Contents
Unit 1 What Is Economics?
1.1 An Overview of Economics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡2
1.1.1 Branches of Economics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡2
1.1.2 Core Principles of Economics .¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡4
1.13 Types of Economic Systems¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡5
1.2 An Overview of Microeconomics ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡6
1.2.1 Key Concepts of Microeconomics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡..6
1.2.2 Core Theories of Microeconomics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡7
1.3 An Overview of Macroeconomics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡9
1.3.1 Key Concepts of Macroeconomics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡9
1.3.2 Core Theories of Macroeconomics ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡10
1.4 Positive Economics vs Normative Economics ¡¡¡¡¡¡¡¡¡¡1
1.4.1 Positive Economics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡11
1.4.2 Normative Economics¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡12
Unit 2 An Overview of Traditional Economic Thought in the West and China
2.1 An Overview of Traditional Economic Thought in the West¡¡18
2.1.1 Economic Thought in Ancient Greece and Rome¡18
2.1.2 Economic Thought in the Middle Ages¡¡¡¡¡¡¡¡¡¡¡¡¡19
2.2 An Overview of Traditional Economic Thought in China¡¡¡¡¡2
2.2.1 Economic Thought Before the 6th Century¡22
2.2.2 Economic Thought from the 7th to the 14th Century¡¡¡¡¡¡¡¡24
Unit 3 Demand and Supply
3.1 The Law of Demand and Supply¡¡30
3.1.1 Definition of Demand¡30
3.1.2 Demand Curve¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡31
3.1.3 Definition of Supply¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡34
3.1.4 Supply Curve¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡35
3.2 Market Equilibrium¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.38
3.2.1 Equilibrium and Equilibrium Price ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡38
3.2.2 Change of Equilibiun ¡40
3.3 Elasticity of Demand and Supply ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡41
3.3.1 The Elasticity of Demand ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡41
3.3.2 The Elasticity of Supply¡43
Unit 4 Consumption and Production
4.1 Utility and Consumer Surplus¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡48
4.1.1 Total Utility and Marginal Utility¡48
4.1.2 Consumer Surplus¡49
4.2 Consumer Behavior Theories..¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡51
4.2.1 Consumer Equilibrium¡51
4.2.2 Income Effect and Substitution Effect¡53
4.3 Cost, Revenue and Profit¡54
4.3.1 Cost and Producer Surplus.¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡54
4.3.2 Revenue and Profit¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡57
4.4 Producers and Production Theory¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡58
4.4.1 Producers and Production Functions¡58
4.4.2 Productivity and Marginal Effects¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡59
Unit 5 Market Competition
5.1 Market and Market Structure¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡..66
5.2 Competition and Monopoly¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡67
5.2.1 Perfectly Competitive Market¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡67
5.2.2 Monopolistic Market ¡71
5.3 Uncertainty and Game Theory¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡74
5.3.1 Uncertainty and Its Impact on the Market¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡74
5.3.2 Game Theory and the Prisoner's Dilemma¡¡¡75
5.4 Market Failures and Public Goods¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡7
5.4.1 Pareto Efficiency and Market Failures¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡77
5.4.2 Externalities and Public Goods¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡78
Unit 6 Factor Market
6.1 Factor Market ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡86
6.1.1 Factors of Production and Factor Market¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡86
6.1.2 Perfectly Competitive and Imperfectly Competitive Factor Markets¡88
6.2 Labor Market¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡89
6.2.1 Demand and Supply of Labor¡89
6.2.2 The Price of Labor¡92
6.3 Capital Market ..¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡94
63.1 Demand and Supply of Capital¡94
6.3.2 The Price of Capital ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡95
6.4 Land Market¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.96
6.4.1 Features of Land ¡96
6.4.2 The Price of Land ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡97
Unit 7 National Economy
7.1 GDP and GNP¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡102
7,1.1 Definitions of GDP and GNP..¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡102
7.1.2 Calculations of GDP and GNP¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡103
7.2 National Income ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡104
7.2.1 Calculation of National Income.¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡105
7.2.2 Distribution of National Income¡¡¡105
7.2.3 Significance of National Income..¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡106
7.3 Aggregate Demand and Aggregate Supply¡¡¡¡¡¡¡¡¡¡¡¡¡107
