Principles of Economics 

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Principles of Economics Course Outline

What is economics?

Concepts Covered:

  • Why is economics important?
  • What are the differences between microeconomics and macroeconomics?
  • How can economists use theories and models to understand economic issues?
  • How are economies organized?

How does scarcity affect economies?

Concepts Covered:

  • How should individuals make choices based on budget constraints?
  • How does production possibilities frontier influence social choices?
  • What are the major objections to economic approaches to decision making?

Why is the relationship between supply and demand important?

Concepts Covered:

  • How does demand and supply affect markets for goods and services?
  • How does demand and supply shift for goods and services?
  • How are changes in equilibrium price and quantity a four-step process?
  • What are price ceilings and price floors?
  • How does demand and supply relate to efficiency?

What factors affect the labor and financial markets?

Concepts Covered:

  • How do demand and supply work in labor markets?
  • Who are the demanders and suppliers in a financial market?
  • How does the market system serve as an efficient mechanism for information?

What is elasticity?

Concepts Covered:

  • How is the price elasticities of demand and supply calculated?
  • What are polar cases of elasticity?
  • How does elasticity affect pricing?
  • What are other areas affected by elasticity?

How do consumers make choices?

Concepts Covered:

  • What are consumption choices?
  • How can changes in income and prices affect consumption choices?
  • What are labor-leisure choices?
  • How do intertemporal affect financial capital markets?

How does cost affect industry structure?

Concepts Covered:

  • How does explicit and implicit costs affect accounting and economic profit?
  • How is the structure of costs designed for the short run?
  • How is the structure of costs designed for the long run?

What makes perfect competition?

Concepts Covered:

  • Why does perfect competition matters?
  • How does perfectly competitive firms make output decisions?
  • How are entry and exit decisions made for the long run?
  • Why is efficiency important in perfectly competitive markets?

What is a monopoly?

Concepts Covered:

  • How are monopolies formed?
  • How does a profit-maximizing monopoly choose outputs and prices?

What is the difference between monopolistic competition and oligopoly?

Concepts Covered:

  • What is monopolistic competition?
  • What is oligopoly?

How does monopoly relate to the antitrust policy?

Concepts Covered:

  • What are corporate mergers?
  • How is anticompetitive behavior regulated?
  • How are natural monopolies regulated?
  • What is the great deregulation experiment?

How does environmental protection relate to negative externalities?

Concepts Covered:

  • What are the economics of pollution?
  • What is command-and-control regulation?
  • What are examples of market-oriented environmental tools?
  • What are the benefits and costs of U.S. environmental laws?
  • What are examples of international environmental issues?
  • What is the tradeoff between economic output and environmental protection?

What are the positive externalities in public goods?

Concepts Covered:

  • Why does the private sector under invests in innovation?
  • How can governments encourage innovation?
  • What are public goods?

What are the problems with poverty and economic inequality?

Concepts Covered:

  • Where is the poverty line drawn?
  • What is the poverty trap?
  • What is the safety net?
  • What are the measurements and causes of income inequality?
  • How do government policies help reduce income inequality?

Why are unions, discrimination, and immigration issues in the labor markets?

Concepts Covered:

  • What are unions?
  • How does employment discrimination happen?
  • Why does immigration matter?

How does information and risk relate to insurance?

Concepts Covered:

  • What is the problem with imperfect information and asymmetric information?
  • Why does insurance have imperfect information?

What role does financial markets play in society?

Concepts Covered:

  • How do businesses raise financial capital?
  • How do households supply financial capital?
  • How is personal wealth accumulated?

What is public economy?

Concepts Covered:

  • How does voter participation affect costs of elections?
  • What are special interest politics?
  • What are flaws in the democratic system of government?

What is the macroeconomic perspective?

Concepts Covered:

  • How is the size of the economy measured?
  • How are nominal values adjusted to real values?
  • How is the real GDP tracked over time?
  • How is GDP compared across countries?
  • How well does the GDP measure the well-being of society?

What is economic growth?

Concepts Covered:

  • Why has economic growth only occurred relatively recently?
  • How is labor productivity related to economic growth?
  • What are the components of economic growth?
  • What is economic convergence?

How does unemployment affect an economy?

Concepts Covered:

  • How is the unemployment rate defined and computed?
  • What are the key patterns of unemployment?
  • What causes change in unemployment over the short run?
  • What causes change in unemployment over the long run?

What is inflation?

