Economics

Name: Economics
Price: 4570 ISK
Availability: InStock
Author: Michael Parkin; Melanie Powell; Kent Matthews
ISBN: 9781292750019

Höfundar: Michael Parkin; Melanie Powell; Kent Matthews (Útgáfa: 12)

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Economics touches almost every aspect of life: from climate change policy to employee salaries, house prices to how much time one spends studying! Economics, 12th European Edition by Parkin, Powell & Matthews gets you to think like an economist by incorporating the latest policy, data and discussions on important global issues, and enables you to evaluate economic practices to make more informed decisions.

This text offers a thorough overview with clear graphs to represent economic concepts visually, a strong focus on real-world applications, and regular opportunities to check your understanding. Case studies on current issues and features such as 'Economics in Action' showcase how economic theories apply to the latest developments in Europe and the UK, including European debates on offshore outsourcing, consideration of the impacts of food price growth caused by the invasion of Ukraine, and more.

Take the path that all leading economists began on, with this comprehensive textbook. "Parkin et al. remains a constant beacon of quality and standards, and is at the top of my reading list. The chapters begin with real-world context before explaining clearly the formal tools that economist use. The explanations are pithy and accessible, the diagrams are very clearly drawn and accurate. The summaries, helpful practice questions and suggested study plans, linked to MyLab, offer students a complete learning experience.

" - Dr Tim Wakeley, Senior Lecturer in Business Economics and Associate Dean, University of Bath "Provides a clear, reader-friendly and rigorous introduction to economic principles, combining strong theoretical foundations with relevant real-world examples. It remains an excellent core text for undergraduate economics students. " - Nicholas Vasilakos, Professor of Sustainable Business Economics & Public Policy, University of East Anglia Pair this text with MyLab Economics MyLab is the teaching and learning platform available to support this title.

By combining trusted author content with digital tools and a flexible learning experience, MyLab Economics personalises learning and assessment to help improve results MyLab Economics is not included with this title. If you would like to purchase both the physical textbook and MyLab (which also comes with the eBook), search for: 9781292750002 which consists of: Print textbook eTextbook MyLab Economics.

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Útgefandi: Pearson International Content