7.3.1 Aggregate Demand¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡107
7.3.2 Aggregate Supply .¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡109
7.3.3 The Aggregate Demand-Aggregate Supply Model¡¡¡¡¡¡¡¡¡11
Unit 8 Economic Growth and the Business Cycle
8.1 Inflation¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡118
8.1.1 Inflation and Its Causes¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡118
8.1.2 Impacts of Inflation¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡120
8.2 Unemployment¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡121
8.2.1 Unemployment and Its Classification .¡¡¡¡¡¡¡¡¡¡¡¡¡¡121
8.2.2 Impacts of Unemployment¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡122
8.3 Economic Growth¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡123
8.3.1 Significance of Economic Growth¡123
8.3.2 Modem Economic Growth Theories.¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡124
8.4 The Business Cycle¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡126
8.4.1 The Business Cycle and Its Stages.¡¡¡¡¡¡¡¡¡¡¡¡¡126
8.4.2 Causes of the Business Cycle¡128
Unit 9 Macroeconomic Policy
9.1 The Role of Government in the Economy ¡¡¡¡¡¡¡¡¡¡¡¡134
9.1.1 Market Regulation.¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.134
9.1.2 Provision of Public Goods and Services ¡¡¡¡¡¡¡¡¡¡¡¡¡.135
9.1.3 Economic Stabilization Through Macroeconomic Policies..137
9.2 Monetary Policy ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡138
9.2.1 Monetary Policy and Its Functions¡¡138
9.2.2 Clasification of Monetary Policy and Its Tools¡¡¡¡¡¡¡¡¡¡¡139
9.2.3 Challenges of Monetary Policy¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡..141
9.3 Fiscal Policy ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡142
9.3.1 Fiscal Policy and Its Functions¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.143
9.3.2 Classification of Fiscal Policy and Its Tools..¡¡¡¡¡¡¡¡¡¡¡144
9.3.3 Challenges of Fiscal Policy ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡145
Unit 10 International Economy
10.1 Absolute Advantage and Comparative Advantage¡152
10.1.1 Absolute Advantage¡¡152
10.1.2 Comparative Advantage¡¡153
10.13 Comparative Advantage and International Trade¡154
10.2 International Economy and Globalization ¡¡155
10.2.1 Economic Interdependence¡¡155
10.2.2 Evolution of Globalization ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡156
10.3 Tariffs¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡158
10.3.1 Definition of Tariff¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡158
10.3.2 The Economic Effects of Tariffs¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.159
10.3.3 The Welfare Effects of Tariffs ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡160
Unit 11 Money and Interest Rates¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡165
11.1 Money ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.166
11.1.1 Definition of Money .¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡166
11.1.2 Origins of Money¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.167
11.1.3 Function and Nature of Money¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡168
11.1.4 The Monetary System¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡170
11.2 Interest Rates¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡171
11.2.1 Definition of Interest Rates¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡171
11.2.2 Types of Interest Rates and Influential Factors¡¡¡¡¡¡¡.172
Unit 12 Financial Institutions and Financial Markets
12.1 Financial Institutions ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡180
12.1.1 Banking Institutions.¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡180
12.1.2 Non-banking Financial Institutions¡184
12.2 Financial Markets ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡186
12.2.1 Money Markets and Capital Markets ¡¡¡¡¡¡¡¡¡¡¡¡¡.186
12.2.2 Primary Markets and Secondary Markets .¡¡¡¡¡¡¡¡.187
Unit 13 International Payments
13.1 Foreign Exchange and Exchange Rate¡¡¡¡¡¡¡¡¡¡.194
13.1.1 Foreign Exchange¡194
13.1.2 Exchange Rate¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡195
13.2 International Balance of Payments ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡199
13.2.1 Definition of International Balance of Payments¡¡¡¡¡¡¡¡?99
13.2.2 Imbalance of International Payments ¡¡¡¡¡¡¡¡¡¡¡¡¡.200
13.2.3 Adjustment of the Imbalance of Payments¡¡¡¡¡¡¡¡¡¡202
Unit 14 Financial Risk, Crisis, and Supervision¡¡¡¡¡¡207
14.1 Financial Risk¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡208
14.1.1 Overview of Financial Risk¡208
14.1.2 Management of Financial Risk ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡..210
14.2 Financial Crisis¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡211
14.2.1 Overview of Financial Crisis¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡.211
14.2.2 Impacts of Financial Crisis¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡213
14.3 Financial Supervision ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡215
14.3.1 Definition of Financial Supervision.¡¡¡¡¡¡¡¡¡¡¡¡¡¡215
14.3.2 Financial Regulation System¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡216
References¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡221
Glossary¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡225
Terms¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡241
