Contents of Economics for everyone


Contents

1    Chapter 1: Scarcity and Choice. 13

1.1     Scarcity. 13

1.2     Opportunity Cost. 16

1.3     Production Possibility Frontier (PPF): Explanation of its Meaning and Use  18

1.4     Marginal Decision-Making: Explanation. 20

1.5     Additional Reading: Factors of Production: The Foundation for Economic Development and the Role of Entrepreneurs. 23

1.6     Questions and Answers. 25

2    Chapter 2: Actors in the Economy. 29

2.1     Households. 29

2.2     Businesses. 30

2.3     Government. 30

2.4     Market. 31

2.5     Interaction between actors. 32

2.6     Additional Reading: The Long Journey of the World Economy: From Simple Trade to Globalization   33

2.7     Questions and Answers. 37

3    Chapter 3: Supply and Demand.. 42

3.1     Demand. 42

3.1.1    Definition and factors affecting demand. 42

3.1.2    Demand Curve: Explanation and Illustration. 44

3.1.3    Price Elasticity of Demand: Definition, Calculation, and Significance. 47

3.2     Supply. 50

3.2.1    Definition and factors affecting supply. 50

3.2.2    Supply Curve: Explanation and Illustration. 51

3.2.3    Price Elasticity of Supply: Definition, Calculation, and Significance. 54

3.3     Market equilibrium: 56

3.3.1    Explanation of how Supply and Demand Interact to Determine the Equilibrium Price and Quantity  56

3.3.2    Analysis of the Impact of Changes in Supply and Demand on Market Equilibrium   59

3.4     Additional Reading: ECONOMIC METHODOLOGY. 61

3.5     Questions and Answers. 66

4    Chapter 4: Markets and Competition.. 70

4.1     Perfect Competition. 70

4.1.1    Characteristics of a Perfectly Competitive Market. 70

4.1.2    Benefits and Limitations of Perfect Competition. 71

4.2     Monopoly. 73

4.2.1    Characteristics of a Monopoly Market. 73

4.2.2    Causes of Monopoly Formation. 73

4.2.3    Impact of Monopoly on Social Welfare. 74

4.2.4    Antitrust Policy. 75

4.3     Oligopoly and Monopolistic Competition. 76

4.3.1    Characteristics and Examples. 76

4.3.2    Comparison of Market Structures. 77

4.4     Additional Reading: The Invention of the Company - A Great Leap Forward in Economic History  78

4.5     Questions and Answers. 80

5    Chapter 5: Consumer and Business Behavior. 84

5.1     Consumer Behavior. 84

5.1.1    Utility Function. 84

5.1.2    Indifference Curve. 86

5.1.3    Optimal Choice. 87

5.1.4    Factors Affecting Consumer Behavior. 89

5.1.5    Importance of Understanding Consumer Behavior. 89

5.2     Business Behavior. 90

5.2.1    Production Function. 90

5.2.2    Isoquant Curve. 91

5.2.3    Profit Maximization. 92

5.2.4    Factors Affecting Business Behavior. 93

5.2.5    Importance of Understanding Business Behavior. 94

5.3     Additional Reading: Funny and Surprising Situations in Consumer and Business Behavior  94

5.4     Questions and Answers. 97

6    Chapter 6: The Role of Government in the Economy. 100

6.1     Public Goods. 100

6.1.1    Characteristics of Public Goods. 100

6.1.2    The Free-Rider Problem.. 101

6.1.3    The Role of Government in Providing Public Goods. 101

6.2     Externalities. 102

6.2.1    Definition of Positive and Negative Externalities. 102

6.2.2    Impact of Externalities on Market Efficiency. 104

6.2.3    Government Measures to Address Externalities. 104

6.3     Income Redistribution. 105

6.3.1    Policy Tools for Income Redistribution. 105

6.3.2    Debate on Equity and Efficiency in Income Redistribution. 106

6.4     Debates on the Extent of Government Intervention. 108

6.4.1    Free Market vs. Government Intervention Schools of Thought. 108

6.4.2    Arguments for and Against Government Intervention. 109

6.5     Additional Reading: The Economic Goals of the United States. 111

6.6     Questions and Answers. 114

7    Chapter 7: Measuring Economic Activity. 118

7.1     Gross Domestic Product (GDP). 118

7.1.1    Definition and Methods of Calculating GDP. 118

7.1.2    Components of GDP. 119

7.1.3    Nominal GDP and Real GDP. 120

7.1.4    Limitations of GDP as a Measure of Well-being. 120

7.2     Inflation. 121

7.2.1    Definition and Measures of Inflation (CPI, GDP Deflator). 121

7.2.2    Causes and Effects of Inflation. 122

7.3     Unemployment. 124

7.3.1    Definition and Types of Unemployment. 124

7.3.2    Natural Rate of Unemployment. 125

