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Idiot's Guides: Economics

Book Description

Economics plays a part in so many news topics-- both domestically and worldwide-- and the need to know the basics is becoming more and more important. Ideal for both the high school and college student, as well as armchair readers, Idiot's Guides: Economics offers an easy-to-understand exploration of this always-complex topic. Covering both microeconomics and macroeconomics, the book incorporates infographics and illustrations where appropriate to make concepts clear and easy to understand. Economics topics include:

- Benefits of Trade

- Supply and Demand

- Elasticity

- Government Intervention in Markets

- Market Efficiency

- Taxes and the Market

- International Trade

- Externalities

- Public Goods and Common Resources

- The Basics of the Tax System

- The Costs of Production

- Perfect Competition

- Monopoly

- Tracking the Economy

- Unemployment and Inflation

- Long-Run Economic Growth

- Savings, Investment Spending, and the Financial System

- Short-Run Economic Fluctuations

- Income and Expenditure

- Aggregate Demand and Aggregate Supply

- Stabilization Policy

- Fiscal Policy

- Money, Banking, and the Federal Reserve System

- Monetary Policy

- Inflation, Disinflation, and Deflation

In addition, such issues as global climate change. the environment, natural disaster recovery, and the social safety net are covered from an economic policy perspective.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright Page
  4. Introduction
  5. Part 1: Understanding the Economic World We Live In
    1. 1 An Overview of Our Economic Society
      1. Long-Run Economic Growth
      2. The Role of Business
        1. Business Revenue
        2. Business Expenditures
      3. The Means of Production
        1. Labor
        2. Capital, Land, and Entrepreneurship
      4. The Role of Consumers
        1. Consumer Income
      5. The Role of Government in the Economy
        1. Policy
        2. Regulation
        3. Government Expenditures
        4. Government Revenue
      6. The Financial System
        1. Financial Intermediaries
        2. Regulators and Supervisors
      7. A Word About Globalization
    2. 2 Introducing the Market Economy
      1. The World Before Adam Smith
      2. Adam Smith and The Wealth of Nations
        1. The “Invisible Hand” of the Market
        2. Long-Run Growth According to Smith
        3. The Role of Government According to Smith
        4. Monopolies According to Smith
      3. Individual Choice and the Dilemma of Scarcity
        1. Opportunity Cost
        2. Measuring in Increments for Accurate Decision Making
      4. Market Interaction and Efficiency
        1. Efficiency and Fairness
        2. Gains from Trade
        3. Markets Reach Equilibrium
        4. When Markets Become Inefficient
    3. 3 Comparative Advantage and Gains from Trade
      1. A Word About Economic Models
      2. The Production Possibility Frontier
      3. Comparative Advantage
        1. Specialization
        2. David Ricardo on Comparative Advantage and Gains from Trade
        3. Possible Negative Effects of Comparative Advantage
    4. 4 How Economists Gauge the Economy
      1. Gross Domestic Product
      2. Other Measurements of the Economy
      3. Government
      4. Business
      5. Households
      6. Consumers
      7. Labor
    5. 5 Public Policy and Microeconomics
      1. Market Inefficiencies
      2. Market Failure and Social Welfare
      3. Externalities
        1. Negative Externalities
        2. Calculating the Costs of Negative Externalities
        3. Solutions for Negative Externalities
        4. Private Deals Avoid Government Solutions
        5. Steps to Compensate Society for Negative Externalities
        6. Positive Externalities
      4. Common Property Resources
      5. Public Goods
        1. Defining a Public Good
        2. The Efficiency of Public Goods
        3. Public Decisions About Public Goods
        4. Evaluating Policy and Public Goods
    6. 6 An Introduction to “Econospeak”
      1. A Language of Their Own
      2. Models and Graphing
        1. How to Construct a Graph
        2. What Graphs Tell Us
