Introductory Economics

Introductory Economics

1st Edition - January 1, 1981
  • Author: Michael Veseth
  • eBook ISBN: 9781483263007

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Description

Introductory Economics deals with the national economy as a whole—macroeconomics, in terms of inflation and unemployment. The book also discusses individual economic decision-makers—microeconomics, in view of the problems of scarcity and choice. Macroeconomics uses the market model of demand and supply as a tool to analyze the causes of, and present some cures for modern economic ailments. The text examines the economics of government fiscal policies with the framework of an aggregate demand and supply model. The book compares monetary policy and fiscal policy, explains the monetarist model of economic activity, and also investigates the roles of money, credit, interest rates. These economic activities have international consequences such as in trade, exchange rates, and on prevailing and future national economic policies. In microeconomics, the book focuses on the economics of exchange, the market mechanisms that increase the gains from trade, and the problems of choice facing consumers and producers in a competitive market. The text also tackles the problems found in resource markets (labor, natural resources, energy), in market failure, as well as analyzes the role of government. Economists, sociologists, students of economics or business, general readers interested in real-world economics, and policy makers involved in national economic development will find the book valuable.

Table of Contents


  • Preface

    Part 1 Tools and Problems

    Chapter 1 Macroeconomic Problems

    What Is Economics?

    Macro- Versus Microeconomics

    Macroeconomics Goals and Problems

    The Great Depression

    The Forties

    The Fifties

    The Sixties

    The Phillips Curve

    The Seventies

    What Happened to the Phillips Curve?

    The Eighties and Beyond

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies I: Another Great Depression?

    The Coming Bust

    We Can Manage Prosperity

    Discussion Questions

    Chapter 2 Supply and Demand

    The Concept of Demand

    The Demand Curve

    The Concept of Supply

    The Supply Curve

    Changes in Supply

    The Market at Work

    Some Applications

    Inflation: A Preview

    Review of Market Actions

    Summary

    Discussion Questions

    Test Yourself

    Chapter 3 The Problem of Unemployment

    The Unemployment Rate

    The Labor Market

    Cyclical Unemployment

    Structural Unemployment

    Frictional Unemployment

    Unemployment Insurance

    The Goal of Full Employment

    How Serious Is the Unemployment Problem?

    Summary

    Discussion Questions

    Test Yourself

    Chapter 4 Understanding Inflatio

    What Is Inflation?

    The Inflation Record

    Economic Effects of Inflation

    The Role of Expectations

    Winners and Losers

    The Power of Compound Inflation

    Coping with Inflation

    Measuring Inflation

    Three Inflation Measures

    Real Versus Nominal Values

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies II: Inflation or Unemployment?

    Winners and Losers

    Unemployment Is More Important

    Fight Inflation First

    Discussion Questions

    Part 2 A Simple Model of the Economy

    Chapter 5 Measuring Economic Activity

    Gross National Product

    GNP as a Measure of Well-Being

    Three Views of GNP

    A Grain of Salt

    Real Gross National Product

    Per Capita RGNP

    International Comparisons

    Summary

    Discussion Questions

    Test Yourself

    Chapter 6 Aggregate Demand

    Spending and Income

    Macroeconomic Equilibrium

    Is Equilibrium Good?

    Consumption Spending

    Investment Spending

    Government Spending

    Net Export Spending

    The Aggregate Demand Curve

    Changes in Aggregate Demand

    Slope of the AD Curve

    Appendix: The Keynesian 45-Degree-Line Model

    Summary

    Discussion Questions

    Test Yourself

    Chapter 7 Aggregate Supply and the Economy

    Aggregate Supply

    The Aggregate Supply Curve

    Changes in Aggregate Supply

    Macroeconomic Equilibrium

    Inventory Adjustments

    Causes of Unemployment

    Causes of Inflation

    The Old-Time Religion

    Wage and Price Controls

    Indexation

    Increasing Aggregate Supply

    Winners and Losers from Economic Policies

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies III: Wage and Price Controls

    Controls Are Useful

    Price Controls Are Bad

    Discussion Questions

    Chapter 8 Fiscal Policy

    The Role of Government

    Government Spending

    The Multiplier

    The Multiplier in the Real World

    Taxes

    The Balanced-Budget Multiplier

    Different Types of Taxes

    The Total Tax Burden

    Tax Expenditures

    Transfer Payments

    Automatic Stabilizers

    Advantages and Disadvantages of Fiscal Policies

    Deficit Spending and the National Debt

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies IV: Taxes and the Laffer Curve 204

    The Tax Wedge

    Cut Taxes Now!

