In its fourth edition, Economics Explained continues its announced purpose — to In this straightforward, highly accessible reference, Heilbroner and Thurow. Examines capitalism, productivity, inflation, the stock market, the gross national product, money, and the theories of Adam Smith, Karl Marx, and John Maynard. Results 1 – 30 of Economics Explained: Everything You Need to Know About How the Economy Works and Where It’s Going by Heilbroner, Robert L.;.

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ECONOMICS EXPLAINED by Robert L. & Lester C. Thurow Heilbroner | Kirkus Reviews

The style is fitting for a rudimentary easy-reading introduction, and going by instinct, Economics Explained presents the basics of what one should look for in future studies in economics. The information presented is a whirlwind tour that covers, though in a limited way, the highlights of all areas of market systems. Starting out by knowing nothing about economy except, of course, a few phrases like, “supply and demand,” and a few basic concepts such as how different types of companies are structured and how their stocks workI did learn some fundamental concepts from Economics Explained that will be invaluable in my future studies.

From the information I gathered from Economics Explainedhere is the economy as I understand it now:.

This is not a term to be taken for granted, because there are other systems besides free market systems. The market system is a recent invention. Heilbroner heilbrone Thurow explain, however, that the heilbrober system was not a market system for many reasons.

First of all, although the workers made “wages” or more precisely, the landowner supported themthere was no reason for the landowner to pay them more or less. Why would the landowner pay them more? But why would the landowner need more crops or products?

Questions?

Why would a shoemaker, for example, lower prices to produce more shoes, or raise them to make more money? There was no equilibrium to maintain; things just were the way they were. This static state of the population did make certain things less worrisome. The landowners would worry their status with the king, for instance, which might influence their riches or status.

It had nothing to do with any product they produced. Likewise, the peasants would simply work and get their sustenance. There was no incentive to be creative or to change your “place” in life.

Economics Explained by Robert L. Heilbroner

A market system, on the other hand, plays by a different set of rules. Basically, there are producers which produce items that are bought by others in a population. If lots of people in the population want a certain item, the producers make more of that item. If they cannot supply enough heilbronfr meet the demandthey will raise the prices. Of course, if they raise the prices too much, less people will buy the items, and they will wind up with a lot heilbronrr products in their inventory.

Overall, the theory is that the demand from the public and the supply from the suppliers will eventually equalize and settle down to a price and quantity somewhere in the middle that works for everyone. With those definitions, then, communist countries do not have economies, or at least they do not have free market systems. The price of shoes is not set by how much people are willing or able to pay for them, or from how many or how little shoes are produced.

The government rather has a shoe factory and sets the prices of the shoes, the wages of the employees, and the wages of the population who have other occupations who actually buy the shoes. Since everything is set by the government, all the ecobomics, prices, and people should all work out just right, assuming the government correctly manipulates all these variables.

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The government in effect rations wages and items to people. Heilbroner and Thurow therefore bring out a very important concept that was new to me: If someone has more ration cards i. If economicd have less ration cards, they can have less of that item. The entire market system is really just a rationing system that exonomics who gets how much of what. This all works out quite nicely: A market bby says nothing about the desirability of the outcome, however.

Because of the desirability or undesirability of certain outcomes, most market systems are not completely free market systems. The government, to some extent or another, steps in and controls some aspect of the market to remove certain outcomes which it feels to be undesirable.

For example, the price of corn in the United States neilbroner not set by market forces, that is, by supply and demand. The government subsidizes corn, artificially keeping corn at high prices by paying farmers to produce corn. This is done because, if the price of corn were allowed to adjust itself in a completely free market system much more corn would be produced than is needed the supply would be more than the demandand the price of corn would drop substantially, putting many farmers out of a job.

The ecoonmics system would still work completely well with farmers out of jobs, and presumably farmers would get other jobs or something, but the government in this case, probably with the support of the population has decided that putting farmers out of a job is worse than having the government control part of the economy.

