Economics: Principles and Applications
Edition: 6
Copyright: 2018
Edition: 6
Copyright: 2018
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The study of economics is relevant to all aspects of our lives. It is the study of human behavior and the consequences of our choices. It is also the study of how the global economic system works.
Economics: Principles and Applications gives students taking introductory economics and principles of macroeconomics an insight into the understanding of the basic concepts in economics. This book and website package gives basic guidelines to understanding concepts in economics and applies its principles through examination of various current events happening in today's global economy. Exercises and conceptual problems at the end of each chapter assess the student’s comprehension of the core concepts.
There is also an added online component to the book that students and teachers can use as exercises and supplements to support instruction.
Coverage of the topics include opportunity costs, demand/supply analysis, cost and market structure on the microeconomics side. The bulk of the book content is macroeconomics, which includes concepts like national income accounting, inflation, unemployment, fiscal and monetary policies and international economics. It also includes current events such as the recent financial crisis and Eurocrisis that are discussed in some relevant chapters.
Chapter 1: Introduction
Basic Branches of Economics
Basic Approaches in Economics
Factors of Production
Ceteris Paribus Concept
Economic Models
Economic Theories
What Do Economists Do?
How Much Gold Do Investors Need? Zero Should Suffice
Economics after the crisis
Chapter 2: Production Possibility Curves
Production Possibility Curves (PPC)
Opportunity Cost
How Trade-offs Apply from a Management Point of View
Economic Growth
Efficiency in Production
Chapter 3: Theory of Demand and Supply
Law of Demand
Demand Schedule
External Factors Affecting Demand
Income
Prices of Related Goods
Population
Price Expectation
Law of Supply
Supply Schedule
External Factors Affecting Supply
Cost of Inputs
Weather /Natural Disasters
Number of Firms
Price Expectation
Market Equilibrium
Price Controls
Shifts in Demand and Supply
Price Elasticity
Special Cases of Elasticity
Importance of Price Elasticity
The Relationship Between Elasticity and Revenue
Do Minimum Wages Cause Lower Wages?
What’s Really Happening in Housing Markets?
Chapter 4: Theory of Production and Cost
Relationship Between Outputs and Inputs
The Law of Diminishing Marginal Returns
Stages of Production
Theory of Cost
Resource Costs
Definitions
Time Periods
Types of Costs
Theory of Sunk Cost
Relationship Between Average and Marginal Cost
Long-Run Theory of Costs
Types of Economies of Scale
Economies of Scale
Diseconomies of Scale
Economies of Scope
Economies of scale made steel
Chapter 5: Market Structure and the Nature of Industries
Competitive Markets
Short -Run Versus Long-Run Competitive Markets
Equilibrium Model for a Long-Run Competitive Firm and Industry
Monopoly
Market Model for a Monopoly
Price Discrimination in Monopoly
First-Degree Price Discrimination
Second-Degree Price Discrimination
Third-Degree Price Discrimination
Monopolistic Competition
Equilibrium Model for a Monopolistic Competitive Market
Oligopoly
The Oligopolist’s Demand Curve
The Kinked Demand Curve
Profit Maximization with a Kinked Demand Curve
Opening a business in Brazil
Appendix 5: Economics and Art of Business and Making Money
Interesting Situation: When Rates Turn Negative
Chapter 6: Externalities and Market Failure
Private versus Public Goods
Optimal Public Good
Externalities
Negative Externalities
Positive Externalities
Coase Theorem
Market Failure and Government Intervention
Carbon Offsets: A Small Price to Pay for Efficiency
Chapter 7: National Income Accounting
National Income Accounting
Gross Domestic Product
Time Period
Approaches in Measuring GDP
Expenditure Approach
Theory to Application
What Is Investment?
Income Approach
Profits Under Income Approach
Other National Income Accounts
Net Domestic Product
National Income (NY)
Personal Disposable Income (PDY)
Sample Problem on National Income Accounting
Mismeasurement Problems in GDP
Rate of Economic Growth
Statistics
Sex, Drugs and a GDP Rethink
Chapter 8: Inflation
What Is Inflation?