ISBN: 9781292750019

Print ISBN: 9781292482132

Format: ePub

Útgáfa: 12

Höfundar: Michael Parkin; Melanie Powell; Kent Matthews

Tungumál: English

Útgefið: 2026-08-20

Prent takmörkun á líftíma: 100

Prent takmörkun: 2

Afritunar takmörkun: 2

Kaflar

Welcome
Welcome
Copyright
Copyright
Copyright
About the Authors
About the Authors
Preface
Preface
Chapter 1: What is Economics?
Chapter 1: What is Economics?
1.1 A Definition of Economics
1.1 A Definition of Economics
1.2 Two Big Economic Questions
1.2 Two Big Economic Questions
What, How and for Whom?
Do Choices Made in the Pursuit of Self-interest also Promote the Social Interest?
Economics in the News: The Invisible Hand
At Issue: The Protest Against Market Capitalism
1.3 The Economic Way of Thinking
1.3 The Economic Way of Thinking
A Choice is a Trade-off
Making a Rational Choice
Benefit: What You Gain
Cost: What You Must Give Up
How Much? Choosing at the Margin
Choices Respond to Incentives
1.4 Economics as a Social Science and Policy Tool
1.4 Economics as a Social Science and Policy Tool
Economist as Social Scientist
Economist as Policy Adviser
1.5 Economist in the Economy
1.5 Economist in the Economy
Jobs for an Economics Graduate
Will Jobs for Economics Graduates Grow?
Earnings of Economics Graduates
Skills Needed for Economics Jobs
A Diversity, Equity and Inclusion Challenge in the Economics Profession
Summary
Summary
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 1 Appendix: Graphs in Economics
Chapter 1 Appendix: Graphs in Economics
Graphing Data
Graphing Economic Data
Scatter Diagrams
Graphs Used in Economic Models
The Slope of a Relationship
Graphing Relationships Among More Than Two Variables
Mathematical Note
A Linear Equation
Slope of a Line
Position of the Line
Positive Relationships
Negative Relationships
Summary
Summary
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 2: The Economic Problem
Chapter 2: The Economic Problem
2.1 Production Possibilities and Opportunity Cost
2.1 Production Possibilities and Opportunity Cost
Production Possibilities Frontier
Production Efficiency
Trade-off Along the PPF
Opportunity Cost
Economics in the News: The Opportunity Cost of Plant-based Protein
2.2 Using Resources Efficiently
2.2 Using Resources Efficiently
PPF and Marginal Cost
Preferences and Marginal Benefit
Efficient Use of Resources
2.3 Gains from Trade
2.3 Gains from Trade
Comparative Advantage and Absolute Advantage
Achieving the Gains from Trade
The Erin–Jack Economy and its PPF
2.4 Economic Growth
2.4 Economic Growth
The Cost of Economic Growth
Economics in Action: Singapore Leaves Europe in the Dust
A Nation’s Economic Growth
Changes in What We Produce
2.5 Economic Coordination
2.5 Economic Coordination
Circular Flows Through Markets
Coordinating Decisions
Economics in the News: Expanding Production Possibilities
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 3: Demand and Supply
Chapter 3: Demand and Supply
3.1 Markets and Prices
3.1 Markets and Prices
A Competitive Market
3.2 Demand
3.2 Demand
The Law of Demand
Demand Curve and Demand Schedule
Change in Demand
A Change in the Quantity Demanded Versus a Change in Demand
3.3 Supply
3.3 Supply
The Law of Supply
Supply Curve and Supply Schedule
Change in Supply
A Change in the Quantity Supplied Versus a Change in Supply
3.4 Market Equilibrium
3.4 Market Equilibrium
Price as a Regulator
Price Adjustments
3.5 Predicting Changes in Price and Quantity
3.5 Predicting Changes in Price and Quantity
An Increase in Demand
A Decrease in Demand
Economics in the News: The Market for Copper
An Increase in Supply
A Decrease in Supply
Economics in the News: The UK Market for Strawberries
Changes in Both Demand and Supply
Economics in the News: The Market for Olive Oil
Mathematical Note
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 4: Elasticity
Chapter 4: Elasticity
4.1 Price Elasticity of Demand
4.1 Price Elasticity of Demand
Calculating the Price Elasticity of Demand
Inelastic and Elastic Demand
Factors That Influence the Elasticity of Demand
Elasticity Along a Linear Demand Curve
Total Revenue and Elasticity
Economics in Action: Elastic and Inelastic Demand
Economics in the News: The Price Elasticity of Demand for Olive Oil
Your Expenditure and Your Elasticity
4.2 More Elasticities of Demand
4.2 More Elasticities of Demand
Income Elasticity of Demand
Economics in Action: Income Elasticities of Demand
Economics in Action: Necessities and Luxuries
Cross Elasticity of Demand
Economics in the News: Cross Elasticity of Demand for Train Travel
4.3 Elasticity of Supply
4.3 Elasticity of Supply
Calculating the Elasticity of Supply
Factors That Influence the Elasticity of Supply
Economics in the News: The Elasticity of Demand for Cocoa
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 5: Efficiency and Equity
Chapter 5: Efficiency and Equity
5.1 Resource Allocation Methods
5.1 Resource Allocation Methods
