Essentials of Economics

Essentials of Economics

2nd Edition - January 1, 1985

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  • Authors: James D Gwartney, Richard Stroup, J. R. Clark
  • eBook ISBN: 9781483262949

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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

Product details

  • No. of pages: 502
  • Language: English
  • Copyright: © Academic Press 1985
  • Published: January 1, 1985
  • Imprint: Academic Press
  • eBook ISBN: 9781483262949

About the Authors

James D Gwartney

Richard Stroup

J. R. Clark

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