spelled backward and you are my
godchild. Zitna knew she had much to fear in the beauty you possess.
Come with me!”
It did not take long to reach the cave of Zitna, for Venus had the power
of witches and fairies when she wished to use it.
“Come forth!” called Venus, when they reached the cave of Zitna.
“Undo your cruel work,” she commanded, when the trembling witch
appeared in the doorway of her cave.
In another minute Sunev stood in her own lovely shape before Venus,
who, instead of being jealous of the wonderful beauty she beheld, drew
Sunev to her and kissed her on her brow.
“You will always be the most beautiful woman in the land,” she said.
“Be you old or young, none shall compare with you.
“As for your daughter, Witch Zitna, you will never see her again, for a
mother who would treat the daughter of another as you have done this
beautiful girl is not the sort to have a daughter. I will claim your daughter
as well as Sunev for my godchild.”
Sunev did not know how they reached the door of her parents’ home,
but she stood there a short time after, and with trembling hands opened
the door.
 Oh, how happy her father and mother were to have her again! The joy
of seeing her safe made them forget the time, and it was the trumpeting
of the Prince of Esor’s messengers that told them the day was far gone.
The messengers knocked at the door, and when Sunev opened it they
knew they had found the wife of their Prince.
Sunev’s father and mother were overcome with sorrow when the
messengers told their errand. They thought they had found their child,
only to lose her again, but the messengers told them they might go along
to the palace. So they all set out.
When the Prince of Esor saw the beauty of Sunev he knew she was the
one woman in the world for him, and without delay he ordered the
wedding feast to be prepared.
A wonderful gown of white and gold was brought from the royal
clothes-room, and a crown of pearls and diamonds was placed upon her
beautiful golden hair, and upon her dainty feet golden slippers and silk
stockings.
Her father and mother were not forgotten by the Prince, either. They
were dressed in clothes they had never even dreamed of and given a
palace near where Sunev and Prince Esor were to live.
But what had become of the beautiful witch child all this time, for, of
course, she was not to blame for the bad deed of Witch Zitna and should
not be made to suffer?
She was safe and happy, you may be sure, for she was surrounded by
every comfort and luxury in another part of the palace, and she did not
wish to become the wife of the Prince.
Instead, she loved one of the friends of the Prince, a noble lord who
had fallen in love with her, but did not dare speak his love because he
knew the Prince might choose her for his bride.
But when this noble lord heard a wife had been found for his Prince
and it was not the beautiful girl he loved, he told the witch child of his
love and they were married the very night that the Prince and Sunev
were married.
And it turned out that the witch child was not a witch child at all, but
had been stolen when a baby from a stork who was carrying her through
the forest to the home of a nobleman, for the goddess Venus, true to her
promise, took both of the beautiful girls for her godchildren and had the
fairies see that they were both made happy.
The witch child was given a pretty name, but her husband best loved
to call her the Queen of Night, because of her wonderful dark beauty.
Sunev was the Princess of Esor, of course, but the Prince called her
Princess Rose, and if you will spell Esor backward you will learn why.
 CILLA AND THE DWARF
nce upon a time there lived a king who had a very beautiful
O daughter, and her suitors came from far and near.
Among them was a dwarf with a huge head and a very long nose. Of
course, no one expected the Princess to marry the ugly creature, but the
dwarf did, and when the Princess refused he flew into a rage and said he
would have her in spite of all she said.
At last the Princess gave her hand to a prince, but the night the
wedding was to take place the Princess was nowhere to be found. They
hunted high and low all over the palace, but no trace could they find of
her; even her wedding-dress disappeared, too. The Prince was in despair
and wrung his hands and cried out he would give to any one who would
find the Princess half of his fortune.
The King also said he would give half of his kingdom to the one who
would bring back the lost Princess.
Now, there was among the servants a little kitchen-maid named Cilla,
who loved the Princess because she always spoke kindly to her, and
when she knew her mistress was lost she resolved to find her at any cost.
So one night when all the people in the palace were sound asleep Cilla
stole out and went to a witch who lived in the woods and asked her to
help her to find the Princess.
“I can only help you a little,” said the witch, “as she is in the power of
one who is more powerful than I am, but this much I can do: Here is a
bean that will do magic work if used in the right way; whether it will
help you to find your Princess I cannot tell. The dwarf has carried her
off, and where he is I do not know.”
