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Book Details
Abstract
The selective, thematic, policy oriented approach of Economics for Business, combined with its strong emphasis on market structures, monetary policy and interest rates, business fluctuations and globalisation, makes it especially suitable for MBA and other executive programmes, as well as for post-experience conversion courses.
Economics for Business
focuses on three essential branches of modern economics: competition and the market system; macroeconomics and the economics of openness and globalisation, including the analysis of international trade, foreign investment and exchange rates. The book has a very strong business focus and has been used in the UK on many MBA courses as well as short, often one semester post experience executive courses. It has also proved popular for undergraduate business economics courses.
The book examines economics from a business perspective and is selective in its coverage, focusing on setting out the big picture and including topics on the basis that they throw light on issues relevant to business. It has a strong policy perspective. Economic issues are analysed in a policy context, which helps students see the relevance of economics to business decisions. The book adopts a modern approach to macroeconomics, as appropriate for business students, and pays special attention to globalisation, trade liberalisation, economic integration and exchange rates.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Economics for business | i | ||
| Brief contents | v | ||
| Contents | vii | ||
| List of boxes | xiv | ||
| Preface to the third edition | xvii | ||
| Acknowledgements | xxi | ||
| The economic policy consensus | 1 | ||
| Introduction | 1 | ||
| The economic policy consensus | 2 | ||
| Why policy changed | 5 | ||
| Implications for the future | 6 | ||
| Criticisms of the new consensus | 7 | ||
| Will the consensus last? | 9 | ||
| Summary | 11 | ||
| Questions for discussion | 11 | ||
| Exercises | 12 | ||
| Further reading | 12 | ||
| What makes nations grow? | 13 | ||
| Introduction | 13 | ||
| Trends in economic growth | 14 | ||
| Growth theories | 17 | ||
| Human welfare and sustainable growth | 26 | ||
| Policy prescriptions for growth | 33 | ||
| Conclusions | 36 | ||
| Summary | 37 | ||
| Questions for discussion | 38 | ||
| Exercises | 39 | ||
| Further reading | 40 | ||
| Appendix 2.1 The economics of the new economy | 40 | ||
| Part I: The market system and competition | 43 | ||
| Introduction to Part I | 44 | ||
| The market system in action | 47 | ||
| Introduction | 47 | ||
| The market system | 48 | ||
| The role of prices | 53 | ||
| Movements in demand and supply | 56 | ||
| The role of traders and arbitrage | 61 | ||
| The efficiency of the market system | 63 | ||
| The free market system in social context | 65 | ||
| Conclusions | 67 | ||
| Summary | 68 | ||
| Questions for discussion | 69 | ||
| Exercises | 70 | ||
| Further reading | 71 | ||
| Market demand and the pricing decision | 72 | ||
| Introduction | 72 | ||
| What is a ‘rational’ consumer? | 72 | ||
| Deriving the market demand curve | 75 | ||
| Elasticities of demand | 75 | ||
| Estimating the demand function | 82 | ||
| Price elasticities and the pricing decision | 88 | ||
| Conclusions | 90 | ||
| Summary | 91 | ||
| Questions for discussion | 92 | ||
| Exercises | 93 | ||
| Further reading | 94 | ||
| The firm in a competitive market | 95 | ||
| Introduction | 95 | ||
| Profit maximisation | 96 | ||
| Rules for maximising profit | 101 | ||
| Cost structure of the firm | 107 | ||
| The transaction costs approach | 115 | ||
| From cost structure to supply curve | 117 | ||
| Conclusions | 119 | ||
| Summary | 120 | ||