    Don't Bet on the Lafferites

    Discussion Questions

    Part 3 Money, Credit, and the Economy

    Chapter 9 Money and Banking

    The Money Supply

    Money Substitutes

    The Interest Rate

    Money and Banks

    Fractional-Reserve Banking

    How Banks "Create" Money

    The Fed

    Open Market Operations

    Reserve Requirement Policy

    Discount Rate Policy

    Summary

    Discussion Questions

    Test Yourself

    Chapter 10 Money, Credit, and the Economy

    The Credit Market

    The Stock Market

    Demand for Credit

    The Credit Demand Curve

    The Supply of Credit

    The Credit Market at Work

    The Inflation Premium

    Disintermediation

    The Real Interest Rate

    Investment and the Credit Market

    Monetary Policy

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies V: Credit Market Controls?

    Credit Regulations Needed

    Deregulate the Credit Market

    Discussion Questions

    Chapter 11 Monetary Versus Fiscal Policy

    Expansionary Monetary Policies

    Expansionary Fiscal Policies

    Public Versus Private Sector Growth

    Inflation in the Long Run

    Advantages and Disadvantages

    Contractionary Policies

    Financing Government Spending

    Borrowing from the Public

    Borrowing from the FRS

    Accommodating Monetary Policy

    Conflicting Monetary Policy

    Summary

    Discussion Questions

    Test Yourself

    Chapter 12 The Monetarists

    The Equation of Exchange

    The Barter Economy

    Money as a Commodity

    Money and the Economy

    Monetary Policy: The Monetarist View

    Fiscal Policy: The Monetarist View

    Monetarist Policy Recommendations

    Criticisms of Monetary Policies

    Friedman's Policy of Rules

    Who's Right, Here?

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies VI: Independence of the Federal Reserve System

    End the FRS' Independence

    Keep the FRS Independent

    Discussion Questions

    Part 4 International Economics

    Chapter 13 International Trade

    Why Do Nations Trade?

    Gains from Trade

    Comparative Advantage in the Real World

    Trade Restrictions

    Who Pays the Tariff?

    The Rationale of Barriers to Trade

    The Balance of Payments

    Stages of Balance of Payments

    The Balance of Trade

    Summary

    Discussion Questions

    Test Yourself

    Chapter 14 The Foreign Exchange Market

    The Exchange Rate

    The Foreign Exchange Market

    The Foreign Exchange Market at Work

    Exchange Market Intervention

    Fixed Exchange Rates

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies VII: Flexible or Fixed Exchange Rates?

    Fixed Exchange Rates

    Let Exchange Rates Float

    Discussion Questions

    Chapter 15 International Economics

    Trade and the Economy

    International Credit Markets

    Eurodollars

    Monetary Policy with Flexible Exchange Rates

    Fiscal Policy with Flexible Exchange Rates

    Economic Policy with Flexible Exchange Rates

    Economi.c Policy with Intervention

    Fixed Exchange Rates

    International Economic Policies

    Summary

    Discussion Questions

    Test Yourself

    Chapter 16 Problems, Coals, and Trade-Offs

    Macroeconomic Goals

    International Economic Goals

    Policy Tools

    Trade-Offs in Economic Policies

    Economic Policy Choices

    Policy Problems

    Setting National Priorities

    Summary

    Discussion Questions

    Test Yourself

    Economic Controversies VIII: Defending the Dollar

    Defend the Dollar!

    Fight Inflation First

    Let the Dollar Fall

    Discussion Questions

    Part 5 The Economics of Exchange

    Chapter 17 Scarcity and Choice

    The Problem of Scarcity

    Changing Trade-Offs

    Scarcity and Choice for the Individual

    Scarcity and Choice for the Business Firm

    Scarcity and Choice for Society

    Economic Growth

    Real World Economics: lim Daniels Has a Hangover?

    Summary

    Discussion Questions

    Test Yourself

    Chapter 18 Specialization and Exchange

    A Barter Economy

    The Theory of Comparative Advantage

    Mutually Advantageous Exchange

    The Gains from Trade

    Specialization in the Real World

    Comparative Advantage in the Real World

    The Role of Money

    Limits to Exchange

    Distribution of the Gain

    Other Reasons for Exchange

    Real World Economics: Bullish on Wall Street

    Summary

    Discussion Questions

    Test Yourself

    Chapter 19 Demand and Supply: The Micro Side

    The Role of the Market

    How the Market Works

    The Concept of Demand

    The Demand Curve

    The Concept of Supply

    The Supply Curve

    Changes in Supply

    The Market at Work

    Changing Markets

    Summary of Market Actions

    The Market's Verdict

    Real World Economics: Apartment House Rents

    Summary

    Discussion Questions

    Test Yourself

    Chapter 20 Markets at Work

    Real World Economics: Falling Calculator Prices

    Real World Economics: Coffee and Tea

    Real World Economics: Cut-Rate Air Fares

    Real World Economics: Cigarette Taxes

    Real World Economics: Rent Controls

    Real World Economics: Price Floors

    Appendix: More about Elasticity

    Summary

    Discussion Questions

    Test Yourself

    Part 6 Consumer and Producer Choice

    Chapter 21 Consumer Choice

    How Much To Buy?