Cilla said she would take the bean. She thanked the witch and started
off through the woods to look for the dwarf, for she was sure he must
live in a cave.
For days she wandered until she was in the deep forest, and at last she
came to a high rock over which she could not climb.
Cilla sat down and leaned against the rock to rest, when, to her
surprise, she heard the sound of weeping. She looked all around, but
could see no opening except a big crack in one side, and this was too
small for her to get through.
She was just about to call out and ask who was inside weeping when
she heard some one coming through the bushes.
Cilla ran behind the rock and watched, and in a minute the dwarf came
bounding out of the bush and briers.
He carried in his hand an iron bar, and with this he opened the crack in
the rock, which was a door, and entered the rock, leaving the door open
behind him.
Cilla was a very brave girl or she would have stayed where she was,
but no sooner had the dwarf disappeared than she ran in after him.
He was standing beside a poor, half-starved-looking little white rabbit,
and Cilla heard him say, “Do you consent or will you starve?”
The little white rabbit only blinked and turned away, and then Cilla
saw something that made her start, for hanging on a ragged bit of rock
was the wedding-dress the Princess was to have worn the night she
disappeared.
Cilla did not wait to see more. She dashed toward the dwarf and
grabbed him by his long nose, and, giving it a hard twist, she cried out:
“Where is my mistress, you wretch? Where is she, I say?”
A very strange thing happened when Cilla gave the long nose a twist;
the dwarf howled like the sound of thunder, and instead of the dwarf
there stood before Cilla a huge toad that hopped away so fast she could
not see where it disappeared.
 “You poor half-starved little rabbit,” said Cilla. “I wish I had
something to give you to eat, but I must hunt for my mistress first, for I
know she must be here.”
Then Cilla thought of the bean. “I’ll give you this,” she said to the
rabbit. “I am sure I shall have no use for it.”
When the rabbit swallowed the bean Cilla’s eyes popped wide open,
for there stood her mistress, safe and sound.
“Oh, Cilla, you have saved me! How ever did you think of twisting his
nose?” asked the Princess.
“Because it looked as if it were made to be twisted,” said Cilla, “but
how did you know the bean would change you back to your own form?”
“I didn’t, but I was hungry; that dreadful dwarf was trying to make me
say I would marry him by starving me. Some powerful witch had given
him the form of a dwarf, and if he could get a princess to marry him she
would change him into a man,” said the Princess.
“Was he a toad at first?” asked Cilla.
“Yes, it seems he was a toad in the cave of a powerful witch, and for
something he did for her she made him a dwarf; then he wanted to
become a man, and the witch told him if he would marry a princess and
take her into the palace to live she would grant his wish.
“He told me this before he had me changed into a rabbit, for he first
carried me off to the cave of this witch, who lives somewhere in this
forest, and I think we better hurry away before the toad gets to her and
tells her I have escaped.”
It took a long time to get out of the forest, but Cilla and the Princess
found the way and the Prince and the King told Cilla she should have the
promised reward.
“Now, what would I do with all that gold and half of a kingdom?”
asked Cilla. “All I ask is to have a nice little cottage and a cow near by
the palace where I can see my mistress every day.”
Of course Cilla’s wish was granted, and there she lived and was happy,
for she married the King’s gardener and became the mother of many
boys and girls who never tired of hearing how their mother rescued the
Princess from the bad dwarf.
 GRETA AND THE BLACK CAT
ne day a woodsman named Peter was chopping down a tree when
O he saw swinging from one of the branches a bundle. Dropping his
ax, he climbed up, and to his surprise, when he opened the bundle,
he found in it a baby girl asleep. Peter hurried home with the baby to his
wife. “Look, Martha,” he said. “I have found a baby girl to be a sister to
our son Robert. We will name her Greta and they shall grow up as
brother and sister.”
But Martha did not want the baby. “We have three mouths to feed
now,” she grumbled. “Why should we care for a child we know nothing
of?”
But Peter would not hear of putting the child out-of-doors and so
Greta lived with Peter and Martha and grew up with Robert.
Poor little Greta had anything but a happy life, for Martha treated her
kindly only when Peter was in sight, and that was seldom.
Robert, seeing that his mother did not treat Greta well, began to order
her to wait upon him as soon as he was old enough and treated her as a
servant.
