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Economics, 3rd Edition

Economics, 3rd Edition

Course No.  550
Course No.  550
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Course Overview

About This Course

36 lectures  |  30 minutes per lecture

We are all economists—when we work, buy, save, invest, pay taxes, and vote. It repays us many times over to be good economists. Economic issues are active in our lives every day. However, when the subject of economics comes up in conversation or on the news, we can find ourselves longing for a more sophisticated understanding of the fundamentals of economics.

  • How can I get an overview of the entire U.S. economy?
  • Why do budget deficits matter?
  • What exactly does the Federal Reserve do?
  • Why do most economists favor international trade so strongly?

Economics, 3rd Edition, will help you think about and discuss these and other economic issues that affect you and the nation every day—interest rates, unemployment, personal investing, budget deficits, globalization, and many more—with a greater level of knowledge and sophistication.

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We are all economists—when we work, buy, save, invest, pay taxes, and vote. It repays us many times over to be good economists. Economic issues are active in our lives every day. However, when the subject of economics comes up in conversation or on the news, we can find ourselves longing for a more sophisticated understanding of the fundamentals of economics.

  • How can I get an overview of the entire U.S. economy?
  • Why do budget deficits matter?
  • What exactly does the Federal Reserve do?
  • Why do most economists favor international trade so strongly?

Economics, 3rd Edition, will help you think about and discuss these and other economic issues that affect you and the nation every day—interest rates, unemployment, personal investing, budget deficits, globalization, and many more—with a greater level of knowledge and sophistication.

Designed for those who haven't already purchased our 2nd Edition economics course, this enlarged and reorganized 3rd Edition includes updated statistics and discussions of more recent events. It also features expanded coverage in areas of great public interest, such as anti-trust issues, corporate responsibility, and international financial crashes.

Master the Basics of Economics

These lectures require no special or advanced knowledge of mathematics. Instead, you will learn economics through intuitive explanations and in plain English, from an instructor who has won teaching awards at Stanford and the University of Minnesota.

Professor Timothy Taylor's first 18 lectures focus on "microeconomics," or looking at economics "from the bottom up." You will study the behavior of individuals, households, and firms; and how they interact in markets for goods, labor, and saving and investment. Topics in microeconomics include:

  • How does supply and demand operate in the free market to determine the prices of the goods we buy and the salaries we are paid?
  • How are interest rates determined? And what effects do they have on so many decisions we make—such as what house we will buy?
  • How do businesses compete with one another? What is a natural monopoly? What role does government have to play in encouraging and regulating competition?
  • Defining "public goods"—things like national defense and education—that we all benefit from whether we contribute to them or not. The difficulty of encouraging citizens to support production of public goods can be understood through a game theory problem known as the prisoner's dilemma.

The second half of the course covers "macroeconomics," or studying the economy "from the top down."Here you will examine the factors that help economists evaluate the economy on a national and global scale. Among these macroeconomic issues are:

  • Common ways the government taxes and spends, and how these actions affect the total demand and supply in our economy
  • The relationship between employment and inflation, and the different perspectives on this problem advanced by the two main schools of economic theory—the Keynesians and the neoclassicists
  • International economics: What are the arguments for and against international trade? How are exchange rates determined and what do they really mean to us as individuals and the economy in general? What are the future prospects for the global economy—which nations are likely to do well and which will lag behind?

Throughout this course, Professor Taylor helps you apply what you are learning to many of today's most frequently discussed and misunderstood issues. Has the world economy become truly borderless, and does globalization take jobs away from American workers? Why do markets for car and health insurance often seem so costly and controversial? What are our prospects for heading off the Social Security and healthcare crises that loom in the coming decades?

Learn to Think Like an Economist

One of the 20th century's top economists, John Maynard Keynes, once said, "Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessor to draw correct conclusions."

You will learn that economics is essentially a way of thinking about big problems that face our society, and that economists sometimes think very differently about these issues than the rest of us do. You will practice thinking like an economist about a succession of topics that are in the news virtually every day, such as:

  • Is it realistic to view pollution as a moral wrong, as some environmentalists do, and try to eliminate it completely? Or can pollution actually have benefits? What would we have to give up if we tried to totally eradicate pollution?
  • How should the government decide whether or not to block a proposed corporate merger?
  • Should we control rents so that people can afford housing? Or should government subsidize low-income housing, or offer families rent vouchers? Which strategy would an economist favor? Which would a politician most likely choose?

In these lectures, you will appreciate the difficulties involved in formulating economic policies that are both effective and satisfying to everyone—consumers and businesses, Republicans and Democrats, rich and poor.

