The Economics Book

PORARY ICS ...

260 I n the 25 years following World War II Keynesian policies, which advocated an active state intervention in the economy, mad ...

261 to Friedman and only gradually adopted more free market economic policies. Rethinking free markets Although monetarism and t ...

262 IT IS POSSIBLE TO INVEST WITHOUT RISK FINANCIAL ENGINEERING D uring the 1960s the institutional foundations of the post-war ...

263 See also: Financial services 26–29 ■ Public companies 38 ■ Risk and uncertainty 162–63 ■ Behavioral economics 266–69 ■ Effic ...

264 exchange to offer tradeable derivatives in agricultural products was the Chicago Board of Trade, in However, the possibilit ...

265 Black swans are rarely sighted but do exist. Nicholas Taleb refers to the highly unexpected, extreme movements of the market ...

266 PEOPLE ARE NOT 100 PERCENT RATIONAL BEHAVIORAL ECONOMICS U ntil the 1980s standard economic theory was dominated by the idea ...

267 See also: Economic man 52–53 ■ Free market economics 54–61 ■ Economic bubbles 98–99 ■ Risk and uncertainty 162–63 ■ Irration ...

268 BEHAVIORAL ECONOMICS People’s choices in multistage games vary according to how questions are framed. If they are directed t ...

269 A scalper sells a sports ticket for cash. The amount that seller and buyer value the ticket depends not just on its perceive ...

270 TA X CUTS CAN INCREASE THE TAX TAKE TAXATION AND ECONOMIC INCENTIVES C ommon sense tells us that if a government wants to ra ...

271 Many tax havens formed in the 1970s, when small islands and countries such as Monaco chose to impose low taxes—or none at al ...

272 See also: Economic bubbles 98–99 ■ Testing economic theories 170 ■ Financial engineering 262–65 ■ Behavioral economics 266–6 ...

273 See also: Economic man 52–53 ■ Effects of limited competition 90–91 ■ Economics and tradition 166–67 ■ Game theory 234–41 I ...

274 U ntil US economist George Akerlof started studying prices and markets in the 1960s, most economists believed that markets w ...

275 A car dealer can reduce a buyer’s risk when selling a car by offering guarantees. In many cases markets adjust to account fo ...

276 F ollowing World War II, economics was dominated by Keynesian thinking (pp.154–61). This claimed that governments could main ...

277 A government may try to deter the building of homes in a flood-prone area by not subsidizing flood insurance. But if it has ...

278 THE ECONOMY IS CHAOTIC EVEN WHEN INDIVIDUALS ARE NOT COMPLEXITY AND CHAOS N o system yet discovered guarantees a good return ...