Thus, the reasoning behind state-controlled markets seem to rest on two assumptions: The authors of Economics Explained in most instances take a liberal viewpoint: The GDP is divided up into several sectorswhich include the private sector people working at jobs heilnroner getting money and then buying shoes heeilbroner, the tuhrow sector the shoe factories which take the economica from sales and buy equipment and pay salariesthe public sector the government, which pays businesses to build highways and make airplanes for the Air Forceand the foreign sector people buying Explainsd and corn outside the US, if I understand it correctly.

Looking at the economy from this high up macroeconomicswe see that each of these sectors work together to make up their own economy. That is, each ad the sectors have their own balance of supply and demand. The more the private sector buys from the business sector, the more the business sector can buy equipment and hire people from the private sector, for example.

Economics Explained

The public sector, on the other hand, can explakned the business and the private sectors by raising or lowering taxes. The actual money, the rationing cards of the market system, is a difficult concept to understand, in some aspects. It seems that the entire system of money is built on itself in a never ending loop of circular dependencies. People can only make money making shoes explainwd the shoe factory pays them. The shoe factory can only have money to pay the workers if people buy shoes.

People can only buy shoes if they have money, People can only make money making shoes exxplained the shoe factory pays them. And on and on It gets more complicated than this, however.

Besides money being more or less valuable by what it can buy, the government can print more money that will also explaijed the value of money. But it is also so interconnected that small changes can have far-reaching effects.

For example, raising or lowering the rate at which the government borrows money because, when the government sells bongs, it is really just borrowing money at its own set rate can also change the amount of money in circulation, which therefore changes the value of money. One point that Heilbroner and Thurow make is that corporations always run at a deficit. They constantly borrow money by selling stock to make the company grow, and the more company grows thudow more money they invest and the higher the price of their stock goes up another example of the system being built on itself.

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This works quite well for corporations, who want to basically exist and expand forever. The book makes the point that government, which makes up a sector of the economy just like businesses, should have no problem forever borrowing money and growing. Businesses can be debt-ridden indefinitely, because their expenditures buy equipment and buildings which have values.

They are raising their capital. Likewise, government can borrow money to build bridges and roads and to fund education, all of which raises the capital of the public sector. With these thoughts in mind, the authors declare that deficit spending or a rising government debt are not in themselves problems, as long are the spending results in more capital, such as roads and educated citizens, for the nation.

My initial problem with this idea which is, granted, not based on a good knowledge of the subject is that it seems to me that businesses can pay creditors and lower debts at any time by selling equipment and buildings.

How can the government sell highways, or regain education expenditures? When the government borrows money, it usually sells bonds to citizens, which is in effect borrowing explaind from the population.

When we say bu “if the government were to pay its debt at this moment, every man, woman, and child would owe XXX amount of money,” I had not realized that the people who would be paid to clear the debt are these same men, women, and children.

The authors seem to be saying that, in general terms, if the government were to pay its debts at this very moment, it would simply be redistributing money among the population, based upon the method of taxation and who had bought government bonds. This edition of Economics Explained ends with some updated information about the interaction of the economies of different countries.

The authors seem to indicate that a 20’s-like crash is very unlikely, given byy expansion of the public sector. The book also gives some details on what the authors feel to be a potential problem, which they label the, “specter of inflation. This fear of inflation is actually holding the economy back. Events in the last couple of weeks appear to have held up this notion, with the stock market dropping considerably and rumors of interest rates being lowered, which had been kept high before to curb inflation.

In all, I explzined Economics Explained to be a good introduction to many important I thurod economics concepts. Its conversational approach there are very few graphs explains ideas and gives one many things to consider, as is evident by this long review. However, although a liberal bias of the authors is evident and even plainly explained at pointsmost if not all of the information in Economics Explained is clearly labeled as fact or opinion and, most importantly, presents an overview of market systems and gives the reader a good starting point to understanding the concept at a deeper level.