Economics Everywhere: From Cowrie Shells to Edison, from Mohair to Mickey Mouse

Economics isn't just about numbers: It's about politics, psychology, history, inventions, and countless other aspects of human endeavor. As a result, it never lacks for interesting, surprising, or amusing content. The following are a few of many examples:

  • Thomas Edison's first invention was an automatic vote-counting machine. But he found he couldn't sell it, so he vowed only to make inventions people would buy.
  • The idea of using a "basket of goods" to measure inflation goes back a long time. During the Revolutionary War, Massachusetts paid its soldiers the amount of money that would buy the following basket of goods: 5 bushels of corn, 68 and four-sevenths pounds of beef, 10 pounds of wood, and 16 pounds of leather.
  • The first federal minimum wage law, passed in 1938, was intended to keep jobs in northern United States from flowing to the south, where wages were much lower. It intentionally put millions of low-skilled black workers in the south out of work.
  • The item that served as money over the broadest geographic area and the longest period of time was the cowrie shell. It was in use as early as 700 B.C. in China and was subsequently used in India, Africa, and southern Europe. It was an acceptable way to pay taxes in some African nations well into the 20th century.
  • The argument that a product should be protected against foreign imports because it is vital to national security is often abused. In the 1950s, the American mohair industry successfully argued for protection—which exists to this day—on the basis that military uniforms contained mohair and without support for the industry American soldiers risked going to battle naked.

In other lectures, you will learn how various ways to measure and analyze the economy were first developed—for example, how America's first statistical definition of poverty was formulated by one person, Social Security Administration employee Mollie Orshansky, in the 1960s. Professor Taylor takes you through the intricacies of patents, copyrights, and product advertising, with examples ranging from America's top corporations to Sonny Bono and Mickey Mouse. You will even see that economic analysis can be applied to behavior that doesn't seem related to economics at all, such as why so many Americans don't vote.

Be an Economics Conversation Starter. Or Stopper.

If you complete this course and devote some thought to its subject matter, you'll be able to hold your own any time the discussion turns to economics, whether it's at your office, in the news, or at the dinner table.

If you hear someone say, for example, "A tax on gas could be a good way of encouraging people to drive less," you'll be able to add, knowingly, "Perhaps, but of course, it all depends on the elasticity of demand for gasoline."

"I should warn you though," Professor Taylor says, from personal experience, "that comments like this can either lead to a really much more intelligent and informed conversation, or they can lead the conversation to an abrupt and uncomfortable halt."

Please note:

This course is not intended to provide financial or investment advice. All investments involve risk: Past performance does not guarantee future success. You acknowledge that any reliance on any information from the materials contained in this course shall be at your own risk.

