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The Economics Book

Book Description

The Economics Book clearly and simply explains more than one hundred groundbreaking ideas in economics, from the earliest experiences of trade to global economic crises.

Using easy-to-follow graphics and artworks, succinct quotations, and thoroughly accessible text, The Economics Book makes abstract concepts of money and trade concrete.

The Economics Book includes innovative ideas from the history of economics, from Thomas Aquinas' rules of markets and morality to Jeffrey Sachs' theories on international debt relief. Learn about the earliest ideas in economics, such as property rights and the function of money, and progress to present-day economic thought, from explanations on economic bubbles to the relationship between economics and the environment.

The Economics Book includes:

- More than 100 key ideas and principles in economic thought, from antiquity to present day

- Brief biographies and context boxes to give the full historical context of each idea

- A reference section with a glossary of economic terms and a directory of economic thinkers

The clear and concise summaries, graphics, and quotations in The Economics Book will help even the complete novice understand the fascinating world of economic thought.

Table of Contents

  1. INTRODUCTION
  2. LET THE TRADING BEGIN 400 BCE–1770 CE
    1. Property should be private • Property rights
    2. What is a just price? • Markets and morality
    3. You don’t need to barter when you have coins • The function of money
    4. Make money from money • Financial services
    5. Money causes inflation • The quantity theory of money
    6. Protect us from foreign goods • Protectionism and trade
    7. The economy can be counted • Measuring wealth
    8. Let firms be traded • Public companies
    9. Wealth comes from the land • Agriculture in the economy
    10. Money and goods flow between producers and consumers • The circular flow of the economy
    11. Private individuals never pay for street lights • Provision of public goods and services
  3. THE AGE OF REASON 1770–1820
    1. Man is a cold, rational calculator • Economic man
    2. The invisible hand of the market brings order • Free market economics
    3. The last worker adds less to output than the first • Diminishing returns
    4. Why do diamonds cost more than water? • The paradox of value
    5. Make taxes fair and efficient • The tax burden
    6. Divide up pin production, and you get more pins • The division of labor
    7. Population growth keeps us poor • Demographics and economics
    8. Meetings of merchants end in conspiracies to raise prices • Cartels and collusion
    9. Supply creates its own demand • Gluts in markets
    10. Borrow now, tax later • Borrowing and debt
    11. The economy is a yo-yo • Boom and bust
    12. Trade is beneficial for all • Comparative advantage
  4. INDUSTRIAL AND ECONOMIC REVOLUTIONS 1820–1929
    1. How much should I produce, given the competition? • Effects of limited competition
    2. Phone calls cost more without competition • Monopolies
    3. Crowds breed collective insanity • Economic bubbles
    4. Let the ruling classes tremble at a communist revolution • Marxist economics
    5. The value of a product comes from the effort needed to make it • The labor theory of value
    6. Prices come from supply and demand • Supply and demand
    7. You enjoy the last chocolate less than the first • Utility and satisfaction
    8. When the price goes up, some people buy more • Spending paradoxes
    9. A system of free markets is stable • Economic equilibrium
    10. If you get a pay raise, buy caviar not bread • Elasticity of demand
    11. Companies are price takers not price makers • The competitive market
    12. Make one person better off without hurting the others • Efficiency and fairness
    13. The bigger the factory, the lower the cost • Economies of scale
    14. The cost of going to the movies is the fun you’d have had at an ice rink • Opportunity cost
    15. Workers must improve their lot together • Collective bargaining
    16. People consume to be noticed • Conspicuous consumption
    17. Make the polluter pay • External costs
    18. Protestantism has made us rich • Religion and the economy
    19. The poor are unlucky, not bad • The poverty problem
    20. Socialism is the abolition of rational economy • Central planning
    21. Capitalism destroys the old and creates the new • Creative destruction
  5. WAR AND DEPRESSIONS 1929–1945
    1. Unemployment is not a choice • Depressions and unemployment
    2. Some people love risk, others avoid it • Risk and uncertainty
    3. Government spending boosts the economy by more than what is spent • The Keynesian multiplier
    4. Economies are embedded in culture • Economics and tradition
    5. Managers go for perks, not their company’s profits • Corporate governance
    6. The economy is a predictable machine • Testing economic theories
    7. Economics is the science of scarce resources • Definitions of economics
    8. We wish to preserve a free society • Economic liberalism
    9. Industrialization creates sustained growth • The emergence of modern economies
    10. Different prices to different people • Price discrimination
  6. POST-WAR ECONOMICS 1945–1970
    1. In the wake of war and depression, nations must cooperate • International trade and Bretton Woods
    2. All poor countries need is a big push • Development economics
    3. People are influenced by irrelevant alternatives • Irrational decision making
    4. Governments should do nothing but control the money supply • Monetarist policy
    5. The more people at work, the higher their bills • Inflation and unemployment
    6. People smooth consumption over their life spans • Saving to spend
    7. Institutions matter • Institutions in economics
    8. People will avoid work if they can • Market information and incentives
    9. Theories about market efficiency require many assumptions • Markets and social outcomes
    10. There is no perfect voting system • Social choice theory
    11. The aim is to maximize happiness, not income • The economics of happiness
    12. Policies to correct markets can make things worse • The theory of the second best
    13. Make markets fair • The social market economy
    14. Over time, all countries will be rich • Economic growth theories
    15. Globalization is not inevitable • Market integration
    16. Socialism leads to empty shops • Shortages in planned economies
    17. What does the other man think I am going to do? • Game theory
    18. Rich countries impoverish the poor • Dependency theory
    19. You can’t fool the people • Rational expectations
    20. People don’t care about probability when they choose • Paradoxes in decision making
    21. Similar economies can benefit from a single currency • Exchange rates and currencies
    22. Famine can happen in good harvests • Entitlement theory
  7. CONTEMPORARY ECONOMICS 1970–PRESENT
    1. It is possible to invest without risk • Financial engineering
    2. People are not 100 percent rational • Behavioral economics
    3. Tax cuts can increase the tax take • Taxation and economic incentives
    4. Prices tell you everything • Efficient markets
    5. Over time, even the selfish cooperate with others • Competition and cooperation
    6. Most cars traded will be lemons • Market uncertainty
    7. The government’s promises are incredible • Independent central banks
    8. The economy is chaotic even when individuals are not • Complexity and chaos
    9. Social networks are a kind of capital • Social capital
    10. Education is only a signal of ability • Signaling and screening
    11. The East Asian state governs the market • Asian Tiger economies
    12. Beliefs can trigger currency crises • Speculation and currency devaluation
    13. Auction winners pay over the odds • The winner’s curse
    14. Stable economies contain the seeds of instability • Financial crises
    15. Businesses pay more than the market wage • Incentives and wages
    16. Real wages rise during a recession • Sticky wages
    17. Finding a job is like finding a partner or a house • Searching and matching
    18. The biggest challenge for collective action is climate change • Economics and the environment
    19. GDP ignores women • Gender and economics
    20. Comparative advantage is an accident • Trade and geography
    21. Like steam, computers have revolutionized economies • Technological leaps
    22. We can kick-start poor economies by writing off debt • International debt relief
    23. Pessimism can destroy healthy banks • Bank runs
    24. Savings gluts abroad fuel speculation at home • Global savings imbalances
    25. More equal societies grow faster • Inequality and growth
    26. Even beneficial economic reforms can fail • Resisting economic change
    27. The housing market mirrors boom and bust • Housing and the economic cycle
  8. DIRECTORY
  9. GLOSSARY
  10. CONTRIBUTORS
  11. ACKNOWLEDGMENTS
  12. COPYRIGHT