5.2 Benefit, Cost and Surplus
5.2 Benefit, Cost and Surplus
Demand, Willingness to Pay and Value
Individual Demand and Market Demand
Consumer Surplus
Supply and Marginal Cost
Supply, Cost and Minimum Supply-price
Individual Supply and Market Supply
Producer Surplus
5.3 Is the Competitive Market Efficient?
5.3 Is the Competitive Market Efficient?
Efficiency of Competitive Equilibrium
Economics in Action: The Invisible Hand
Market Failure
Sources of Market Failure
Alternatives to the Market
5.4 Is the Competitive Market Fair?
5.4 Is the Competitive Market Fair?
It’s Not Fair if the Result Isn’t Fair
It’s Not Fair if the Rules Aren’t Fair
Case Study: A Shortage of Hotel Rooms in a Natural Disaster
At Issue: Price Gouging
Economics in the News: Pricing to Use Resources Efficiently
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 6: Government Actions in Markets
Chapter 6: Government Actions in Markets
6.1 A Housing Market with a Rent Ceiling
6.1 A Housing Market with a Rent Ceiling
A Housing Shortage
Increased Search Activity
Illegal Trading
Inefficiency of Rent Ceilings
Are Rent Ceilings Fair?
Allocating Housing Among Demanders
Economics in Action: Rent Ceilings: A Political Winner?
6.2 A Labour Market with a Minimum Wage
6.2 A Labour Market with a Minimum Wage
Minimum Wage Brings Unemployment
Is the Minimum Wage Fair?
Inefficiency of a Minimum Wage
At Issue: Does the Minimum Wage Cause Unemployment?
6.3 Taxes
6.3 Taxes
Tax Incidence
A Tax on Sellers
A Tax on Buyers
Equivalence of Tax on Buyers and Sellers
Tax Incidence and Elasticity of Demand
Tax Incidence and Elasticity of Supply
Taxes and Efficiency
Taxes and Fairness
Economics in Action: Workers and Consumers Pay Most Tax
6.4 Production Quotas and Subsidies and Price Supports
6.4 Production Quotas and Subsidies and Price Supports
Production Quotas
Production Subsidies
Price Supports
Economics in Action: Rich High-Cost Farmers the Winners
6.5 Markets for Illegal Goods
6.5 Markets for Illegal Goods
Economics in the News: Inefficient Rent Ceilings
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 7: Global Markets in Action
Chapter 7: Global Markets in Action
7.1 How Global Markets Work
7.1 How Global Markets Work
International Trade Today
What Drives International Trade?
Economics in Action: EU Trade Focus
Why the UK Imports Cars
Why the UK Exports Chemicals
7.2 Winners, Losers and the Net Gain from Trade
7.2 Winners, Losers and the Net Gain from Trade
Gains and Losses from Imports
Gains and Losses from Exports
7.3 International Trade Restrictions
7.3 International Trade Restrictions
Tariffs
Economics in Action: Free Trade and EU Tariffs
Import Quotas
Economics in the News: Brexit and UK Trade
Export Subsidies
Other Import Barriers
7.4 The Case Against Protection
7.4 The Case Against Protection
At Issue: Is Offshore Outsourcing Bad or Good for the UK?
Avoiding Trade Wars
Why is International Trade Restricted?
Economics in the News: Subsidy and Retaliatory Tariffs: EU Electric Car Market
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 8: Households’ Choices
Chapter 8: Households’ Choices
8.1 Consumption Possibilities
8.1 Consumption Possibilities
Budget Line
Budget Equation
8.2 Preferences and Indifference Curves
8.2 Preferences and Indifference Curves
Marginal Rate of Substitution
Degree of Substitutability
8.3 Predicting Consumer Behaviour
8.3 Predicting Consumer Behaviour
Best Affordable Choice
Price Effect
Economics in Action: Best Affordable Choice of Cinema Films and Streaming
Income Effect
Substitution Effect and Income Effect
8.4 New Ways of Explaining Households’ Choices
8.4 New Ways of Explaining Households’ Choices
Behavioural Economics
Neuroeconomics
Controversy
Economics in the News: Consumer Shift to Own-brand Goods
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 9: Organising Production
Chapter 9: Organising Production
9.1 The Firm and its Economic Problem
9.1 The Firm and its Economic Problem
The Firm’s Goal
Accounting Profit
Economic Accounting
Opportunity Cost of Production
Economic Accounting: A Summary
The Firm’s Decisions
The Firm’s Constraints
9.2 Technological and Economic Efficiency
9.2 Technological and Economic Efficiency
Technological Efficiency
Economic Efficiency
9.3 Information and Organisation
9.3 Information and Organisation
Command Systems
Incentive Systems
The Principal–Agent Problem
Coping with the Principal–Agent Problem
Types of Business Organisations
Economics in the News: Principals and Agents Get it Wrong
Pros and Cons of Different Types of Firms
Economics in Action: Types of Firms in the UK Economy
9.4 Markets and the Competitive Environment
9.4 Markets and the Competitive Environment
Identifying Market Structure
Economics in Action: Concentration in Europe
UK Market Structures
9.5 Produce or Outsource? Firms and Markets
9.5 Produce or Outsource? Firms and Markets
Firm Coordination
Market Coordination
Why Firms?