| Questions for discussion | 121 | ||
| Exercises | 122 | ||
| Further reading | 124 | ||
| The economics of market power | 125 | ||
| Introduction | 125 | ||
| Firm size | 126 | ||
| The economics of market power | 133 | ||
| How to sustain monopoly power | 141 | ||
| Market power with few firms – the case of oligopoly | 142 | ||
| Conclusions | 146 | ||
| Summary | 147 | ||
| Questions for discussion | 148 | ||
| Exercises | 149 | ||
| Further reading | 150 | ||
| Case study 6.1 The diamond cartel | 151 | ||
| Competition policy, privatisation and regulation | 155 | ||
| Introduction | 155 | ||
| The case for competition | 156 | ||
| Competition policy | 159 | ||
| Privatisation | 169 | ||
| Regulation | 171 | ||
| Conclusions | 175 | ||
| Summary | 176 | ||
| Questions for discussion | 177 | ||
| Exercises | 177 | ||
| Further reading | 179 | ||
| Government intervention and the market system | 180 | ||
| Introduction | 180 | ||
| Income distribution and the equity–efficiency trade-off | 182 | ||
| Market failures | 187 | ||
| Government intervention | 193 | ||
| Government failure | 198 | ||
| Conclusions | 202 | ||
| Summary | 203 | ||
| Questions for discussion | 204 | ||
| Exercises | 205 | ||
| Further reading | 205 | ||
| Business and the environment | 206 | ||
| Introduction | 206 | ||
| Economic growth and the environment | 208 | ||
| Environmental policies | 211 | ||
| Policy instruments: design and effects | 214 | ||
| Impact on business | 219 | ||
| Conclusions | 222 | ||
| Summary | 223 | ||
| Questions for discussion | 224 | ||
| Exercises | 225 | ||
| Further reading | 226 | ||
| Hiring labour and the investment decision | 227 | ||
| Introduction | 227 | ||
| The hiring decision | 227 | ||
| The investment decision | 232 | ||
| Conclusions | 238 | ||
| Summary | 239 | ||
| Questions for discussion | 239 | ||
| Exercises | 240 | ||
| Further reading | 241 | ||
| Part II: The macroeconomic framework | 243 | ||
| Introduction to Part II | 244 | ||
| Aggregate supply, aggregate demand and the price level | 246 | ||
| Introduction | 246 | ||
| How is gross domestic product (GDP) calculated? | 247 | ||
| Potential GDP, actual GDP, and GDP at purchasing power | 252 | ||
| parity (PPP) | 252 | ||
| The aggregate supply (AS) curve | 256 | ||
| Aggregate demand (AD) and money | 261 | ||
| Conclusions | 271 | ||
| Summary | 272 | ||
| Questions for discussion | 273 | ||
| Exercises | 273 | ||
| Further reading | 275 | ||
| Appendix 11.1 The money supply process | 275 | ||
| Price stability and central banks | 276 | ||
| Introduction | 276 | ||
| What is price stability? | 278 | ||
| Deviation from price stability 1: inflation | 280 | ||
| Deviation from price stability 2: deflation | 284 | ||
| Benefits of price stability | 286 | ||
| Central banks and institutional reform | 292 | ||
| Price stability and exchange rate anchors | 296 | ||
| Is inflation dead? | 300 | ||
| Conclusions | 302 | ||
| Summary | 302 | ||
| Questions for discussion | 303 | ||
| Exercises | 304 | ||
| Further reading | 304 | ||
| Understanding interest rates and monetary policy | 305 | ||
| Introduction | 305 | ||
| Which interest rate? | 306 | ||
| What determines interest rates? | 311 | ||
| Interest rates and economic activity | 315 | ||
| Monetary policy and interest rates | 318 | ||
| The design of monetary policy | 324 | ||
| Conclusions | 328 | ||
| Summary | 329 | ||
| Questions for discussion | 330 | ||
| Exercises | 331 | ||
| Further reading | 332 | ||
| Case study 13.1 Taylor’s rule for monetary policy | 334 | ||
| Unemployment and the labour market | 336 | ||
| Introduction | 336 | ||
| Facts about unemployment | 338 | ||
| Supply-side approach and the market mechanism | 342 | ||
| Short-run versus long-run perspectives | 348 | ||