Greta had to weed the garden and bring in the water and the wood.
She had to wash the dishes and make the beds and do all the work
excepting when Peter was at home.
One day when Peter was going to the woods he told Robert to chop a
pile of wood in the yard and have it finished by the time he came home.
 When Peter was out of sight Robert told Greta to chop the wood.
“That is what you are here for—to do the work,” said Robert. “You
would have been eaten up by the bears if we had not taken you in. Now
go to work and chop that wood.”
Greta began to cry and said she could not handle the ax; she was too
small. But Martha boxed her ears and told her she should not have any
dinner if she did not do as Robert told her.
Greta went to the woodpile and picked up the ax, but it was no use.
She could not chop the wood. And fearing a beating if she did not do it,
Greta ran away. On and on she ran until she came to a turn in the road
which led into a forest. Here she decided to stop for the night, and she
was just lying down by a rock when she heard a pitiful “me-ow.”
Looking in the bushes close by, Greta saw a big black cat holding up
one paw as though it was hurt. “Poor pussy!” said Greta, taking the cat in
her arms. “You look as unhappy as I feel. Let me bind up your paw.”
Greta tore off a piece of her dress and bound up the cat’s paw, and
then, to her surprise, the black cat spoke to her.
“Come with me and I will show you where to sleep. You will have to
carry me, for my paw is very painful,” said the cat.
Greta picked up the cat, too surprised to be frightened, and went
through the woods as the cat directed her.
When they reached a big rock with an opening in it the cat said: “Here
is my home. Take me in and you will find a place to sleep and food as
well.”
Creeping in on her hands and knees with the cat under her arm, Greta
found herself in a big room with a table in the center and on it plenty of
food.
In one corner of the room was a bed and on this Greta saw a queer-
looking old woman with a hooked nose.
She was asleep and did not notice them until the cat said, “Eat your
supper.”
Up jumped the queer-looking old woman when she heard this, for she
was the witch.
“You, and a mortal with you,” she screamed, as she reached for her
crooked stick.
 Greta ran to the door, for she thought the old witch was about to strike
her; but the black cat, who was sitting on the floor near by where Greta
had put it, said: “Don’t you dare touch this girl; she has saved my life,
and from this hour you are in my power, for a mortal has held me in her
arms.
“If you would live call the good fairy that has been looking for me all
these years. I shall find her, anyway, but it will save time if you use your
magic power, and you will regret it if you do not obey me.”
When the old witch heard this she began to tremble and hobbled to the
door of the cave and tapped it three times with her crooked stick.
The rock opened so she could walk out, and Greta followed to see
what she did, for she was no longer afraid; she knew the black cat would
protect her.
The old witch gave a peculiar cry when she was outside, and Greta
saw the next instant a tiny creature dressed in pink gauze, holding a
wand of gold in one little hand, standing on a bush beside the old witch.
“Here I am, Witch Terrible,” said the fairy. “What can I do for you?
You must be in great danger or you would not have called for one of us.”
The cat when it heard the fairy speak ran out of the cave, limping, and
lay down in front of the fairy. “Help me, my good fairy,” said the black
cat. “I am the Prince for whom you have looked so long. The old witch
changed me into a black cat and took away my power to speak until I
was held in the arms of a mortal.
“I know her secret, and, though she dared not kill me, she wanted me
to die, so she turned me into the forest to starve, and if it had not been for
this girl, good fairy, the old witch would have had her wish granted.
“When she changed me into a black cat she said I should never speak
until a mortal held me, and that I could not regain my own shape until a
fairy changed me, but something has happened since then, and to save
herself she obeyed me and called you, for I know her secret, and that is
why I did not have to hunt for you, my good fairy.”
The fairy touched the black cat with her wand and Greta saw in place
of the big black cat a handsome man dressed in black velvet, with gold
trimmings. “Now tell me the secret you know about the witch,” said the
fairy.
 The old witch threw up her arms and cried for mercy. “Remember, I
called the fairy,” she said; “you would have hunted a long time if I had
not. Be merciful!”
“I shall not forget,” said the Prince. “This woman is only half a
witch,” he said. “She is part mortal, and every night at twelve o’clock
she has to become a mortal for an hour because she tried to change a
water nymph into a frog. The river god, the water nymph’s father, called
on a very powerful ogre, who was his friend, and the ogre was about to
change her into a rock, but she begged so hard he made her half mortal
and left her to her fate.”
