Economics: Principles and Applications

Author(s): Rolando A Santos

Edition: 6

Copyright: 2018


Details: eBook w/KHPContent Access | 180 days |


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


Prices of Related Goods


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


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


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


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


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


Sex, Drugs and a GDP Rethink

Chapter 8: Inflation

What Is Inflation?

Microeconomic Consequences of Inflation

Macroeconomic Consequences of Inflation



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


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



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


Consumer Confidence

Interest Rates


Changes in Investment

Paradox of Thrift

Foreign Exchange and the Liquidity Trap


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


‘Fiscal Cliff’ Has Many Perils

Chapter 12: Money and Banking


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


Chapter 14: International Trade

Why International Trade?

Theories of International Trade

Theory of Absolute Advantage

Theory of Comparative Advantage


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


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


A Math Review


Graphs, Slopes, and Intercepts

Income Determination Models

Symbols Used in This Book



Rolando A Santos

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.

Related ISBN's: 9798765722473, 9798765706022

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ISBN 9798765722473

Details eBook w/KHPContent Access 180 days