Essentials of Economics - 2nd Edition - ISBN: 9780123110350, 9781483262949

Essentials of Economics

2nd Edition

Authors: James D Gwartney Richard Stroup J. R. Clark
eBook ISBN: 9781483262949
Imprint: Academic Press
Published Date: 1st January 1985
Page Count: 502
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Description

Essentials of Economics, Second Edition is a text intended for a one-term course in economics for college students. It attempts to teach students of the analytic way of studying economics and provides the basics of the concept of political economy and uses this knowledge to explain the choice process in the public sector.

The book presents a comprehensive survey of economics. It contains chapters that highlight the importance of the microincentive structure of macroeconomic markets; identifies the determinants of supply, as well as the impact of public policy on those determinants; and presents both adaptive and rational expectations theory. The linkage between production theory and the cost curves faced by the firm; examination of the market structure; and the role of regulation and deregulation are covered as well.

Economics students will find the book very useful.

Table of Contents


Preface

Acknowledgments

Part One The Economic Way of Thinking—An Introduction

Chapter 1 The Economic Approach

What Is Economics About?

The Economic Way of Thinking

Myths of Economics: "Economic Analysis Assumes that People Act Only Out of Selfish Motives. It Rejects the Humanitarian Side of Humankind."

Positive and Normative Economics

What Do Economists Do?

Outstanding Economists: Adam Smith (1723—1790) and the Historical Roots of Economics

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 2 Some Tools of the Economist

Opportunity Cost Is the Highest Valued Opportunity Lost

The Production Possibilities Curve

Trade Tips and Comparative Advantage

Division of Labor, Specialization, and Exchange in Accordance with the Law of Comparative Advantage

Three Economizing Decisions Facing All Nations: What, How, and For Whom?

Two Methods of Making Decisions—The Market and Government Planning

Myths of Economics: "In Exchange, when Someone Gains, Someone Else Must Lose. Trading is a Zero-Sum Game."

Outstanding Economist: David Ricardo (1772-1823) and the Early Followers of Smith

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 3 Supply, Demand, and the Market Process

Scarcity Necessitates Rationing

Consumer Choice and the Law of Demand

Producer Choice and the Law of Supply

Markets and the Coordination of Supply and Demand

Shifts in Demand and Changes in Quantity Demanded

Shifts in Supply

Outstanding Economist: Alfred Marshall (1842-1924)

Time and the Adjustment Process

Repealing the Laws of Supply and Demand

How the Market Answers the Three Basic Economic Questions

The Communicating, Coordinating, and Motivating Functions of the Market

Myths of Economics: "Rent Controls are an Effective Method of Ensuring Adequate Housing at a Price the Poor can Afford."

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 4 Supply and Demand for the Public Sector

Ideal Economic Efficiency

Why Might the Invisible Hand Fail?

The Economics of Collective Action

Conflicts between Good Economics and Good Politics

Outstanding Economist: James Buchanan (1919- )

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Part Two Macroeconomics

Chapter 5 Taking the Nation's Economic Pulse

Micro- and Macroeconomics

The Concept of GNP

Two Measures of GNP and Why They Are Equal

Depreciation and Net National Product

Other Related Income Measures

What GNP Does Not Consider

What GNP Measures

Employment and Economic Instability

Three Types of Employment

What is Full Employment?

The Economics of Inflation

Who Gains and Who Loses from Inflation?

Does the CPI Overstate the Inflation Rate?

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 6 Aggregate Demand and Equilibrium in a Simple Keynesian Model

Consumption As a Component of Aggregate Demand

Investment As a Component of Aggregate Demand

Government Expenditures As a Component of Aggregate Demand

Net Exports As a Component of Aggregate Demand

The Keynesian Concept of Macroequilibrium

The Multiplier Principle

The Paradox of Thrift

Investment Instability and the Accelerator

The Accelerator-Multiplier Interaction and the Role of Inventories

The Central Theme of Keynes

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 7 Fiscal Policy and Demand Management

Fiscal Policy in Historical Perspective

Demand Stimulus to Combat Recession

Fiscal Policy for Dealing with Inflation

Fiscal Policy and Budget Deficits

Practical Limitation of Demand-Management Strategy

Automatic Stabilizers

Outstanding Economist: James Tobin (1918- )

Perspectives in Economics: Fact and Fiction about the National Debt

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 8 Aggregate Supply, Fiscal Policy, and Stabilization

The Determinants of Aggregate Supply

The Aggregate Supply Curve for the Constrained Economy

Fiscal Policy, Aggregate Demand, and Aggregate Supply

What is Supply-Side Economics?

What Do We Know about Fiscal Policy?

The Dual Problems of Macroeconomics

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Addendum: Macroequilibrium within the Price—Quantity Framework

Chapter 9 Money and the Banking System

What Is Money?

