Index
accelerating inflation 120, 121, 156, 172 but note 186-8
accelerator 148
account, capital and current see balance of payments
account, unit of 153
advances, bank see bank loans
affluent society 44
aggregate demand 128, 129, 143-6, 147, 170-1 but note 123-4; see also fiscal and monetary policy
agriculture: input requirements 17, 23-4; fluctuations in, 69-70, 213, 237—8: waees in 94
allocation of resources 33ff, 204-26; and inflation 180—1, 193; see also economic welfare, efficiency
Annual Abstract of Statistics 122
applied economics 232-3, 240ff
assets, financial 151-2, 154, 161; see also wealth; liquid 153-4,161,191; reserve 203
association, statistical 241—5
assumptions, for efficient allocation 51-3, 72-9, 207ff, 225-6; of perfect competition 75; use of in economics 233—4, 240 see also ceteris paribus
average propensity to consume 139
average propensity to save 137, 139
backward-bending supply curve 86-7
bads, economic 110, 176; see also pollution
balance of payments policy 194-9
bank credit multiplier 161
bank deposits 158-61, 174, 191-3
banknotes 159
barriers to entry 19-20, 76, 166-7, 210
barter 152
beggar-my-neighbour policies 199
benefit-cost analysis 215, 223
best fit see fit
borrowing 14-15, 143, 144, 163-4; see also investment, bank loans
borrowing, government 157—8, 189, 192
budget deficits and surpluses 189-90
building societies 154
built-in-stabilisers 189-90, 201
business confidence 118, 144,164
business cycle see trade cycle
capital, as a factor of production 18; fixed 106; human 18, 93; national 106; opportunity cost of 79; working 106; capital consumption 108, 121; goods 12-13, 106; issues 14; see also interest rate, investment
cash economy 109
causal relationships 11, 173-4, 200, 244-5
ceteris paribus 59, 61, 65, 67—8, 123 but note 56; see also assumptions
cheques 160
circular flow of income and expenditure 101—5
claims 151
coal industry 118
coefficients, input 25; price 252
coin 160
collective bargaining 91-2,193
Common Market see EEC
comparative advantage 27-9, 199
comparative economic systems 225
comparative statics 237
competitive output 77
competitiveness of exports 196, 199
competition 52, 75-9; see also perrect and imperfect competition
competition policy 210-12, 221
complementary goods 61
composition, fallacy of 246, 247
compulsion 221
conditions of demand 61; of supply 65
confidence, business 118, 144, 164; statistical see reliability
conflicts in goals see trade-offs
constant returns 25
consume, propensity to 8, 137, 139— 43, 164
consumer sovereignty 51
consumption, capital 109, 121; household 4ff
consumption function 127-8, 143-4; possibility curve 35—6
control: exchange 199; import 199; price 193, 219-21
controlled experiments 240
corporation tax 105
correlation 173-4, 200, 241-5, 247
cost-benefit analysis 215, 224
costs: comparative 27—9, 199; constant 40; decreasing 42—3; increasing 40-2; marginal 62-3, 72-3; opportunity 34ff see also capital, labour and land and tradeoffs; real 34; social 213-16, 217 19; transport 30
credit 143, 144; see also bank loans
credit cards 155
crisis 118
crowding out 193
currency reserves 197
current account see balance of payments
cycle, trade 140, 145, 170, 246 but note 117-21
debts, settlement of 152
definition of economics 229
deflation 198
demand: aggregate 123—4, 128-9, 134, 147, 170-1 but note 143-6; conditions of 61; determinants 5 5ff; derived 82; effective 55; elasticity of 68-70, 79 but note 60-1; market 57, 58—9; shifts in 61, 67—8; see also price mechanism
demand for foreign exchange 195-7; for labour 81-5; for leisure 86; for loanable funds 162—4; for money 155-8, 161-2, 168-9
democracy 48
dependent variables 233
deposits, bank 158-61, 174, 191, 192; building societies 154
Deposits, Special 192
depressed areas 219
dictatorship 48
