Table of Contents
Cover
Series page
Title page
Copyright page
INTRODUCTION
CHAPTER 1 GROWTH
WHAT IS ECONOMIC GROWTH?
THREE MEASURES OF ACTIVITY
HOW IT ALL FITS TOGETHER
FOCUS ON HOUSEHOLD SPENDING AND INVESTMENT BY FIRMS
VOLUMES, VALUES AND THE SEASONS
BUSINESS CYCLES AND TREND GROWTH
MULTIPLIERS
SPARE CAPACITY AND THE ‘OUTPUT GAP’
RECESSIONS AND DEPRESSIONS
COMPARING ECONOMIES ACROSS THE WORLD
WHAT TO WATCH
CHAPTER 2 INFLATION
WHAT IS INFLATION?
HOW PRICES ARE DETERMINED
CAUSES OF INFLATION: DEMAND-PULL VERSUS COST-PUSH
THE IMPORTANCE OF INFLATION
EXPECTATIONS
A HISTORY OF INFLATION
CHAPTER 3 EMPLOYMENT
INTRODUCTION
MEASURING JOBS AND JOBLESSNESS
THE JOBS MARKET AND WAGES
TYPES OF UNEMPLOYMENT
OKUN’S LAW
TIME LAGS
PRODUCTIVITY
THE PHILLIPS CURVE AND THE ‘NATURAL RATE’ OF UNEMPLOYMENT
WHY THE PHILLIPS CURVE STOPPED WORKING
CHANGES IN THE WORKFORCE
CHAPTER 4 TRADE
WHAT IS INTERNATIONAL TRADE?
COMPARATIVE ADVANTAGE
THE BALANCE OF PAYMENTS
CURRENCIES AND TRADE
GOING BACK TO BALANCE
PURCHASING POWER PARITY
THE ASIAN CRISIS
PROTECTIONISM
GLOBAL TRADE DEALS
CHAPTER 5 MONEY
WHY DOES MONEY EXIST?
WHAT IS MONEY TODAY?
MONEY DEMAND – THE MOTIVES FOR HOLDING MONEY
MONEY SUPPLY AND CREDIT CREATION
HOW INTEREST RATES ARE DETERMINED
THE QUANTITY THEORY OF MONEY
THE IMPORTANCE OF MONEY IN PRACTICE
THE BORROWERS AND SAVERS OF MONEY
HOUSEHOLD BORROWING AND DEBT
BORROWING BY FIRMS
THE EFFECT OF BORROWING ON THE ECONOMY
THE 2007 CREDIT CRISIS – IN A NUTSHELL
CHAPTER 6 CENTRAL BANKING
WHAT DO CENTRAL BANKS DO?
HOW CENTRAL BANKING STARTED
INTEREST RATES
THE TRANSMISSION MECHANISM
FORECASTING
INFLATION TARGETING
MONETARY POLICY RULES
QUANTITATIVE EASING
FINANCIAL STABILITY
CHAPTER 7 THE PUBLIC FINANCES
WHAT ARE THE PUBLIC FINANCES?
BALANCING THE BUDGET
THE ROLE OF GOVERNMENT
THE KEYNESIAN APPROACH
TAXES
DEBT AND BOND MARKETS
SOVEREIGN DEFAULTS
CHAPTER 8 HOUSING
THE MARKET FOR HOUSING
HOW WE MEASURE HOUSE PRICES
WHAT DRIVES THE PRICE OF HOUSES?
AFFORDABILITY
HOUSING AS AN INVESTMENT
THE IMPORTANCE OF HOUSING TO THE WIDER ECONOMY
BUBBLE TROUBLE AND THE SUB-PRIME CRISIS
CONCLUSION
ACKNOWLEDGEMENTS
SOURCES
Index
This is the stuff you’ve always been embarrassed to ask about the world of modern business.
That What You Need to Know … books can get you up to speed on a core business subject fast. Whether it’s for a new job, a new responsibility, or a meeting with someone you need to impress, these books will give you what you need to get by from someone who knows what they’re talking about.
Each book contains:
- What It’s all About – A summary of key points
- Who You Need to Know – The basics about the key players
- Who Said It – Quotes from key figures
- What You Need to Read – Books and online resources for if you want to deepen your knowledge
- How You Need to Do It – Key tips for using the knowledge
- If You Only Remember One Thing – A one-liner of the most important information
You might also want to know:
- What You Need to Know about Business
- What You Need to Know about Project Management
- What You Need to Know about Strategy
- What You Need to Know about Leadership
- What You Need to Know about Marketing
- What You Need to Know about Starting a Business
This edition first published 2011
© 2011 George Buckley and Sumeet Desai
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Have you ever wondered what makes an economy tick, and why recessions happen? Or why prices rise and fall? Why do governments borrow money, and why does it matter if they borrow too much? What causes unemployment? Why are house prices so important for the economy? And what is it that causes our savings rates and the cost of borrowing to move up and down?
If you have, then you’re already interested in economics.
These are the sort of issues that we hear about every day in the newspapers and on the television news. There’s always been a certain fascination with what’s going on in the economy. This has been particularly true since the global credit crisis, with the recession that followed having had such as large impact on economies and businesses worldwide.
Never has it been more important to understand what’s going on in the world of economics. The last few years have shown us that we can’t always rely on strong economic growth and a rate of inflation that remains stable from one year to the next. Sometimes things go wrong, and when they do the economy is rarely out of the news.
To the uninitiated, understanding economics can be a daunting prospect. Sometimes news stories assume that the reader, viewer or listener knows more about economics than is actually the case. But you don’t need a degree to understand economics. In fact, economics is a very logical subject and the basics can be grasped very easily. It is no coincidence that the eighteenth century economist Adam Smith – dubbed the Father of Economics – began his career at Glasgow University as Professor of Logic.
What this book aims to do is to provide a basic introduction to the subject of economics. Understanding economics is one of the cornerstones of running any business. So having a feel for what’s going on in the economy will give you a much better idea of the factors that are driving your business – both now and in the future.
Whether you’re in business and want to have a better feel for the economic forces that are affecting your bottom line, or you’re just looking to improve your general awareness of how the economy works, then this book provides a simple introduction to the subject. It explains key economic ideas in simple terms, and we hope it will whet your appetite for reading more about the subject of economics in the future.
So, in summary, if you’re after an introduction to the broad field of economics then you need look no further than this book. Economics is a fascinating subject, one which is becoming ever more popular within schools and universities up and down the country. Take a look in your local bookshop and you’ll see how much interest there is by the number of books on popular economics and, in particular, the recent credit crisis.
This book gives you the resources you need to get a clearer picture of how the economy works, what economic developments mean for you and your business, and an ability to better understand the economic analysis and discussion you read in the newspapers and see on television every day.