Economics in Action: Apple Doesn’t Make the iPhone
Economics in the News: Competition in Markets for Internet Advertising
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 10: Output and Costs
Chapter 10: Output and Costs
10.1 Time Frames for Decisions
10.1 Time Frames for Decisions
Short Run
Long Run
10.2 Short-run Technology Constraint
10.2 Short-run Technology Constraint
Product Schedules
Product Curves
Total Product Curve
Marginal Product Curve
Average Product Curve
Economics in Action: How to Pull Up Your Average
10.3 Short-run Cost
10.3 Short-run Cost
Total Cost
Marginal Cost
Average Cost
Marginal Cost and Average Cost
Why the Average Total Cost Curve is U-Shaped
Cost Curves and Product Curves
Shifts in the Cost Curves
Economics in the News: Checkout Cost Curves
10.4 Long-run Cost
10.4 Long-run Cost
Production Function
Short-run Cost and Long-run Cost
Long-run Average Cost Curve
Economies and Diseconomies of Scale
Economics in Action: Produce More to Cut Cost
Economics in the News: Expanding Capacity at Amazon
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 10 Appendix: Producing at Least Cost
Chapter 10 Appendix: Producing at Least Cost
Isoquants and Factor Substitution
Isocost Lines
Least-cost Technique
Key terms: Appendix 10
Chapter 11: Perfect Competition
Chapter 11: Perfect Competition
11.1 What is Perfect Competition?
11.1 What is Perfect Competition?
How Perfect Competition Arises
Price Takers
Economic Profit and Revenue
The Firm’s Decisions
11.2 The Firm’s Output Decision
11.2 The Firm’s Output Decision
Marginal Analysis
Temporary Shutdown Decision
A Firm’s Short-run Supply Curve
11.3 Output, Price and Profit in the Short Run
11.3 Output, Price and Profit in the Short Run
Market Supply in the Short Run
Short-run Equilibrium
Change in Demand
Profits and Losses in the Short Run
Economics in Action: Production Cutback and Temporary Shutdown
11.4 Output, Price and Profit in the Long Run
11.4 Output, Price and Profit in the Long Run
Entry and Exit
A Closer Look at Entry
A Closer Look at Exit
Economics in Action: Entry and Exit
Long-run Equilibrium
11.5 Changes in Demand and Supply as Technology Advances
11.5 Changes in Demand and Supply as Technology Advances
Increase in Demand
Decrease in Demand
Economics in the News: Vinyl’s Comeback
Technological Advances Change Supply
Economics in the News: Falling Cost of Sequencing DNA
11.6 Competition and Efficiency
11.6 Competition and Efficiency
Efficient Use of Resources
Choices, Equilibrium and Efficiency
Economics in the News: Perfect Competition in Lavender Oil
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 12: Monopoly
Chapter 12: Monopoly
12.1 Monopoly and How it Arises
12.1 Monopoly and How it Arises
How Monopoly Arises
Economics in Action: Information-age Monopolies
Monopoly Price-setting Strategies
12.2 Single-price Monopoly’s Output and Price Decision
12.2 Single-price Monopoly’s Output and Price Decision
Price and Marginal Revenue
Marginal Revenue and Elasticity
Price and Output Decision
12.3 Single-price Monopoly and Competition Compared
12.3 Single-price Monopoly and Competition Compared
Comparing Price and Output
Efficiency Comparison
Redistribution of Surpluses
Rent Seeking
Rent-seeking Equilibrium
12.4 Price Discrimination
12.4 Price Discrimination
Two Ways of Price Discriminating
Increase Profit and Producer Surplus
Profiting by Price Discriminating
Perfect Price Discrimination
Economics in Action: Attempting Perfect Price Discrimination
Efficiency and Rent Seeking with Price Discrimination
Economics in the News: Microsoft Monopoly
12.5 Monopoly Regulation
12.5 Monopoly Regulation
Efficient Regulation of a Natural Monopoly
Second-best Regulation of a Natural Monopoly
Economics in the News: Is Google Misusing Monopoly Power?
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 13: Monopolistic Competition
Chapter 13: Monopolistic Competition
13.1 What is Monopolistic Competition?
13.1 What is Monopolistic Competition?
Large Number of Firms
Product Differentiation
Competing on Quality, Price and Marketing
Economics in Action: Monopolistic Competition in Europe
Entry and Exit
Examples of Monopolistic Competition
13.2 Price and Output in Monopolistic Competition
13.2 Price and Output in Monopolistic Competition
The Firm’s Short-run Output and Price Decision
Profit Maximising Might Be Loss Minimising
Long Run: Zero Economic Profit
Monopolistic Competition and Perfect Competition
Is Monopolistic Competition Efficient?
13.3 Product Development and Marketing
13.3 Product Development and Marketing
Innovation and Product Development
Advertising
Economics in Action: Advertising Expenditures
Using Advertising to Signal Quality
Brand Names
Efficiency of Advertising and Brand Names
Economics in the News: Product Differentiation in Restaurant Service
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 14: Oligopoly
Chapter 14: Oligopoly
14.1 What is Oligopoly?
14.1 What is Oligopoly?