differentials, wage 193, 208-9 but note 92-4
differentiation, product 16, 75-6, 210
diminishing marginal product 82-3
diminishing marginal utility 57
directors, company 15
discretionary policies 201
disequilibrium see equilibrium
disposable income 111
distribution of income and wealth see income and wealth, distribution of
double coincidence of wants 152
double counting 103
E.E.C. 199
earnings, transfer 94; see also wages
economic bads 110, 178; see also pollution
economic growth see growth, economic
economic models 233ff
economic policy 177—203, 204—28, 230-3
economic progress 178
economic surplus 94
economic systems 225
Economic Trends 122
economic welfare 72—9, 112, 204—28
economics, branches of 230—2; nature of 229ff
economics of scale 21, 42—3, 85; see also natural monopoly
education 17, 93, 178, 209. 213, 216, 222
effective demand 55
efficiency 205, 224-5; see also allocation of resources and factor combination
effort, supply of 44, 85-8, 224-5
elasticity of demand 60-1, 68-70, 79; for labour 84
elasticity of supply 64—5, 68-9
endogenous vaxiables 233
Engel's Law 6
entry, freedom of 75; see also barriers to entry
equations 235-6, 238, 250, 252-3, 256
equilibrium 49-50, 65—7; dynamic 237-8; labour market 88-9; monopoly 49, 65-7, 72
equilibrium and optimality see economic welfare
equilibrium income 125ff; models 234-7; rate of interest 164-6
equity 181, 224 but note 204; see also income distribution
excess demand and supply 49, 50, 125
exchange control 199
exchange rates 195-6, 199, 203
exogenous variables 233
expectations augmented Phillips curves 185, 202
expectations, inflationary 143, 166, 184-8, 193, 202
expenditure function 126-8, 143-6
experiments, laboratory 240
export subsidies 199
exports 13, 105, 145—6; see also balance of payments and comparative advantage
external effects 52, 217, 223 but note 213-16
factor combination 14, 34-6, 43ff, 60—1, 205 but note 20
factor endowments 29
factor prices 53-4, 96-7, 205; see also interest, profit, rent and wages
factors of production 16-19, 34, 80-100;opportunity cost of 41-3; mobility of 19-20, 93-4, 179, 188-9, 202, 213
failure, market 51-3, 73-9, 206-17, 226
fallacy of composition 246, 247
feedbacks 238
financial assets 151-2, 154, 161; see also wealth
fiscal drag 190
fiscal policy 189-90, 198, 200-2
fixed factors 20, 82, 84-5, 106
fluctuations in farm incomes 69-70, 213; in income and expenditure 117-20, 139-40, 145, 255; in prices 69-70, 213 see also inflation
food, expenditure on 5, 6, 7, 9
foreign currency reserves 119, 197-8
foreign investment 109, 119, 120, 193, 196-7, 198
foreign trade, and the national income 105, 118-19, 194-9; see also comparative advantage
foreign travel 119
forty five degree line, 128-9, 133
France 115
free entry 75; see also barriers to entry
freedom, personal 220—1, 222; see also paternalism
frictional unemployment 122
fringe benefits 210
full employment 171, 172, 179, 185, 226
futures markets 203
G.A.T.T. 199
general price level see inflation
George, Henry 95
Germany 115
goals, business 15—16; conflicts in see trade-offs; macroeconomic 177—82; microeconomic 204-5
goods, distinguished from services 5, 6; complements and substitutes 61; economic 33-4; inferior 7, 59; normal 59; public distinguished from private 45, 52, 215-16; see also capital
gold standard 199
government activities see also subsidies and paternalism and taxes
government and agriculture 70, 212-13; economic growth 177-203; external effects 217, 223 but note 213-16; and imperfect competition 221-2, 223 but note 210-12; and income distribution 112, 204, 219, 226—7 but note 207-9; and inflation 186-8, 200ff but note 180—2; and price control 193, 219—20; and the balance of payments 197—9
government borrowing 156-7, 189, 192
government expenditure 143, 145-6, 204-28; see also P.S.B.R.