        3. Math Concepts Depicted in Graphs
        4. Why Use Models?
  6. Part 2: Microeconomics: Business and the Consumer
    1. 7 Supply and Demand
      1. The Demand Curve
        1. Constructing a Demand Schedule and a Demand Curve
        2. Shifts in the Demand Curve
        3. Factors That Change Demand
      2. The Supply Curve
        1. Constructing a Supply Schedule and a Supply Curve
        2. Shifts in the Supply Curve
        3. Factors That Change Supply
      3. Finding the Equilibrium in Supply and Demand
        1. Surplus and Shortage
        2. How an Increase in Demand or Supply Affects the Equilibrium
      4. Price Elasticity and Inelasticity of Demand
        1. Measuring Elasticity of Demand
        2. A Quick Read on the Degree of Elasticity
        3. Total Revenue and Price Elasticity of Demand
        4. Cross-Price Elasticity of Demand and Income Elasticity of Demand
      5. Price Elasticity of Supply
    2. 8 Consumer and Producer Surplus
      1. Consumer Surplus
        1. Consumer Surplus and the Demand Curve
      2. Producer Surplus
        1. Producer Surplus and the Supply Curve
        2. Calculating the Producer Surplus
      3. Total Surplus and Market Efficiency
      4. Price Controls, Sales Taxes, and the Deadweight Loss
        1. Rent Control and Deadweight Loss
        2. How Price Ceilings and Floors Create a Deadweight Loss
        3. The Effect of a Sales Tax on the Market
    3. 9 How Consumers Make Choices
      1. Consumers Aim for Maximum Happiness
        1. Total and Marginal Utility
      2. Budget Constraints
        1. Optimizing Consumption Choice
        2. Marginal Utility per Dollar (or Other Currency)
      3. Consumer Utility and the Demand Curve
    4. 10 The Firm: Maximizing Profit
      1. How to Make a Profit
        1. Computing the Profit: Accounting Profit vs. Economic Profit
      2. Analyzing a Firm’s Cost Structure
        1. Fixed and Variable Costs
        2. Worker Productivity
        3. Total, Average, and Marginal Costs
      3. Maximizing Profit
        1. Producing in a Perfectly Competitive Market
        2. Producing the Optimal Quantity to Maximize Profit
      4. Losing Money: When to Call It Quits
        1. Determining the Short-Run Shutdown Price
  7. Part 3: Microeconomics: Market Structure
    1. 11 Perfect Competition
      1. Conditions for Perfect Competition
        1. Producers and Consumers Are Price Takers
        2. Free Entry and Exit of Firms
        3. Perfect Information
        4. No Transaction Costs
        5. Perfect Factor Mobility
        6. Perfect Competition Creates Efficiency
    2. 12 Monopoly
      1. Characteristics of a Monopoly
        1. A Monopoly Is the Single Source of a Product
        2. The Monopolist Is a Price Maker
        3. The Monopolist Maximizes Profits
        4. Price Elasticity of Demand and Total Revenue
      2. The Monopolist, Society, and Public Policy
        1. Monopoly Inefficiency
        2. Public Policy Measures
      3. Price Discrimination
        1. Price Discrimination and Consumer Surplus
        2. Forms of Price Discrimination
    3. 13 Oligopolies
      1. Examples of Oligopolies
      2. Characteristics of the Oligopoly
        1. Barriers to Entry Are High
        2. Concentration Ratio
        3. Product Differentiation
        4. Perfect or Imperfect Information?
      3. Interdependence and Behavior of Oligopoly Firms
        1. Equilibrium in an Oligopolistic Market
        2. Collusion and Cartels
        3. Noncollusive Approach
        4. To Collude or Not to Collude
      4. Antitrust Legislation and Oligopolists’ Response
    4. 14 Monopolistic Competition
      1. Characteristics of Monopolistic Competition
        1. Many Producers and Differentiated Products
        2. Free Entry and Exit into the Industry
      2. Short-Run and Long-Run Equilibrium
      3. Inefficiency of Monopolistic Competition
      4. Advertising and Brand Name Recognition
      5. Comparing Market Structures
  8. Part 4: Macroeconomics
    1. 15 Keeping Track of Growth: The National Accounts
      1. National Income Accounting
        1. Understanding Output
        2. The Flow of Funds Through the Economy