“Which means she can never leave this forest,” said the fairy, “and as
she does many of her magic deeds at night when she rides abroad on her
broomstick she is not a very powerful witch.”
“Yes, that is it,” said the Prince, “and she does not want it known
among the fairies or the goblins or any of the magic-power folks. That is
the mercy for which she begs.
“I hope you will keep her secret, good fairy, for she saved me so much
time and trouble in calling you.”
“I will keep her secret from all but the fairies, but one of the fairy
family will come here every night to make sure no mortal has been
harmed by her, for some one might stray in here just as this girl did and
be changed into some other form.”
“I have one more favor to ask of you, good fairy,” said the Prince. “I
wish to make this girl my wife if she will marry me, and I would like to
have the proper clothes for a princess, so that I may take her to my
palace at once.”
“What do you say, my dear?” asked the fairy. “Will you marry the
Prince?”
Greta felt she must be dreaming, but she was sure she would love the
handsome Prince if she were awake, so she told the fairy she would, and
the next instant her ragged clothes dropped from her and she stood
before the Prince in a beautiful green velvet riding-habit, with a long
feather in her hat, looking every inch a princess.
That night a great feast was held at the palace of the Prince in honor of
his return and to celebrate their wedding, and the very next day Greta
and the Prince rode to the home where she had once lived to give Peter a
bag of gold.
“He was the only person who ever treated me kindly until I met you,”
Greta told the Prince, “and I shall never forget him.”
Greta was not recognized by Martha or her son Robert, for they little
thought the beautiful Princess was the poor girl that had once been their
slave. But Peter, who had loved her, looked after the coach as it rolled
away. “It looked a little like her,” he said, “but, of course, it could not
be.” Many gifts did Greta and the Prince send to Peter, and in his old age
he was given a comfortable house and plenty to eat, and, though Martha
and Robert shared his good fortune, they never knew who sent it.
The Prince told Peter who the Princess really was one day, because the
poor old man had never ceased to sorrow because Greta could not be
found, but not a word did he tell of this to Robert or Martha, but kept his
secret all to himself as long as he lived.
 THE KNIGHT OF THE BRIGHT STAR
nce upon a time there lived a prince named Lorenzo. Although he
O was a prince, he was quite poor and lived with his mother and one
servant in a mountain far from the land of his birth.
His father, the King, had been killed in a battle with another king, who
took away the wealth and the castles of the defeated King, leaving Prince
Lorenzo and his mother nothing of their former grandeur.
Prince Lorenzo grew up with a longing for vengeance in his heart, and
often at night his mother would find him gazing in the direction of his
old home as he stood alone under the stars.
“Son,” said the Queen-mother one night, “why do you gaze so intently
into the distance? Why are you so sad?”
“There is bitterness in my heart for my father’s enemy who has robbed
me of all the happiness and pleasure in the great world outside,” replied
the Prince.
“Let me go, mother, and seek my fortune, and I may be able to avenge
the wrongs done to you and me.”
“Vengeance does not belong to us, my son,” said the Queen-mother.
“You must not take upon yourself that which is not your right.
“Go out in the world and taste its pleasures, but keep your Star of
Hope as bright as those shining in the heavens over your head if you
wish for happiness.”
 The next morning Prince Lorenzo started on his journey. He was
dressed in a shining suit of mail and sat upon a white horse with
trappings of silver. In the center of his helmet was a little silver star
which his mother gave him with these words:
“My son, may your armor protect you from all evil and may this star
be your guide. It is enchanted, for it was given to me by a fairy when I
was Queen and your father King.
“If ever it grows dim look into your own heart to find the cause, and,
finding it, cast it from you if you wish for happiness.”
Prince Lorenzo promised to look to the brightness of the little star and
rode away to seek his happiness.
After several days he came to a big city, the City of Pleasure it was
called, and those who lived there told him his armor was much too heavy
for one so young to wear.
“Cast it aside,” they told the Prince, “and we will show you the joys of
living.”
So the Prince listened and followed the people in the City of Pleasure
to a beautiful palace where merriment reigned, and laid aside his armor
for a lighter garb. One day Prince Lorenzo looked from the Palace of
Merriment and saw all around the castle men, women, and children
working, and on their faces the look of misery.