    Consumer Benefits: Utility

    Maximizing Utility

    Opportunity Cost

    Consumer Equilibrium

    Changing Consumer Choice

    Changing Prices: Demand Curves

    Substitutes, Complements, and Income Effects

    Changing Preferences

    Real World Economics: Cas Lines Grow Longer in Nation's Capital

    Appendix: Indifference Curve Analysis

    Summary

    Discussion Questions

    Test Yourself

    Chapter 22 Production and Cost

    Who are the Producers?

    Motives of the Firm

    Production and Costs

    Different Views of Production Costs

    Costs in the Long Run

    Real World Economics: Toys and Games

    Appendix: Production Theory

    Summary

    Discussion Questions

    Test Yourself

    Chapter 23 Producer Choice: Monopoly

    What Is a Monopoly?

    Monopoly Revenues

    The Monopoly Production Decision

    Monopoly Pricing

    Changing Costs

    Technological Advances

    Monopoly in the Real World

    Real World Economics: A Money-Losing Monopoly

    Summary

    Discussion Questions

    Test Yourself

    Chapter 24 Producers in competitive Markets

    Perfect Competition

    Price Takers

    Maximizing Profits

    Supply Curves

    Equilibrium for the Industry

    Changing Costs for the Firm

    Supply in the Long Run

    Real World Economics: A Monopoly versus a Competitive Market

    Summary

    Discussion Questions

    Test Yourself

    Chapter 25 Imperfect Competition

    Product Differentiation

    Price Discrimination

    Benefits of Price Discrimination

    Cartels

    Oligopolies

    Government Regulation

    Real World Economics: Automotive Oligopoly

    Summary

    Discussion Questions

    Test Yourself

    Part 7 Resource Markets

    Chapter 26 Labor Markets

    The Supply of Labor

    The Demand for Labor

    Changes in Labor Demand

    The Labor Demand Curve

    Wage Rate Differentials

    Labor Unions

    Government Labor Policies

    Real World Economics: Cost-of-Living Clauses

    Summary

    Discussion Questions

    Test Yourself

    Chapter 27 Capital and Natural

    Resource Markets

    The Demand for Inputs

    Investment: The Demand for Capital

    Input Supplies: Natural Resources

    The Impact of Price Expectations

    The Problem of Property Rights

    Unstable Prices

    Real World Economics: Training and Education Programs

    Summary

    Discussion Questions

    Test Yourself

    Chapter 28 Energy Markets

    Energy and Economic Development

    Price, Quantity, and Substitution Effects

    Energy Supplies

    Energy Price Controls

    OPEC and the Supply of Oil

    Managing the Energy Problem

    The Paradox of Net Energy

    Energy and the Environment

    Real World Economics: The Price of Energy

    Summary

    Discussion Questions

    Test Yourself

    Part 8 Market Failures

    Chapter 29 Free Market Choice

    The Free Market Economy

    The Invisible Hand

    Bureaucratic Choice

    Self-Interest and the Invisible Hand

    The Economic Properties of Demand

    Total Benefits and Consumers' Surplus

    The Economic Properties of Supply

    Market Equilibrium: Net Benefits

    Taxes and Net Benefits

    Government Subsidies

    Democratic Choice

    Voting: What Does the Public Want?

    The Role of Government: Market Failures

    Real World Economics: Ticket Scalping

    Summary

    Discussion Questions

    Test Yourself

    Chapter 30 Market Failures: Externalities

    Private versus Social Costs and Benefits

    External Benefits

    External Costs

    Optimal Pollution

    Externality Policy Options

    Limits to Government Actions

    Public Goods

    Real World Economics: Free Market or Democratic Choice

    Summary

    Discussion Questions

    Test Yourself

    Chapter 31 Market Failures: Monopolies

    Monopoly Problems

    Government Monopoly Policy

    Antitrust Regulation

    Trade-Off: Patent Monopolies

    Costs and Benefits of Monopoly Regulation

    Natural Monopolies

    Pricing of Natural Monopolies

    Real World Economics: U.S. Postal Service

    Summary

    Discussion Questions

    Test Yourself

    Chapter 32 Scarcity and Choice: The Poverty Problem

    Fighting Poverty: The Record

    Who Are the Poor?

    Causes of Poverty

    Transfer Payments

    What Kind of Transfers?

    Minimum Wages

    Job Training and Education

    Public Employment Programs

    Costs of Government Action

    Real World Economics: The Social Security Tax

    Summary

    Discussion Questions

    Test Yourself

    Suggestions for Further Reading

    Glossary

    Answers to "Test Yourself"

    Index

Product details

  • No. of pages: 790
  • Language: English
  • Copyright: © Academic Press 1981
  • Published: January 1, 1981
  • Imprint: Academic Press
  • eBook ISBN: 9781483263007

About the Author

Michael Veseth