Barriers to Entry
Economics in Action: Oligopoly in Europe
Small Number of Firms
Examples of Oligopoly
14.2 Oligopoly Games
14.2 Oligopoly Games
What is a Game?
The Prisoners’ Dilemma
An Oligopoly Price-fixing Game
Economics in Action: A Game in the Global Card Payment Market
Game of Chicken
14.3 Repeated Games and Sequential Games
14.3 Repeated Games and Sequential Games
Repeated Duopoly Game
Economics in the News: Airbus versus Boeing
Sequential Entry Game in a Contestable Market
14.4 Antitrust Law
14.4 Antitrust Law
UK and EU Antitrust Laws
Price Fixing: Always Illegal
Three Antitrust Policy Debates
Economics in Action: The EU versus Microsoft
Mergers and Acquisitions
Economics in Action: The EU Blocks UK Mobile Merger
Economics in the News: Anticompetitive Practices in Cloud Services
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 15: Public Choices and Public Goods
Chapter 15: Public Choices and Public Goods
15.1 Public Choices
15.1 Public Choices
Why Governments?
Economics in Action: What UK Governments Provide
Political Equilibrium
What is a Public Good?
A Fourfold Classification
Mixed Goods
Economics in Action: Is a Lighthouse a Public Good?
Inefficiencies that Require Public Choices
15.2 Providing Public Goods
15.2 Providing Public Goods
Free-rider Problem
Marginal Social Benefit of a Public Good
Marginal Social Cost of a Public Good
Efficient Quantity of a Public Good
Inefficient Private Provision
Efficient Public Provision
Principle of Minimum Differentiation
Economics in Action: Public Provision Without Public Production: Private Prison Services
Inefficient Public Overprovision
15.3 Positive Externalities: Education and Healthcare
15.3 Positive Externalities: Education and Healthcare
Positive Externalities
Public Choices in Education
Economics in Action: Provision of University Education
Healthcare Services
Economics in Action: Global Healthcare Expenditures
At Issue: The NHS in Crisis: Can a Reform from Competition Between Purchasers and Providers to Collaboration Fix the NHS?
Economics in the News: Underprovision of UK Road Maintenance
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 16: Economics of the Environment
Chapter 16: Economics of the Environment
16.1 Negative Externalities: Pollution
16.1 Negative Externalities: Pollution
Economics in Action: Opposing Trends: Success and Failure
Negative Externalities
Establish Property Rights
Mandate Clean Technology
Tax or Cap and Price Pollution
Economics in Action: Global Prisoners’ Dilemma
Coping with Global Emissions
At Issue: Should We Be Doing More to Reduce Carbon Emissions?
16.2 The Tragedy of the Commons
16.2 The Tragedy of the Commons
Unsustainable Use of a Common Resource
Economics in Action: The Original Tragedy of the Commons
Inefficient Use of a Common Resource
Achieving an Efficient Outcome
Economics in Action: ITQs Work
Economics in the News: Cutting Carbon Emissions
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 17: Markets for Factors of Production
Chapter 17: Markets for Factors of Production
17.1 Anatomy of Factor Markets
17.1 Anatomy of Factor Markets
Markets for Labour Services
Markets for Capital Services
Markets for Land Services and Natural Resources
Entrepreneurship
17.2 Demand for a Factor of Production
17.2 Demand for a Factor of Production
Value of Marginal Product
Firm’s Demand for Labour
Firm’s Demand for Labour Curve
Changes in the Demand for Labour
17.3 Labour Markets
17.3 Labour Markets
Competitive Labour Market
Differences and Trends in Wage Rates
Economics in Action: Diversity of UK Wage Rates
Economics in the News: Explaining the Gender Pay Gap
Immigration and the Labour Market
Economics in Action: Some Immigration Facts
Labour Market with a Union
Economics in the News: Are Trades Unions in the UK a Spent Force?
17.4 Capital and Natural Resource Markets
17.4 Capital and Natural Resource Markets
Capital Rental Markets
Land Rental Markets
Non-renewable Natural Resource Markets
Economics in Action: The World and EU Markets for Oil
Economics in the News: Gig and Sharing Economy
Mathematical Note
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 18: Economic Inequality and Redistribution
Chapter 18: Economic Inequality and Redistribution
18.1 Economic Inequality in the UK
18.1 Economic Inequality in the UK
Distribution of Income
Income Lorenz Curve
Distribution of Wealth
Wealth or Income?
Annual or Lifetime Income and Wealth?
Trends in Inequality
Economics in Action: Who in the UK Are the Rich and Who Are the Poor?
Economics in Action: Poverty in EU
Poverty
18.2 Inequality in the World Economy
18.2 Inequality in the World Economy
Income Distributions in Selected Countries
Global Inequality and its Trends
18.3 Sources of Economic Inequality
18.3 Sources of Economic Inequality
Human Capital
Discrimination
Contests Among Superstars
Unequal Wealth
18.4 Income Redistribution
18.4 Income Redistribution
Income Taxes
Benefit Payments