      2. The Gross Domestic Product
        1. What Is Included in the GDP?
        2. How to Calculate the GDP
        3. Real GDP, Nominal GDP, and Per Capita GDP
        4. GDP Growth and the Standard of Living
    2. 16 Unemployment and Inflation
      1. The Unemployment Rate
        1. Who Is Counted as Unemployed?
        2. Calculating the Unemployment Rate
      2. The Natural Rate of Unemployment
        1. Frictional Unemployment
        2. Structural Unemployment
        3. Cyclical Unemployment
      3. The Relationship Between Unemployment and Inflation
        1. Inflation, Unemployment, Policy, and the Phillips Curve
    3. 17 Inflation and Deflation
      1. What Is Inflation?
      2. What Causes Inflation?
        1. Inflation in the Short Run
        2. Inflation in the Long Run
        3. Measuring Inflation
      3. Understanding High Inflation and Hyperinflation
        1. Government Expenditures and the Printing Press
        2. Inflation Expectations
        3. Nominal and Real Interest Rates
      4. Deflation
        1. Debt Deflation
        2. Deflation Challenges Central Bank Policy
      5. Hyperinflation, Stagflation, and Chronic Deflation: Three Stories
        1. Hyperinflation: The German Weimar Republic of 1921 to 1924
        2. Supply Shock and Stagflation: The Oil Embargo of 1973
        3. Chronic Deflation: Japan in the 1990s
    4. 18 The Business Cycle
      1. The Business Cycle: Defining the Short-Run Fluctuations in <br xmlns="" xmlns:epub=""></br>the Economythe Economy
        1. Expansions and Recessions
        2. The Business Cycle and Employment
      2. Aggregate Demand and Aggregate Supply
        1. Aggregate Demand
        2. Shifts in the Aggregate Demand Curve
        3. Aggregate Supply
        4. The AD-AS Model
    5. 19 Recessions and Depressions
      1. Effects of Recessions
        1. The Paradox of Thrift and Deleveraging
        2. Defining a Recession
      2. Causes of Recessions
      3. Economic Theories of Recessions
        1. Keynesian Theory
        2. Classical Theory
        3. Monetarist Theory
    6. 20 Money
      1. A Brief History of Money
        1. Barter
        2. Commodity Money
        3. Representative Money
        4. Fiat Money
        5. Paper Money
      2. The Function of Money
      3. Gold and the Gold Standard
        1. The Origin and History of the Gold Standard
        2. Advantages and Disadvantages of the Gold Standard
      4. The Money Supply
        1. Classification of Money
        2. The Role of Banks in Creating Money
        3. How Deposits Are Protected
    7. 21 The Central Banks and Macroeconomic Policy
      1. Origins of Central Banks
        1. Financial Panics
        2. The Establishment of the U.S. Federal Reserve Bank
        3. European Central Banks
      2. The Great Depression
        1. The Effect of Policy on the Crisis
        2. The Recovery
        3. Lessons of the Great Depression
      3. Functions of the Central Banks
        1. An Independent Central Bank
        2. Maintaining Macroeconomic Stability
        3. Maintaining Financial Stability: Lender of Last Resort
        4. Maintaining Financial Stability: Regulation of the Banking Industry
        5. The Response by Central Banks to the 2008 Financial Crisis
        6. The Mandate to Foster Maximum Employment (United States)
    8. 22 Using Government Fiscal Policy to Influence the Economy
      1. Establishing a Budget
      2. Balancing the Budget and the Business Cycle
        1. Should a Balanced Budget Be Mandated?
        2. Public Debt (Government Debt)
      3. Using Fiscal Policy to Expand or Contract the Economy
        1. Implementing a Contractionary Fiscal Policy
        2. Implementing an Expansionary Fiscal Policy
        3. Shortcomings of an Expansionary Fiscal Policy
      4. How Fiscal Policy Filters Through the Economy
        1. Measuring the Effect of Fiscal Stimulus
        2. Conducting Fiscal Policy with Taxes and Transfers
        3. The Effect of Taxes and Transfers on the Multiplier
        4. Taxes and Transfers as Automatic Stabilizers
      5. Government Regulation
    9. Appendixes
      1. A Glossary
      2. B Recommended Reading
    10. Index
    11. About the Author