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36 Lectures
  • 1
    How Economists Think
    This lecture identifies ways in which economists think differently about human motivations, tradeoffs, and the workings of markets. It also introduces a number of terms: microeconomics, macroeconomics, opportunity cost, marginal analysis, and more. x
  • 2
    Division of Labor
    The division of labor means that almost no one produces all or most of what they consume. Since Adam Smith over 200 years ago, economists have explained how the combination of a division of labor and exchange of goods and services increases productivity. x
  • 3
    Supply and Demand
    Any market involves both buyers, or "demand;" and sellers, or "supply." The supply and demand framework predicts that markets will tend toward an equilibrium price, where the quantity supplied and the quantity demanded are equal. x
  • 4
    Price Floors and Ceilings
    Price floors, such as government support for farmers, set price minimums, while price ceilings, like rent control, set a maximum price. Both can hold prices away from equilibrium, and make demand unequal to supply. Price regulations impose costs on consumers or producers, and create inefficiency. x
  • 5
    Elasticity
    Demand for orange juice is elastic—when its price rises, consumers can switch to other juices. Demand for gasoline is inelastic—when its price rises, drivers can't switch to other fuels. Elasticity is useful in evaluating how public policies will work. x
  • 6
    The Labor Market and Wages
    In the labor market, individuals are the suppliers, businesses are the demanders, and wages are the price. This lecture examines labor markets by discussing some prominent issues, like the minimum wage and how payroll taxes for Social Security affect wages. x
  • 7
    Financial Markets and Rates of Return
    There is a longstanding prejudice against capital markets in western culture—after all, charging interest used to be considered a sin of usury. This lecture focuses on the demand side of the capital markets, or primarily the demand for financial capital from businesses that seek to invest in plants and equipment. x
  • 8
    Personal Investing
    The supply side of the capital market is an ornate name for a more basic question: How can I get rich through financial investments? While this course is not intended to provide financial or investment advice, this lecture looks at the four major investment concerns—return, risk, liquidity, and tax status—and then considers a range of investments, and their tradeoffs. x
  • 9
    From Perfect Competition to Monopoly
    Competition between firms falls into four categories: perfect competition, monopolistic competition, oligopoly, and monopoly. This lecture discusses these paradigms, and describes how prices, output, and profits are likely to differ in each. x
  • 10
    Antitrust and Competition Policy
    Antitrust refers to government policies to prevent monopoly and encourage competition. They include blocking proposed mergers between firms; forcing firms to change unfair practices; and in some cases (like AT&T in 1984) requiring large firms to be split into smaller ones. x
  • 11
    Regulation and Deregulation
    In some industries—like airlines, banking, and electricity—government has sought to regulate prices charged and/or quantities produced. This lecture discusses the situations when government regulation works best, and when it does not. x
  • 12
    Negative Externalities and the Environment
    "Negative externalities" are situations in which the buying and selling of goods creates consequences—like pollution—felt by third parties who are not part of the original transaction. Regulation can be inflexible and costly. Economists have instead proposed market-oriented policies. x
  • 13
    Positive Externalities and Technology
    The market can produce too few "positive externalities": good things like scientific research, innovation, and education. Policy solutions for this situation include patents, copyrights, direct government support, and tax credits to industry. x
  • 14
    Public Goods
    Public goods, like national defense or basic scientific research, are "nonexcludable" and "nondepletable." Potential sellers cannot exclude people from using them, and they are not used up as more people use them. Markets often do a poor job of producing public goods, so there is a case for government action. x
  • 15
    Poverty and Welfare Programs
    Economists have preferred anti-poverty strategies that favor cash and wage subsidies over trying to set prices low or wages high for the poor. However, recent welfare reform emphasizes another feature—that people take jobs as soon as possible. x
  • 16
    Inequality
    Inequality is the gap between those with high incomes and those with low incomes. Since the late 1970s, inequality has increased in the United States. This lecture discusses the possible causes, whether some government response is appropriate and, if so, what kind. x
  • 17
    Imperfect Information and Insurance
    Imperfect information, such as how much to charge for auto insurance when information about the risks of auto accident is imperfect, can raise havoc with markets. It raises two issues—moral hazard and adverse selection—that are fundamental to arguments over health insurance in the United States. x
  • 18
    Corporate and Political Governance
    Shareholders may have trouble constraining the actions of top corporate managers and voters can have difficulty controlling politicians' actions. So skepticism is warranted about whether firms will seek efficient production, or whether politicians will act in society's best interest. x
  • 19
    Macroeconomics and GDP
    Macroeconomics has four policy goals—economic growth, low unemployment, low inflation, and sustainable trade deficits—and two main tools: federal budget policy and monetary policies of the Federal Reserve. Gross domestic product (GDP) is the standard measure of a nation's economy. x
  • 20
    Economic Growth
    In the long run, the rate of economic growth is by far the most important factor in determining the average standard of living. The key factors behind economic growth are increases in physical capital, human capital, and technology, all of which depend upon a supportive market environment. x
  • 21
    Unemployment
    The economist's view of unemployment focuses on why supply and demand in the labor market are producing unemployment. The underlying causes of unemployment can be split into two broad categories: cyclical unemployment, and the structural or natural rate of unemployment. x
  • 22
    Inflation
    Inflation is an overall sustained increase in the level of prices. The inflation rate is determined by defining a basket of goods, and then tracking how the cost of that basket changes over time. Mild inflation is not a great policy concern, but higher levels can cause problems. x
  • 23
    The Balance of Trade
    The trade deficit is perhaps the most misunderstood statistic in all of economics. The United States ran extremely large trade deficits in the late 1990s and into the 2000s, turning the United States into the world's largest debtor economy. x
  • 24
    Aggregate Supply and Aggregate Demand
    Economists commonly think about the macroeconomy through the model of aggregate demand and supply. It indicates how growth, inflation, unemployment, and the trade balance are related; why certain goals sometimes involve trade offs; and which macroeconomic policies to use. x
  • 25
    The Unemployment-Inflation Tradeoff
    Some of the biggest controversies in modern macroeconomics revolve around whether an unemployment-inflation tradeoff exists. This tradeoff, known as the Phillips curve, existed quite clearly in U.S. data from about 1950 to 1970, but then fell apart. x
  • 26
    Fiscal Policy and Budget Deficits
    This lecture reviews the main spending and taxing components in the federal budget, surveys trends in federal budget deficits and federal debt, and explains why budget deficits exploded, contracted, and then exploded again in the last 20 years. x
  • 27
    Countercyclical Fiscal Policy
    Spending increases or tax cuts can mitigate a recession, and spending cuts or tax hikes can fight inflation. In the United States, these countercyclical measures happen automatically to some extent, but some believe government should go beyond these automatic stabilizers. x
  • 28
    Budget Deficits and National Saving
    When government budget deficits are large and sustained, two possible effects can result. First, less financial capital may be available for private investment. Second, the United States may need to attract foreign investors. In the long term, neither is healthy. x
  • 29
    Money and Banking
    Economists define money as whatever serves as the medium of exchange, store of value, or unit of account. Money's various modern definitions— traveler's checks, checking accounts, savings accounts, money market mutual funds, etc.— reveal that money and the banking system are tightly interrelated. x
  • 30
    The Federal Reserve and Its Powers
    The Federal Reserve controls monetary policy, and has great power over the United States and even the world's economy. Yet it is run by presidential appointees and bankers, not by elected officials. Although there are plausible reasons, this remains controversial. x
  • 31
    The Conduct of Monetary Policy
    Controversies exist over exactly how the Federal Reserve should fight inflation. Should it focus exclusively on inflation, or also pay attention to such goals as shortening recessions? Should it act when stock market or housing prices may be forming a bubble? x
  • 32
    The Gains of International Trade
    Economists are deeply supportive of foreign trade; the average person is much more suspicious. The expansion of global trade in the post-World War II period has brought large gains to the United States and to the world economy. x
  • 33
    The Debates over Protectionism
    Pressures to limit imports are called "protectionism." This lecture reviews arguments for protectionism—saving jobs, protecting the environment, and others—and the reasons that most economists find those arguments less than compelling. x
  • 34
    Exchange Rates
    An exchange rate is the rate at which one currency exchanges for another. Exchange rates can be considered as a (misguided) symbol of national economic virility, when in reality they are just a price for currency. x
  • 35
    International Financial Crashes
    This lecture explores international financial crashes—such as those suffered by Thailand, Russia, and Argentina in recent years—and policies that may reduce their risk. But such risks will likely continue as international flows of financial capital expand. x
  • 36
    A Global Economic Perspective
    This lecture discusses global economic prospects over the next few decades. Even with a number of potential stumbling blocks, the chances for several billion people to be far better off are extraordinary. The United States sometimes seems to fear this richer world, but it need not. x