Subsidised Welfare Services
Economics in Action: Redistribution in the EU and the UK
The Big Trade-off
Economics in the News: Income Inequality
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 19: Uncertainty and Information
Chapter 19: Uncertainty and Information
19.1: Decisions in the Face of Uncertainty
19.1: Decisions in the Face of Uncertainty
Expected Wealth
Risk Aversion
Utility of Wealth
Expected Utility
Making a Choice with Uncertainty
19.2 Buying and Selling Risk
19.2 Buying and Selling Risk
Insurance Markets
Graphical Analysis of Insurance
Risk that Can’t be Insured
Economics in Action: Insurance in the UK
19.3 Private Information
19.3 Private Information
Asymmetric Information: Examples and Problems
Market for Used Cars
Market for Loans
Economics in Action: The Sub-prime Credit Crisis
Market for Insurance
19.4 Uncertainty, Information and the Invisible Hand
19.4 Uncertainty, Information and the Invisible Hand
Information as a Good
Monopoly in Markets that Cope with Uncertainty
Economics in the News: Insuring Against Theft
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 20: Measuring GDP and Economic Growth
Chapter 20: Measuring GDP and Economic Growth
20.1 Gross Domestic Product
20.1 Gross Domestic Product
GDP Defined
Circular Flow of Expenditure and Income
Taxes, Market Price and Factor Cost
Gross and Net
20.2 Measuring UK GDP
20.2 Measuring UK GDP
Expenditure Approach
Income Approach
Nominal GDP and Real GDP
Calculating Real GDP
20.3 Uses and Limitations of Real GDP
20.3 Uses and Limitations of Real GDP
Standard of Living Over Time
Standard of Living Across Countries
Limitations of Real GDP
At Issue: Should GNNP Replace GDP?
Economics in Action: A Broader Indicator of Economic Wellbeing
The Bottom Line
Economics in the News: Real GDP After the COVID Pandemic
Chapter 20 Appendix: Graphs in Macroeconomics
Chapter 20 Appendix: Graphs in Macroeconomics
Time-series Graph
Graph That Uses a Ratio Scale
Mathematical Note
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 21: Monitoring Jobs and Inflation
Chapter 21: Monitoring Jobs and Inflation
21.1 Employment and Unemployment
21.1 Employment and Unemployment
Why Unemployment is a Problem
Economics in Action: What Kept John Maynard Keynes Awake at Night
Labour Force Survey
Three Labour Market Indicators
Other Definitions of Economic Inactivity and Unemployment
Most Costly Unemployment
Other Measures of Unemployment
21.2 Unemployment and Full Employment
21.2 Unemployment and Full Employment
Frictional Unemployment
Structural Unemployment
Cyclical Unemployment
‘Natural’ Unemployment
Real GDP and Unemployment Over the Business Cycle
Economics in Action: COVID-19, Economic Inactivity, and Long-term Sickness
21.3 Price Level, Inflation and Deflation
21.3 Price Level, Inflation and Deflation
Why Inflation and Deflation are Problems
Consumer Prices Index
Reading the CPI Numbers
Constructing the CPI
Other Price Indexes
Measuring the Inflation Rate
Distinguishing High Inflation from a High Price Level
Biased Price Indexes
Magnitude of the Bias
Some Consequences of Bias in the CPI
Alternative Price Indexes
Core Inflation
Real Variables in Macroeconomics
Economics in the News: Inflation After Lockdown
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 22: Economic Growth
Chapter 22: Economic Growth
22.1 Basics of Economic Growth
22.1 Basics of Economic Growth
Calculating Growth Rates
Economic Growth Versus Business Cycle Expansion
Magic of Sustained Growth
Applying the Rule of 70
22.2 Long-term Growth Trends
22.2 Long-term Growth Trends
Long-term Growth in the UK Economy
Real GDP Growth in the World Economy
Long-term Growth in Emerging Economies
22.3 How Potential GDP Grows
22.3 How Potential GDP Grows
What Determines Potential GDP?
What Makes Potential GDP Grow?
22.4 Why Labour Productivity Grows
22.4 Why Labour Productivity Grows
Preconditions for Labour Productivity Growth
Physical Capital Growth
Human Capital Growth
Economics in Action: Women Are the Better Borrowers
Technological Advances
Economics in Action: Intellectual Property Rights Propel Economic Growth
Economics in the News: Robots Raise Labour Productivity
22.5 Growth Theories, Evidence and Policies
22.5 Growth Theories, Evidence and Policies
Classical Growth Theory
Neoclassical Growth Theory
New Growth Theory
New Growth Theory versus Malthusian Theory
Sorting Out the Theories
Empirical Evidence on the Causes of Economic Growth
Policies for Achieving Faster Growth
Economics in the News: Low Investment and Slow Growth
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 23: Finance, Saving and Investment
Chapter 23: Finance, Saving and Investment
23.1: Financial Institutions and Financial Markets
23.1: Financial Institutions and Financial Markets
Finance and Money
Physical Capital and Financial Capital
Capital and Investment
Wealth and Saving
Financial Capital Markets
Financial Institutions