7.3.3    Economic and Social Costs of Unemployment. 125

7.4     Additional Reading: Stories About GDP: When Numbers Don't Tell the Whole Story  127

7.5     Questions and Answers. 129

8    Chapter 8: Business Cycles. 133

8.1     Phases of the business cycle. 133

8.2     Causes of Economic Fluctuations. 136

8.2.1    Supply Shocks and Demand Shocks. 136

8.2.2    The Role of Expectations. 137

8.3     Policies to stabilize the economy: 138

8.3.1    Fiscal Policy and Monetary Policy. 138

8.3.2    Debates on the Effectiveness of Stabilization Policies. 140

8.4     Additional Reading: The History of Global Economic Thought and the Formation of Macroeconomics  141

8.5     Questions and Answers. 144

9    Chapter 9: Money and Banking.. 149

9.1     Functions of Money. 149

9.2     Money Supply. 151

9.3     Banking System.. 154

9.3.1    Role of the Central Bank and Commercial Banks. 154

9.3.2    The Process of Money Creation by Banks. 155

9.4     Federal Reserve (Fed). 156

9.4.1    Structure and Functions of the Fed. 156

9.4.2    Fed's Monetary Policy Tools. 157

9.5     Additional Reading: The Basic Characteristics of Capitalism (Market Economy): From Theory to Practice  159

9.6     Questions and Answers. 162

10     Chapter 10: Fiscal and Monetary Policy. 166

10.1     Fiscal Policy: A Deeper Dive. 166

10.1.1  Government Spending and Taxes: The Levers of Influence. 166

10.1.2  The Ripple Effect: Impact on Aggregate Demand and Output. 167

10.1.3  The Balancing Act: Budget Deficits and Public Debt. 168

10.2     Monetary Policy: Navigating the Economic Seas. 169

10.2.1  Goals of Monetary Policy. 169

10.2.2  The Transmission Mechanism: How Monetary Policy Works. 171

10.2.3  The Delicate Dance: Coordination between Fiscal and Monetary Policy. 172

10.3     Additional Reading: Institutional Economics: When the "Rules of the Game" Determine the Outcome  173

10.4     Questions and Answers. 176

11     Chapter 11: International Trade. 180

11.1     Benefits of International Trade. 180

11.1.1  Absolute Advantage and Comparative Advantage. 180

11.1.2  Market Expansion and Product Diversification. 181

11.2     Barriers to Trade. 183

11.2.1  Tariffs, Quotas, and Non-Tariff Measures. 183

11.2.2  Arguments for and Against Trade Protection. 185

11.3     Globalization: A World Interconnected. 186

11.3.1  Definition and Manifestations of Globalization. 186

11.3.2  Impact of Globalization on the U.S. Economy. 187

11.4     Additional Reading: The Impossible Trinity in Economics. 189

11.5     Questions and Answers. 191

12     Chapter 12: Other Global Economic Issues. 197

12.1     Public Debt: A Balancing Act. 197

12.1.1  Causes and Effects of High Public Debt. 197

12.1.2  Solutions to Reduce Public Debt. 200

12.2     Financial Crises: The Unraveling of Confidence. 201

12.2.1  Causes and Developments of Financial Crises. 201

12.2.2  Lessons Learned and Preventive Measures. 203

12.3     Climate Change: The Economic Toll. 204

12.3.1  Economic Impact of Climate Change. 204

12.3.2  Policies to Address Climate Change. 206

12.4     Migration: Flows of People, Flows of Impact. 207

12.4.1  Economic Impact of Migration. 207

12.4.2  Policies to Manage Migration. 209

12.5     Additional reading: The Dot-com Bubble: The Internet Craze and the Painful Awakening   210

12.6     Questions and Answers. 212

13     Chapter 13: Personal Finance Management. 218

13.1     Personal Budget: Income, Expenses, Savings. 218

13.1.1  Income. 218

13.1.2  Expenses. 219

13.1.3  Savings. 219

13.1.4  Creating and tracking a personal budget. 220

13.1.5  Some Principles for Effective Personal Budget Management. 220

13.1.6  Credit (Borrowing Money) & Smart Spending: Building Your Financial Reputation   221

13.2     Investment: Types of investments, risks, and returns. 223

13.2.1  Common types of investments. 224

13.2.2  Risks and returns. 225

13.2.3  Choosing the right investment. 225

13.3     Principles of smart investing. 226

13.3.1  Common types of insurance. 227

13.3.2  The Importance of Insurance. 228

13.3.3  Choosing the right insurance. 229

13.3.4  Some notes when buying insurance. 229

13.4     Additional Reading: Towards Financial Freedom: Not Just a Dream, But a Journey  230

13.5     Questions and answers. 233

 

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