Lecture Titles

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Timothy Taylor
M.Econ. Timothy Taylor
Macalester College

Professor Timothy Taylor is Managing Editor of the prominent Journal of Economic Perspectives, published by the American Economic Association. He earned his Master's degree in Economics from Stanford University.

Professor Taylor has won student-voted teaching awards for his Introductory Economics classes at Stanford University. At the University of Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the Master's degree students at the Hubert H. Humphrey Institute of Public Affairs.

In 2007, Professor Taylor published the first Principles of Economics textbook, available as a free download from Freeload Press. He has also edited a wide range of books and reports and published articles on globalization, the new economy, and outsourcing. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News.

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Reviews

Rated 4.6 out of 5 by 101 reviewers.
Rated 4 out of 5 by Great Overview, But Outdated Professor Timothy Taylor's 36 lecture tour of the field of economics is a fine overview of the subject, particularly for someone like me who last took an economics course decades ago in college. I found the second half of the course covering macroeconomics to be more interesting than the first half and also more applicable to the modern world. My only caveat is that, although the course is in its 3rd edition, it's badly outdated. Last revised in 2005, it completely misses the economic meltdown and Great Recession of 2008. No survey course in Econ 101 is worth its salt without covering that event which effect business and economics well into the second decade of the 21st century. May 4, 2014
Rated 5 out of 5 by Real value Well written and easy to understand for everyone who is interested in day to day economics. April 26, 2014
Rated 4 out of 5 by good course to gain a basic understanding Professor Taylor does a very good job in presenting this course, as he does in his other courses that I have heard. However, a lot of the material covered in the course was not new to me, and will probably not be new to anyone who has taken any academic course in economics. The course did provide me with enough interesting insights to make hearing it well worthwhile. October 26, 2013
Rated 3 out of 5 by Good overview but some weaknesses This course is a reasonable overview of the portions of elementary economics that are amenable to an audio format. I mostly enjoyed it (I'm going through it for a third time in a period of several years- the commute thing you know...) but some parts are kind of infuriating. For me personally, some of the more useful elements are just reminding me how to clearly convey some of the aspects of economics, rather than the actual content. His introductory portion on economists not making predictions is just weird. He later talks about the great "predictive value" of supply/demand analysis. His saying, "no one asks physicists to make predictions" is just ridiculous. This whole discussion was confused and fuzzy. He could have made some great points about particular vs. general predictions or the role of exogenous events or the roles of mathematics and equations, but didn't. His introduction to the prisoner's dilemma was confusing and overly complicated. The economic implications were mostly covered well, but the original introduction of the problem was weird. As indicated by both of the above, the speaker sometimes seems to forget to say important things and gets rambly. More appropriate for informal two-way conversation than a lecture series that people pay for. October 6, 2013
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