Economics in Action: Global Financial Crisis and the Fix
Insolvency and Illiquidity
Interest Rates and Asset Prices
Funds that Finance Investment
Real Interest Rate
Economics in Action: Nominal and Real Interest Rates
23.2: Loanable Funds Market
23.2: Loanable Funds Market
Demand for Loanable Funds
Supply of Loanable Funds
Equilibrium in the Loanable Funds Market
Economics in Action: UK’s Financial Balance Sheet
Changes in Demand and Supply
Economics in Action: Brexit and Covid in the Loanable Funds Market
23.3: Government in the Loanable Funds Market
23.3: Government in the Loanable Funds Market
Government Budget Surplus
Government Budget Deficit
Economics in the News: Lowering Borrowing Costs
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 24: Money, the Price Level and Inflation
Chapter 24: Money, the Price Level and Inflation
24.1 What is Money?
24.1 What is Money?
Medium of Exchange
Unit of Account
Store of Value
Money in the UK Today
Economics in Action: Money in the Eurozone
24.2 Monetary Financial Institutions
24.2 Monetary Financial Institutions
Types of Monetary Financial Institutions
What Monetary Financial Institutions Do
Economic Benefits Provided by Monetary Financial Institutions
How Monetary Financial Institutions Are Regulated
At Issue: Fractional-Reserve Banking Versus 100 Per Cent Reserve Banking
Economics in Action: Northern Rock: A Modern Day Bank Run
Financial Innovation
24.3 Central Banking
24.3 Central Banking
European Central Bank
Bank of England
Bank of England’s Balance Sheet
Economics in Action: Bank of England’s Balance Sheet Explodes
Bank of England in the Market for Reserves
24.4 How Banks Create Money
24.4 How Banks Create Money
Creating Deposits by Making Loans
Money Creation Process
Money Multiplier
Economics in Action: Variable Money Multiplier
Economics in the News: A Massive Open Market Operation
24.5 Money Market
24.5 Money Market
Influences on Money Holding
Demand for Money
Changes in the Demand for Money
Money Market Equilibrium
24.6 Money, Price Level and Real GDP
24.6 Money, Price Level and Real GDP
Quantity Theory of Money
Monetarist View
Economics in Action: Does the Quantity Theory Work?
Economics in the News: Money Growth and Inflation
Mathematical Note
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 25: International Finance
Chapter 25: International Finance
25.1 Foreign Exchange Market
25.1 Foreign Exchange Market
Foreign Currencies
Trading Currencies
Exchange Rates
An Exchange Rate is a Price
Demand for One Money is the Supply of Another Money
Economics in Action: The UK Pound against the Euro, the US Dollar and the Yen
Demand in the Foreign Exchange Market
Law of Demand for Foreign Exchange
Demand Curve for UK Pounds
Supply in the Foreign Exchange Market
Law of Supply of Foreign Exchange
Supply Curve of UK Pounds
Market Equilibrium
Changes in the Demand for Pounds
Changes in the Supply of Pounds
Changes in the Exchange Rate
Economics in Action: Fall and Rise of the UK Pound
25.2 Arbitrage, Speculation and Market Fundamentals
25.2 Arbitrage, Speculation and Market Fundamentals
Arbitrage
Speculation
Economics in Action - A Big Mac Index
Market Fundamentals
25.3 Exchange Rate Policy
25.3 Exchange Rate Policy
Flexible Exchange Rate
Fixed Exchange Rate
Crawling Peg
Economics in Action - The People’s Bank of China in the Foreign Exchange Market
25.4 European Monetary Union
25.4 European Monetary Union
Benefits of the Euro
Economic Costs of the Euro
Optimal Currency Area
25.5 Financing International Trade
25.5 Financing International Trade
Balance of Payments Accounts
Economics in Action: Persistent Current Account Deficits
Borrowers and Lenders
Global Loanable Funds Market
Debtors and Creditors
Is Net Borrowing a Problem?
Current Account Balance
Economics in Action: Three Sector Balances
Where is the Exchange Rate?
Economics in the News: Trump’s Tariffs
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 26: Aggregate Supply and Aggregate Demand
Chapter 26: Aggregate Supply and Aggregate Demand
26.1 Aggregate Supply
26.1 Aggregate Supply
Quantity Supplied and Supply
Aggregate Supply Time Frames
Long-run Aggregate Supply
Short-run Aggregate Supply
Changes in Aggregate Supply
26.2 Aggregate Demand
26.2 Aggregate Demand
Aggregate Demand Curve
Changes in Aggregate Demand
Economics in Action: Central Banks Fight a Pandemic Recession
26.3 Explaining Macroeconomic Trends and Fluctuations
26.3 Explaining Macroeconomic Trends and Fluctuations
Short-run Macroeconomic Equilibrium
Long-run Macroeconomic Equilibrium
Economic Growth and Inflation in the AS–AD Model
The Business Cycle in AS-AD Model
Economics in Action: The UK Business Cycle
Fluctuations in Aggregate Demand
Fluctuations in Aggregate Supply
26.4 Macroeconomic Schools of Thought
26.4 Macroeconomic Schools of Thought
Classical View
Keynesian View
Monetarist View
The Way Ahead
Economics in the News: Aggregate Supply and Aggregate Demand in Action