government policy objectives 177-82, 204—5
government production 212, 215-16 but note 221-3
government securities 151, 157
Great Depression, the 118, 146-8
growth, economic: determinants 116, 178; and government policy 177— 203; and inflation 180—1, 200-2; and living standards 107-11, 178
growth, economic and the production possibility curve 45-6
growtn, economic in U.K. 115-17
Haines, B. 247
Hartley, K. 202
hoarding 170
homogenous factors 93
hours of work 44—5, 86—7, 110—11, 225
housing subsidies 219
hyperinflation 181
I.M.F. 199
identities 148
inperfect competition in the capital market 166-7
imperfect competition in the goods market 75-9, 210-12
imperfect competition in the labour market 90-2, 210
import restrictions 199
imports 13, 145; see also balance of payments and comparative advantage
imputed income 122
incentives 225
income and expenditure equality 101-2
income determination 123-48, 165-6
income effect of a change in prices 59-60
income effect of a change in wage rates 86
income distribution 80—1, 204—28; and consumption 5ff, 143; and inflation 111-12, 180-1; and market failure 51—3, 73—5, 207-9; and living standards 111—12; see also factor prices and wages
income: disposable 111-12; national 101-22, 123-48; nominal 107, 108, 113-15; real 107-8, 113-14, 168, 169-70
incomes policy see prices and incomes policies
independent variables 233
inelastic demand 60, 79, 212-13
inelastic supply 64, 69-70, 212-13
inflation 180-9; accelerating 156-7, 172-3 but note 186-8; cost and demand 172-3, 193; hyper-181
inflation and balance of payments 195-6; and income distribution 111-12, 181-2; and output 170-1, 188-9; and rates of interest 166—7; and resource allocation 180-1; and Scottish dysentry 245; and unemployment 182-8
inflation in the U.K. 102, 113—15, 120-1
information deficiencies 52, 210-12
injections 146
input coefficients 25
input-output tables 13, 23—5,48
instability see fluctuations
institutions, social 207, 209, 215—16, 220-1
instruments, policy, balance of payments 197—200; macroeconomic 189-93, 200-2; microeconomic 217-26
intended expenditure see planned expenditure
interdependence, international 199
inter-industry relations see input-output tables
interest rates 18, 97; determination of 161-4; nominal and real 166; structure of 166—7
interest rates and balance of payments 120, 197-9; and inflation 166; and investment 18-19, 143, 162-5, 200—1; and price of fixed interest securities 156-8
international co-operation 119—20, 198—9; investment 108—9, 119, 194, 196-7, 198; specialisation 27-30; trade see comparative advantage; and the national income 105, 118-20, 194-9
International Monetary Fund 199
inventories see stocks
inverse relationships 251
investment: defined 18, 106—7; determinants 144-5;fluctuationsinll8, 138-9; replacement 144
investment and economic growth 46—7, 116-17; and rates of interest 18-19, 143, 144, 162-5, 200; and savings 130-6, 146
investment in U.K. 116
invisible hand 51
invisible exports and imports 119
issues, notes 159; shares 14-15
Italy 116
Japan 116
Keynesian economics 146-8, 150, 168-71, 172, 189, 190 but note 200-2
laboratory experiments 240
labour 17, 81; demand for 81-5; division of 21, 29; mobility of see mobility of factors; price of 88-9; supply of 85-8; see also trade unions and wages
lags see time lags
laissez-faire 51, 206—7, 225-6 but note 72-3
land 17—18, 94—6;taxation of 96
laige scale see economies of scale
law of diminishing returns 82-3,117
least squares 247
licence fees 218
lighthouses 215
liquidity 153-4, 161, 192; see also reserve assets
loans, bank 159—61, 191—3; see also government borrowing
location of industry see regional poncy
long run 68-9, 167, 212—13 but note 84-5
luxuries 8
manufacturing sector 12
marginal propensity to consume 139-42
marginal propensity to save 139-42
marginal revenue 77
marginal social benefits and costs 213-16
market economies 49ff
market equilibrium 49-50, 65-7, 88-9
market failure 51-3, 73-9, 206-17, 225
market imperfections 75-9, 210-12
market prices, G.D.P. at 121, 122
market supply 64
markets, agricultural 69-70, 212-13; financial 161—7; factors 80-100; foreign exchange 195-7; goods 55—79; international 27—9