“Who are these creatures?” he asked his gay companions.
“Those are the toilers who make the money for us to spend,” was the
reply. “Look at us and forget these creatures and be merry.”
But the Prince could no more be merry; he remembered his Star of
Hope his mother had given him and hurried to find it.
Instead of the shining star he had left he found it dim and dull, and
then he remembered his mother’s words, “Look into your own heart to
find the cause.” His love of wealth and pleasure had driven out all
thoughts of others, and he had cared not how he gained these things, so
long as he had them.
“My selfishness has dimmed my Star of Hope,” said the Prince; “I
must leave the City of Pleasure and the Palace of Merriment, for this is
not happiness.”
 He buckled on the cast-off armor and rode away. As he rode past the
toilers he threw among them all the gold he had gained while in the City
of Pleasure.
Far away from the city he rode, and found himself in the midst of
sickness and suffering.
Dismounting, the Prince ministered to the sufferers’ needs and forgot
all else until he fell asleep from exhaustion.
When he awoke his horse stood beside him, and in the moonlight the
little star shone brightly from its place in his helmet on the ground at his
side. Prince Lorenzo jumped to his feet and placed the helmet on his
head. He had tasted the joy of good deeds. He no longer looked for
pleasure in selfishness, and the bitterness of vengeance had gone from
his heart.
Back to his mother he rode with the little star shining. “You have won,
my son!” she cried as she met him. “All my love for you could not teach
you how to gain real happiness; selfish pleasure and love of vengeance
dull our Star of Hope, but only those who have learned the lesson for
themselves can know this.”
Prince Lorenzo was surprised one morning to see coming up the
mountain, where he and his mother lived, an army of brightly dressed
soldiers. When they came nearer he saw they were the soldiers that once
had served his father, the King.
“The King who wronged you is dead,” they told Prince Lorenzo, “and
before he died he made us promise to find you and the Queen and bring
you back to your kingdom, which he wrongfully took from you.”
Of course Prince Lorenzo and his mother rejoiced to know that once
more they would live in their former home, and lost no time in starting
out on the journey.
“Your Star of Hope has brought you through tribulations into peace
and happiness,” said his mother, “and all wrongs are righted, but if it had
become dulled by selfishness and vengeance, my son, we still might be
in the darkness of despair.”
 THE DOLPHIN’S BRIDE
ne day there came through the woods that bordered on a big ocean a
O poor little beggar girl named Nitta.
Nitta was crying; she was hungry and she did not know where to go,
for her aunt, who had a daughter of her own, did not want to support
Nitta and had turned her out-of-doors that very day.
“I am too poor to support you,” said the hard-hearted aunt. “You must
take care of yourself.”
Nitta’s father and mother were dead and there seemed to be no place
for her but the woods, so she wandered along until she came to the
ocean, and there she sat down to cry out her grief.
While she was crying a big dolphin poked his head out of the water.
“What are you crying for, little girl?” he asked.
Nitta was so surprised to hear the dolphin speak that she stopped
crying at once. “I am crying because I have no home,” she replied.
“I will give you a home if you will come with me,” said the dolphin.
“I need some one to take care of my house.”
“But I cannot live in the water; I should drown,” said Nitta.
“I would not ask you to come if you would drown,” answered the
dolphin. “But you must decide for yourself whether you could keep
house for a fish. There are no children to play with at the bottom of the
ocean.”
 “I shall starve if I stay on land, and I may find a good home,” thought
Nitta as the dolphin waited for his answer.
“I’ll go with you,” she said.
“Then jump on my back,” said the dolphin, “and close your eyes; there
is nothing to fear. I promise you that.”
Nitta jumped on his back and closed her eyes. Over the waves they
went, and then suddenly Nitta felt the dolphin plunge under the water,
and down, down they went, and then next thing she knew the dolphin
stopped and said, “Here we are.”
Nitta opened her eyes, and instead of being in the water, as she
thought, she was in a beautiful garden in front of a beautiful house. Up
the steps the dolphin flopped, for, of course, he could not walk, having
no feet, and Nitta followed him.
He led her into a big hall hung with beautiful pictures and soft carpets
upon the floor upon which Nitta was almost afraid to step.