The Business of Banking

The Federal Reserve System

The Deregulation and Monetary Control Act

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 10 Money, Keynesianism, and Monetarism

Historical Background on the Importance of Money

How Monetary Policy Works—The Modern Keynesian View

The Modern Monetarist View

The Basic Propositions of Monetarism

The Monetarist-Keynesian Controversy in Perspective

Perspectives in Economics: Budget Deficits and Our Economy

Chapter Learning Objectives

The Economic Way of Thinking— Discussion Questions

Chapter 11 Expectations and the Limits of Macropolicy

The Phillips Curve—The Dream and the Reality

Adaptive Expectations and the Shifting Phillips Curve

Politics, Expectations, and the Spiraling Upward of the Inflation Rate

Rational Expectations

Interest Rates and the Expected Rate of Inflation

Pulling It All Together

New Directions in Macroeconomic Policy

A Microeconomic Approach to Macroeconomic Problems

Perspectives in Economics: The Reagan Tax Cut and Welfare for the Rich

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Part Three Microeconomics

Chapter 12 Demand and Consumer Choice

Choice and Individual Demand

The Elasticity of Demand

Determinants of Specific Preferences—Why Do Consumers Buy That?

Outstanding Economist: John Kenneth Galbraith (1908- )

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Addendum: Consumer Choice and Indifference Curves

Chapter 13 Cost and the Supply of Goods

Organization of the Business Firm

The Role of Costs

Short Run and Long Run

Economic and Accounting Cost—A Hypothetical Example

Costs in the Short Run

Costs in the Long Run

What Factors Cause the Firm's Cost Curves to Shift?

Costs and the Economic Way of Thinking

Myths of Economics: "A Good Business Decision Maker will never Sell a Product for Less than its Production Costs."

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 14 Pure Competition and Monopoly

Competition, Its Meaning and Significance

The Model of Pure Competition

The Workings of the Competitive Model

Output Adjustments and Long-Run Equilibrium

Efficiency and the Competitive Model

Monopoly—The Other Market Extreme

Price Discrimination

Why Is Monopoly "Bad"?

Monopoly and Competition

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 15 The Intermediate Cases: Monopolistic Competition and Oligopoly

Characteristics of Monopolistic Competition

Price and Output under Monopolistic Competition

Comparing Pure and Monopolistic Competition

Outstanding Economist: Joan Robinson (1903-1983)

Real-World Monopolistic Competitors

Characteristics of Oligopoly

Price and Output under Oligopoly

Concentration and Real-World Oligopolistic Power

Myths of Economics: "The Prices of Most Goods are Unnecessarily Inflated by at Least 25 Percent as a Result of the High Rate of Profit of Producers."

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 16 Business Structure, Regulation, and Deregulation

The Structure of the U.S. Economy

Antitrust Legislation—The Policy Objectives

Theories of Regulation and Regulatory Policy

The Regulatory Effects of Motor Vehicle Inspection

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 17 The Supply of and Demand for Productive Resources

Human and Nonhuman Resources

The Demand for Resources

Marginal Productivity and the Firm's Hiring Decision

Marginal Productivity, Demand, and Economic Justice

The Supply of Resources

Supply, Demand, and Resource Prices

Outstanding Economist: Gary Becker (1930- )

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 18 Earnings, Skill Acquisition, and the Job Market

Why Do Earnings Differ?

Is Discrimination Profitable to the Employer?

Productivity and the General Level of Wages

Myths of Economics: "Automation is the Major Cause of Unemployment. If we Keep Allowing Machines to Replace People, we are Going to Run Out of Jobs."

How Is the Economic Pie Divided?

Perspectives in Economics: The Minimum Wage—An Economic Appraisal

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Part Four Public Choice

Chapter 19 Problem Areas for the Market

External Effects and the Market

The Importance of Communal and Private Property Rights

Public Sector Responses to Externalities

Market Failure: Public Goods

Outstanding Economist: Allen Kneese (1930— )

Market Failure: Poor Information

Looking Ahead

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Chapter 20 Public Choice: Gaining from Government and Government Failure

Voter's Demand for Political Representation

Supply, Profits, and the Political Entrepreneur

The Demand for Public Sector Action

The Economics of Government Failure

Why General Motors Receives Better Signals Than Congress

The Economic Analysis of the Public Sector

Looking Ahead

Chapter Learning Objectives

Perspectives in Economics: Dealing with Special Interests

The Economic Way of Thinking—Discussion Questions

Part Five International Economics

Chapter 21 Gaining from International Trade

The Composition of the International Sector

Comparative Advantage and Trade between Nations

Restrictions to Trade

Myths of Economics: "Free Trade with Low-Wage Countries such as China and India would Cause the Wages of U.S. Workers to Fall."

Frederic Bastiat on Obstacles to Gains from Trade

Chapter Learning Objectives

The Economic Way of Thinking—Discussion Questions

Index

Credits

Details

No. of pages:
502
Language:
English
Copyright:
© Academic Press 1985
Published:
Imprint:
Academic Press
eBook ISBN:
9781483262949

About the Author

James D Gwartney

Richard Stroup

J. R. Clark