mathematical economics 236
maximisation see prolit and satisfaction, maximisation of
methods of economics 11, 229-47
Mitchell, J. 247
mobility of tactors 19-20, 93-4, 179, 188-9, 202, 213
models: algebraic 235-7; dynamic 237-8; economic 233ff; equilibrium 234-7; quantitative 238ff; solutions 234-7; testing 238-46; working 237-8
monetarists 150-1, 168-71, 173 but note 200-2
monetary policy 191-3, 198-9, 200-2
money 48, 149-76; demand tor 154-8, 162, 168-9; functions of 153; nature of 150-2, 173-4;near 155; price of 161ff; primitive 158; quantity theory of 167-70, 174, 200; supply of 158-61, 172, 173-4; and the rate of interest 164
money illusion 149
Monopolies and Mergers Commission 221
monopoly equilibrium 76-7, 210; in the labour market 90-2, 210; policy 211-12, 220-1; and market failure 75-9, 210-13
multinational corporations 15
multiplier 139-42, 148, 165, 174, 192—3;bank credit 159-60
national capital 106
National Health Service 45, 222, 223
national income 101—2, 103—48; of the U.K. 112-13, 122, 255-6; see also growth, economic
national product see national income
nationalised industries 215—16, 221—3
natural monopoly 76, 78-9, 210-12, 226
natural rate of unemployment 188-9
negative relationships 251, 253—4
neighbourhood effects see external effects
nineteen thirties see Great Depression
non-economic activities 111
non-marketed goods and services 109-10
non-pecuniary advantages 93-4, 208-9
normal profit 79
normative economics 229-32, 238
North Sea oil 17
notes, bank 159
O.P.E.C. 173
objective statements see positive economics
objectives of policy 147, 177-82, 204—5: of business 17—18
occupations, earnings 93-4; and household expenditure 9-10
oil, North Sea 17
oligopoly 75
Oliver, J. M. 226
open market operations 191
opportunity cost 34, 35ff, 72-3; of capital 79; of labour 79; of land 94 -5; see also trade-offs
optimum 20, 73; see also economic welfare
ownership, state 15, 212, 222, 225-6
paradox or thrift 137, 138-9, 165, 247
paternalism 216-17, 218; see also freedom, personal
perfect competition 73, 210-12
petrol 33
planned expenditures, distinguished from realised 124-5
policy instruments see instruments, policy
political issues 150, 202, 215-16, 221-3
pollution 52-3, 110, 117, 219-20, 226 but note 218-19
population: as a factor of production 17, 87-8, 116; and living standards 108; and demand 58, 143
portfolios 157, 161, 167, 174, 192
positive associations 251
post hoc ergo propter hoc 245
prediction see forecasting
predictor variables 233
price control 193, 219-20, 226; also prices and incomes policies
price index numbers 108, 113-14, 122: in the U.K. 114
price mechanism 49-51, 125; see also laissez faire
price stability 69-70, 212-13; see also inflation
prices and incomes policies 193, 202, 226
private versus social wants 45, 213-15, 217-19
product differentiation 16, 75—6, 210-11
production frontier 36 ff
production possibility curve 36ff
productivity 18, 91-2; and inflation 182-3, 200-1 see also growth, economic; and the production possibility curve 47; and wages 81—3, 93, 208—9 see also efficiency
profit maximisation 15-16, 51-2, 79
profit, normal 79
propensity to consume 139-40, 142-4
propensity to save 136-7, 139-40, 165
proxy variables 239
psychological factors 3, 20, 143—4
public corporations 15
public goods 45, 52, 215-16, 222
Public Sector Borrowing Requirement 193, 203
purchasing power parity 203
quality 110
quantification 233-4, 240, 241-2
quantity theory of money 167-70, 174, 200
rate of exchange 195-7, 199-200, 203
rate of interest see interest
rational expectations 203
real costs 34; see also opportunity costs
real income 107-8, 114-15, 168, 170
regional expenditure 3
reliability, statistical 209, 242—3, 254-5
reserve assets 203
reserves, foreign currency 119, 197-8
resource allocation see allocation of resources
restrictions, import 199
Restrictive Practices Court 221
satisfaction, maximisation of 51—2, 72-3
save, propensity to 137, 139—44, 165
savings: defined 131; function see propensity to save
savings and Income distribution a; ana investment 130-5, 146; and myopia 216-17; and the rate of interest 165-6, 200-1
