Economics Explained

This book is written for those of you who want to have a clearer understanding of how the economy ticks along and what the Government's function is. As the front cover indicates, the main players are producers, consumers, the bank, and Government. In NZ, producers and consumers essentially drive economic activity in a haphazard fashion. It's the Government's job to navigate around pitfalls and provide a rescue helicopter. The first part of the book explains the methods Government can use to navigate. The second part is about knowing when to cause a change in direction and by how much. Consumers and producers interact using money. It enables the payment of wages and the buying of goods. It may surprise you to realise how critical it is that the Reserve Bank ensures that there is just the right amount of money in circulation. Too much money and consumer demand could cause prices to rise; too little and the economy could slump. Some activities increase the amount of money in circulation and others decrease it. A balance is necessary for the economy to run smoothly. The Government uses Fiscal and Monetary policy to keep the economy on a steady course, with the aim of stable prices and low unemployment. This is carefully explained with numerous examples, questions, and answers to ensure you understand. An often hotly debated topic is "when and by how much should the Government act?" That is harder to answer and so the explanation delves into long and short run equilibrium. Graphs are included as well as an explanation of "the natural level of employment".