| The importance of demand | 352 | ||
| Technology, productivity and unemployment | 355 | ||
| Labour market policies | 357 | ||
| Conclusions | 360 | ||
| Summary | 363 | ||
| Questions for discussion | 364 | ||
| Exercises | 364 | ||
| Further reading | 365 | ||
| Appendix 14.1 Unemployment and inflation – the Phillips curve | 365 | ||
| Fiscal policy, budget deficits and government debt | 370 | ||
| Introduction | 370 | ||
| Counter-cyclical fiscal policy | 371 | ||
| The limits of fiscal activism | 376 | ||
| Public debt and ‘crowding out’ | 381 | ||
| Fiscal policy in Europe | 388 | ||
| Conclusions | 393 | ||
| Summary | 395 | ||
| Questions for discussion | 396 | ||
| Exercises | 397 | ||
| Further reading | 398 | ||
| Appendix 15.1 The sustainability of debt | 398 | ||
| Business fluctuations and forecasting | 401 | ||
| Introduction | 401 | ||
| Business fluctuations – the facts | 403 | ||
| What causes fluctuations? | 407 | ||
| Business fluctuations and growth | 411 | ||
| Forecasting the business cycle | 412 | ||
| Macro-forecasts and the firm | 416 | ||
| Conclusions | 417 | ||
| Summary | 418 | ||
| Questions for discussion | 419 | ||
| Exercises | 419 | ||
| Further reading | 419 | ||
| Part III: The global economy | 421 | ||
| Introduction to Part III | 422 | ||
| Foreign trade: patterns and policy | 424 | ||
| Introduction | 424 | ||
| Global trade and the WTO | 425 | ||
| Explaining the gains from international trade | 431 | ||
| Quantifying the gains from trade | 438 | ||
| Trade policy and protection | 442 | ||
| What determines comparative advantage? | 449 | ||
| Conclusions | 452 | ||
| Summary | 454 | ||
| Questions for discussion | 455 | ||
| Exercises | 456 | ||
| Further reading | 457 | ||
| Case study 17.1 China and the WTO:\rthe effects of trade liberalisation | 458 | ||
| Capital flows and foreign investment | 462 | ||
| Introduction | 462 | ||
| Capital flows | 463 | ||
| Basic model | 465 | ||
| Foreign direct investment and multinationals | 471 | ||
| Effects of foreign investment | 479 | ||
| Conclusions | 484 | ||
| Summary | 485 | ||
| Questions for discussion | 486 | ||
| Exercises | 486 | ||
| Further reading | 487 | ||
| Labour migration | 488 | ||
| Introduction | 488 | ||
| Recent trends | 489 | ||
| Effects of migration – the basic model | 491 | ||
| Migration, public finances and jobs | 494 | ||
| Conclusions | 498 | ||
| Summary | 499 | ||
| Questions for discussion | 499 | ||
| Exercises | 500 | ||
| Further reading | 500 | ||
| The balance of payments: what it is and why it matters | 501 | ||
| Introduction | 501 | ||
| What is the balance of payments? | 502 | ||
| Balance of payments problems | 509 | ||
| How to correct a balance of payments imbalance | 518 | ||
| Conclusions | 523 | ||
| Summary | 524 | ||
| Questions for discussion | 525 | ||
| Exercises | 526 | ||
| Further reading | 527 | ||
| Coping with exchange rates | 528 | ||
| Introduction | 528 | ||
| How exchange rates work | 529 | ||
| Exchange rate theory | 536 | ||
| Capital flows and exchange rate volatility | 542 | ||
| Strategies for coping with exchange rate risk | 548 | ||
| Conclusions | 554 | ||
| Summary | 556 | ||
| Questions for discussion | 556 | ||
| Exercises | 557 | ||
| Further reading | 558 | ||
| Appendix 21.1 The global foreign exchange market | 558 | ||
| Exchange rate regimes and the euro | 561 | ||
| Introduction | 561 | ||
| The global exchange rate system | 563 | ||
| Floating exchange rates | 566 | ||
| Search for stability | 573 | ||
| Establishing a single currency – the euro | 580 | ||
| Conclusions | 586 | ||
| Summary | 587 | ||
| Questions for discussion | 588 | ||
| Exercises | 589 | ||
| Further reading | 589 | ||
| Appendix 22.1 Exchange rate regimes – a brief history | 590 | ||
| Index | 595 |