scale of production 22, 25, 42—3, 85; see also natural monopoly
scatter diagrams 241, 242, 243
science of choice 43
scope and method or economics 229-47
Scotland 118
Scottish dysentiy 245
seasonal unemployment 122
securities, fixed interest 156-7; government 151, 156
self-interest 51
shifts of curves, of aggregate expenditure 136-7, 144; of supply and demand 61, 65, 67-8
shipbuilding 118
short run 68-9, 84-5, 166-7, 201, 216
signalling function of prices 49, 50, 217-18
significance, statistical 243
slopes of curves 241, 251—3; see also elasticity; of aggregate demand and supply curves 170-1; of budget line 34-6; of demand curves 59; of production possibility curves 38-43; of savings function 140; of supply curves 63
social benefits and costs 213-16, 217-19
social institutions 52, 207, 209, 216, 220-1
social wants 45
solutions to economic models 234—5
Soviet Union 48
special deposits 192
specialisation ana efficiency 20-1, 29, and money 152-3; and international trade 27-9
speculative capital movements 196—7
spillover effects see external effects
stabilisation policy 166, 189-93, 200-2; see also price stability
standard of living 6—7, 107—12
state intervention 177-203, 204-228; see also government
state ownership 15, 211-12, 222, 225
statistical reliability 209, 242—3, 254-5
steel industry 118
stocks 106; distinguished from flows 150-1, 238; unplanned changes 135-6, 148
store of value 153
structural unemployment 122, 179, 185 but note 188
subsidies, in the national accounts 121, 122; and resource allocation 217-19; effect on market price 72; housing 224; to exporters 199; to the arts 216, 219
substitution effect: of a change in price 59—60; of a change in wage rates 85-6
suicides 244
supply: aggregate 171; backward bending 85—6, 87; conditions of 65; determinants of 62-3;elasticity of 64—5, 68—9; market 64; shifts in 65, 67-8
supply curve 62—3, 124-5, 235—6; schedule 62—3, 234—5
supply of effort 44-5, 85-7, 224-5; of factors 85—7, 91—2, 94—5; of foreign exchange 195-6; of labour 85-7; of loanable funds 162—4; of money 158-61, 172-4
takeovers 15
targets see goals
tariffs 199
taxes: and equity 224-5; and income distribution 111—12, 218-19; and incentives 224-5; and market price 70-2; and the national account 104-5, 111-12, 121-2; and resource allocation 215-16, 217-19;on companies 104-5; on expenditure 111-12, 114; in imports 199; on income 104-5, 111-12, 191, 219-20; on land 95-6
technical progress 18, 85, 116, 143, 188
television 215
testing economic models 238—46
thrift, paradox of 138—9, 165, 247
time lags: and agriculture 69—70, 212-13, 237-8; and demand for money 152-3, 155; and elasticity of supply 64; and factor supply 19—20, 22, 84-5; and market price 68-9. 212-13, 237-8; and quantity of money 170, 201; see also short run and long run
token money 158
trade cycle 117-20, 140, 145, 170, 255
trade unions 91-2, 172, 184-8, 193
training and productivity 17, 178-9, 213; and wages 93, 209
transactions motive 155
transfer earnings 94
transfer payments 80, 104-5, 111
transport costs 30
travel, foreign 119
treasury bills 192
unemployment and balance of payments 198: and inflation 179, 182-9; and trade unions 91, 184-6; and wages 89-90, 182-8, 219-20
unemployment, structural 122, 179, 185, 188; types of 122, 179, 239; in U.K. 120, 146-8
unit elasticity of demand 60-1, 254
unit of account 153
V.A.T. 122
vaccination 214
value, store 153
value judgements 53, 74, 209, 239 but note 230—2
variable factors of production 20, 82, 84-5
variables: dependent 233; endogenous and exogenous 233; independent (explanatory and predictor) 233; proxy 239; stock and flow 238
velocity of circulation 168-70
visible imports and exports 119
wage differences 92-4, 193, 208
wages: in U.K. 80-1; market determination 87-9; minimum 89-90, 219; and inflation 182-9; and trade unions 91—2, 182—9
wealth, distribution of 51-3, 208-9; see also income distribution; stock of 143, 150-1
wealth of Nations 21
weather 245
welfare, economic 72-9, 112, 204-28
withdrawals 146
work effort see effort, supply of
working capital 106
working models 237