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 27: Expenditure Multipliers
Chapter 27: Expenditure Multipliers
27.1 Fixed Prices and Expenditure Plans
27.1 Fixed Prices and Expenditure Plans
Expenditure Plans
Consumption and Saving Plans
Marginal Propensities
Slopes and Marginal Propensities
Economics in Action: UK Consumption Function
Consumption and Real GDP
Import Function
27.2 Real GDP with a Fixed Price Level
27.2 Real GDP with a Fixed Price Level
Aggregate Planned Expenditure
Actual Expenditure, Planned Expenditure and Real GDP
Equilibrium Expenditure
Convergence to Equilibrium
27.3 The Multiplier
27.3 The Multiplier
Basic Idea of the Multiplier
Multiplier Effect
Why is the Multiplier Greater Than 1?
Size of the Multiplier
The Multiplier and the Slope of the AE Curve
Imports and Income Taxes
Multiplier Process
Economics in Action: The Multiplier in the Great Depression
Business Cycle Turning Points
27.4 The Multiplier and the Price Level
The Multiplier and the Price Level
Adjusting Quantities and Prices
Aggregate Expenditure and Aggregate Demand
Deriving the Aggregate Demand Curve
Changes in Aggregate Expenditure and Aggregate Demand
Equilibrium Real GDP and the Price Level
Economics in the News: The Keynesian Model in Action
Mathematical Note
Aggregate Expenditure
Equilibrium Expenditure
The Multiplier
Government Expenditure Multiplier
Autonomous Tax Multiplier
Balanced Budget Multiplier
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 28: The Business Cycle, Inflation and Deflation
Chapter 28: The Business Cycle, Inflation and Deflation
28.1 The Business Cycle
28.1 The Business Cycle
Mainstream Business Cycle Theory
Real Business Cycle Theory
Economics in Action: Real Business Cycle Impulse
28.2 Inflation Cycles
28.2 Inflation Cycles
Demand-pull Inflation
Cost-push Inflation
Expected Inflation
Forecasting Inflation
Inflation and the Business Cycle
28.3 Deflation
28.3 Deflation
What Causes Deflation?
Economics in Action: Fifteen Years of Deflation in Japan
What Are the Consequences of Deflation?
How Can Deflation Be Ended?
28.4 The Phillips Curve
28.4 The Phillips Curve
Short-run Phillips Curve
Long-run Phillips Curve
Economics in Action: The UK Phillips Curves
Economics in the News: Recession and Recovery in the UK
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 29: Fiscal Policy
Chapter 29: Fiscal Policy
29.1 Government Budgets
29.1 Government Budgets
Highlights of the UK Budget in 2025/26
UK Budget in Historical Perspective
Economics in Action: EU Government Budget Balances and Debts
UK and EU Budget Balances and Debt in a Global Perspective
29.2 Supply-side Effects of Fiscal Policy
29.2 Supply-side Effects of Fiscal Policy
Full Employment and Potential GDP
Effects of the Income Tax
Taxes on Expenditure and the Tax Wedge
Economics in Action: Some Real-world Tax Wedges
Taxes and the Incentive to Save and Invest
Economics in the News: Corporate Taxes on the Rise?
At Issue: To Tax or Borrow to Fund Government Spending?
Tax Revenues and the Laffer Curve
Supply-side Debate
29.3 Generational Effects of Fiscal Policy
29.3 Generational Effects of Fiscal Policy
Generational Accounting and Present Value
UK Welfare State and the Pensions Time Bomb
Generational Imbalance
International Debt
29.4 Fiscal Stimulus
29.4 Fiscal Stimulus
Automatic Fiscal Policy and Cyclical and Structural Budget Balances
Economics in Action: Fiscal Stimulus in the Pandemic
Discretionary Fiscal Stimulus
Economics in Action: How Big are the Fiscal Multipliers?
Economics in the News: UK Fiscal Policy
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Chapter 30: Monetary Policy
Chapter 30: Monetary Policy
30.1: Monetary Policy Objectives and Framework
30.1 Monetary Policy Objectives and Framework
Monetary Policy Objectives
Remit for the Monetary Policy Committee
Actual Inflation and the Inflation Target
Economics in Action: Monetary Policy in the Eurozone
30.2 Conduct of Monetary Policy
30.2 Conduct of Monetary Policy
Monetary Policy Instruments
Monetary Policy Decisions
Implementing the Policy Decision
At Issue: Was the Bank of England Too Slow to Raise Interest Rates?
30.3 Monetary Policy Transmission
30.3 Monetary Policy Transmission
Quick Overview
Interest Rate Changes
Exchange Rate Fluctuations
Money and Bank Loans
Long-term Real Interest Rate
Expenditure Plans
Change in Aggregate Demand, Real GDP and the Price Level
The Bank Fights Recession
The Bank Fights Inflation
Loose Links and Long and Variable Lags
Economics in the News: Monetary Stimulus from Crisis to Brexit to Pandemic
Economics in Action: A Look at the Long and Variable Lag
30.4 Financial Crisis: Cure and Prevention
30.4 Financial Crisis: Cure and Prevention
Anatomy of the Financial Crisis
The 2007–2008 Crisis
Policy Actions
Economics in the News: UK Monetary Policy
Summary
Summary
Worked Problem
Study Plan Problems and Applications
Additional Problems and Applications
Footnotes
Glossary