Microeconomic Consequences of Inflation
Macroeconomic Consequences of Inflation
Uncertainty
Speculation
Shortened Time Horizon
Tax Effects
Theory to Application
Paying for the American Revolution
Types of Inflation
Demand-Pull Inflation
Theory to Application
Life During the Bolivian Hyperinflation
Cost-Push Inflation
Measures of Inflation
Consumer Price Index
Producer’s Price Index
GDP Deflator
Real Versus Nominal GDP
Expected Inflation and TIPS
The price of cooking the books
Deflation More Than Threat to Some
Chapter 9: Unemployment and the Business Cycle
Introduction
Scheme of Labor Force
Natura l Rate of Unemployment
Types of Unemployment
Frictional Unemployment
Structural Unemployment
Seasonal Unemployment
Cyclical Unemployment
Theory to Application
Henry Ford’s $5 Workday
Business Cycles
Stages of Business Cycles
Sources of Business Cycles
Basic Facts About Business Cycles
Bubbles
APPENDIX 9: PHILLIPS CURVE AND THE ROLE OF EXPECTATIONS
Chapter 10: Aggregate Demand and Aggregate Supply
Circular Flow of Economic Activity
Aggregate Demand and Prices
Aggregate Supply
Regions of Aggregate Supply
Shifts in Aggregate Demand and Supply
Changes in Consumption Expenditure
External Factors Affecting Consumption
Wealth
Consumer Confidence
Interest Rates
Taxes
Changes in Investment
Paradox of Thrift
Foreign Exchange and the Liquidity Trap
AHEAD OF THE TAPE
Appendix 10: Equilibrium Income Analysis
Chapter 11: Government Expenditures and Fiscal Policy
What Is Fiscal Policy?
Theory to Application
The Troubling Outlook for Fiscal Policy
Taxes and Government Finance
Budget Deficits and Surplus
Theory to Application
Deficits, Consumption, and Investment in the United States
During World War II
Graphical Model of “Crowding-Out” Effect
The Link Between Budget Deficit and Trade Deficit
Why Deficits Don’t Matter
Technical Model for a Three-Sector Economy
Learning From Greece
ECONOMIC VIEW
‘Fiscal Cliff’ Has Many Perils
Chapter 12: Money and Banking
Introduction
The Functions of Money
The Money Market
Types of Money Demand
Money Supply
Theory to Application
How Do Credit and Debit Cards Fit into the Monetary System?
Creation of Money
Bank Regulation
The Initial Loan
Secondary Deposits
Fractional Reserves
Excess Reserves
A Multibank World
Changes in the Money Supply
More Deposit Creation
The Money Multiplier
Banks and the Circular Flow
The Bitcoin Paradox That Undid Mt. Gox
Chapter 13: The Federal Reserve and Monetary Policy
The Central Bank of the United States
History of the Federal Reserve
The Nature of the Federal Reserve..
Tools of Monetary Policy
The Fed in Action
Theory to Application
Bank Failures and the Money Supply in the 1930s
The U.S. Financial Crisis of 2008
The Future of Financial Regulation
IN THE MARKETS
Chapter 14: International Trade
Why International Trade?
Theories of International Trade
Theory of Absolute Advantage
Theory of Comparative Advantage
Tariffs
Why Would a Country Impose a Tariff?
Theory to Application
Making Cheap Medicine Expensive
Types of Tariffs
Economic Implication of Tariffs
Theory to Application
China, Tariffs, and the WTO
Quotas
Theory to Application
Cotton Pits Farmer Versus Farmer
The trouble with outsourcing
Chapter 15: International Finance
Balance of Payments
Theory to Application
The World’s Largest Debtor
Foreign Exchange Markets
Factors Affecting the Exchange Rate
Relative Inflation Rates
Relative Interest Rates
Relative Income Levels
Exchange Rate Systems
Fixed Exchange Rate
Freely Floating Exchange Rate
Managed Floating Exchange Rate
Theory to Application
The Chinese Currency Controversy
The Concept of the Euro: Current Trends in International Finance
Economics focus Beefed-up burgernomics
The Chinese Renminbi: What’s Real, What’s Not
Appendix
A Math Review
Functions
Graphs, Slopes, and Intercepts
Income Determination Models
Symbols Used in This Book
Glossary
Index
Rolando A. Santos is a full professor of economics at Lakeland Community College in Mentor, Ohio. He received his PhD in economics from Northeastern University in Boston, Massachusetts, and dual masters’ degrees in economics and international studies from Ohio University in Athens, Ohio. His global teaching and academic experience has encompassed the Philippines, France, Slovak Republic, Croatia, Romania, Australia, China, and the United States. He has written numerous academic papers on topics related to international finance particularly on the Asian foreign exchange market and financial crisis. He received various grant awards, including a Title 6B grant in business in an international education program. He also has done various consulting projects in Northeast Ohio region in both academic and business settings. Dr. Santos was also active in the Philippine American Chamber of Commerce in Northeast Ohio and the Ohio Asian American Chamber of Commerce. He is also an adjunct professor at Cleveland State University and John Carroll University.