Concepts Covered:

  • How is inflation tracked?
  • How are changes in the cost of living are measured?
  • How do the U.S. and other countries experience inflation?
  • Why is there confusion over inflation?
  • What is indexing, and what are its limitations?

What defines international trade?

Concepts Covered:

  • How are trade balances measured?
  • What are the historical and international contexts for trade balances?
  • How are trade balances related to flows of financial capital?
  • What is the national saving and investment identity?
  • What are the pros and cons of trade deficits and surpluses?
  • What is the difference between level of trade and the trade balance?

What is the aggregate demand/aggregate supply model?

Concepts Covered:

  • What are macroeconomic perspectives on demand and supply?
  • How do economists build models of aggregate demand and aggregate supply?
  • What happens when there are shifts in aggregate supply?
  • What happens when there are shifts in aggregate demand?
  • How does the AD/AS model incorporate growth, unemployment, and inflation?
  • How does the AD/AS model incorporate Keynes’ law and Say’s law?

What is the Keynesian Perspective?

Concepts Covered:

  • What is the Keynesian analysis of aggregate demand?
  • What are the building blocks of Keynesian Analysis?
  • What is the Phillips Curve?
  • How are market forces defined by the Keynesian Perspective?

What is the Neoclassical Perspective?

Concepts Covered:

  • What are the building blocks of Neoclassical Analysis?
  • What are the policy implications of the Neoclassical Perspective?
  • How do we balance Keynesian and Neoclassical models?

How are money and banking approached at a Macroeconomic Level?

Concepts Covered:

  • How is money defined by its functions?
  • How is money measured?
  • What is the role of banks?
  • How do banks create money?

Why are monetary policy and bank regulation important?

Concepts Covered:

  • What are the roles of the Federal Reserve and central banks in the U.S. economy?
  • How are banks regulated?
  • How does a central bank execute monetary policy?
  • How does monetary policy affect economic outcomes?
  • What are the pitfalls for monetary policy?

What are exchange rates and international capital flows?

Concepts Covered:

  • How does the foreign exchange market work?
  • What do demand and supply shifts in foreign exchange markets look like?
  • What are the Macroeconomic effects of exchange rates?
  • What are exchange rate policies?

How do government budgets affect fiscal policies?

Concepts Covered:

  • How do governments define spending priorities?
  • What are taxes?
  • What is the federal deficit, and how does it relate to the national debt?
  • How can fiscal policy be used to fight recession, unemployment, and inflation?
  • What are automatic stabilizers?
  • What are the practical problems with discretionary fiscal policy?
  • What is the question of a balanced budget?

What are the impact of government borrowing?

Concepts Covered:

  • How does government borrowing affect investment and the trade balance?
  • What is the relationship between fiscal policy, investment, and economic growth?
  • How does government borrowing affect private saving?
  • How does fiscal policy affect the trade balance?

How is Macroeconomic policy implemented around the world?

Concepts Covered:

  • Why are economies around the world so diverse?
  • How can countries improve their standards of living?
  • What are the causes of unemployment around the world?
  • What are the causes of inflation in various countries and regions?
  • What are the implications of trade balance in the foreign market?

How are commerce and trade handled at the international level?

Concepts Covered:

  • What are absolute and comparative advantages?
  • What happens when a country has an absolute advantage in all goods?
  • How is intra-industry trade between similar economies handled?
  • What are the benefits of reducing barriers to international trade?

What is globalization and protectionism?

Concepts Covered:

  • What is protectionism?
  • What are the effects of international trade on jobs, wages, and working conditions?
  • What are the arguments in support of restricting imports?
  • How is trade policy enacted globally, regionally, and nationally?
  • What are the tradeoffs of trade policy?

About the book

Principles of Economics  

Principles of Economics covers scope and sequence requirements for a two-semester introductory economics course. The authors take a balanced approach to micro- and macroeconomics, to both Keynesian and classical views, and to the theory and application of economics concepts. The text also includes many current examples, which are handled in a politically equitable way.

About the authors:

Senior Contributing Authors

Steven A. Greenlaw, University of Mary Washington
Timothy Taylor,
Macalester College

Contributing Authors

Amyaz Moledina, The College of Wooster
Craig Richardson, Winston-Salem State University
David Shapiro, Pennsylvania State University
Ralph Sonenshine, American University
Eric Dodge, Hanover College
Cynthia Gamez, University of Texas at El Paso
Andres Jauregui, Columbus State University
Diane Keenan, Cerritos College
Dan MacDonald, California State University San Bernardinor

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