Nitta almost forgot her queer companion, she was so overcome with
all the grandeur she beheld.
On both sides of the long hall were many rooms, one of gold, one of
silver, one of marble, and the dolphin told Nitta she was to choose which
room she would care to have for her own.
“But you said I was to keep your house,” said Nitta; “a servant cannot
live in one of these beautiful rooms.”
“I did not say I wanted you to be a servant,” said the dolphin. “I want
some one to live here and care for the house, but not to do the work.”
Nitta chose a beautiful room hung in blue silk, with chairs of blue
damask and beautiful rosewood frames.
The ceiling was a darker blue, and all over it were dotted diamonds
that twinkled like stars.
The floor was covered with a blue velvet carpet, soft and thick, and
over it were scattered big pink roses which looked as if they would crush
when stepped upon, they seemed so natural.
There was a piano of rosewood at one end of the room, and upon this
Nitta was surprised to see the dolphin jump and with its fins begin to
play. Music such as Nitta never heard came from the keys, and so
enchanted was she that when the dolphin stopped playing Nitta ran to
him and put her hand upon his head.
“You poor fish,” she said, “it is too bad you are not a man. I wish I
were a fairy and could change you into a prince. This place is far too
beautiful for a fish to live in, and besides, you play such wonderful
music. How is it possible?”
“There is only one way you can help me, and since you wished to be a
fairy and change me into a prince,” said the dolphin, “I will see if you
will keep your word.
“Look behind the door and bring the sword you will find there, and I
will tell you the only way I can be freed from the spell of a witch who
hates me.”
From behind the door Nitta brought the sword. She found it had a
beautiful handle of gold and set with diamonds and pearls, but the blade
looked sharp and pointed and Nitta trembled as she held it.
“Now if you really are sorry for me,” said the dolphin, “and wish to
make me a prince, strike off my head.”
Nitta dropped the sword at the very thought of anything so terrible. “I
cannot do that,” she said. “You have been too kind to me.”
“That is the only way you can repay me,” said the dolphin, with a
sigh. “I see you did not mean what you said about wishing to be a fairy.”
“Oh yes, I do, indeed I do!” said Nitta. “I do not want to kill you, but I
will put you out of misery if that is what you want.”
She picked up the sword and swung it over her head; then she looked
at the dolphin, closed her eyes, and brought down the sword.
As it fell Nitta felt herself slipping away, it seemed to her into the
bottom of the ocean.
When she opened her eyes she saw a very handsome man bending
over her. “You are a brave girl,” he said. “You have saved me from a
terrible fate.”
“Where is the good dolphin?” asked Nitta. “Oh, I will never forgive
myself for killing him!”
“He is gone forever. I was the poor dolphin,” said the handsome man
at her side. “You broke the spell that held me, for the old witch who
changed me into the dolphin said I must remain one until a pretty woman
should strike off my head.”
“But why should a witch change you into a fish?” asked Nitta.
“Because I would not marry her daughter and make her a princess,”
replied the handsome man. “You see, I am a prince and I was waiting for
the girl I could love to appear before I would take my princess.
“And now I have found her. Will you become my princess?”
Nitta was already in love with the handsome man who had fallen in
love with her, and so they were married that very day in the wonderful
castle of beautiful rooms and lived happily ever after.
PRINCESS DIDO AND THE PRINCE OF THE
ROSES
ittle Princess Dido ran away from her attendants every time she
L could, and one day when she was walking in the forest with her
servants she hid behind a tree while they were talking, and before
they had missed her she ran down another path and was out of their
sight.
When Princess Dido found herself alone she began to look about to
see if she could find any flowers, for she was very fond of flowers and
was never allowed to pick them herself; her servants did that for her.
“I can pick them myself now,” she said, laughing to herself to think
she had escaped from the servants, and she began picking all the wild
flowers she could find, walking along all the time and going farther into
the forest.
When it was sunset the Princess Dido found herself in the thick of the
trees and bushes, and she began to wonder why her attendants did not
find her and take her home; but the sun set and the stars came out and
still no one came, and Princess Dido felt tired and lay down among the
leaves and mosses and went to sleep.
When she awoke the moon was shining, and although she was in the
forest alone she was not afraid, for she did not think any one would harm
a princess, so she rolled over on her soft bed, thinking she would go to
sleep again, when something cold touched her cheek.