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82 of 84 people found the following review helpful
5.0 out of 5 stars Connects the dots between economic theory and current economic issues
Greg Ip's Little Book of Economics frames current economic issues in an
easy to read and understandable fashion. It combines economic theory
with real world conditions. Ip provides context to the credit market
crisis, the Great Recession, and to the painfully high unemployment of
recent years. The book also explains in a non-technical fashion the...
Published on September 30, 2010 by Ray

versus
34 of 38 people found the following review helpful
3.0 out of 5 stars Great content, horrible Kindle formatting
The content is quite good, albeit very basic. It's really a great US-centric introduction to the basics of economics. The other reviews cover the material quite well, I wanted to mention the Kindle formatting.

It's really bad.

For example, the book has an index. That's nice. But, the index isn't linked to the actual pages, so it's just a list of...
Published on May 6, 2011 by Eric Crampton


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82 of 84 people found the following review helpful
5.0 out of 5 stars Connects the dots between economic theory and current economic issues, September 30, 2010
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This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
Greg Ip's Little Book of Economics frames current economic issues in an
easy to read and understandable fashion. It combines economic theory
with real world conditions. Ip provides context to the credit market
crisis, the Great Recession, and to the painfully high unemployment of
recent years. The book also explains in a non-technical fashion the role
of the Federal Reserve, the factors that are considered in the
formulation of policy, and the many unconventional policies of the
Federal Reserve employed during the crisis. I have assigned this book to
my Money & Banking class at Rutgers as a complement to the regular text.
Feedback from the students has been uniformly favorable. I strongly
recommend The Little book of Economics for those with an interest in
connecting the dots between theory and practice, for students who
are looking for purpose in economic theory, and for the more general
reader looking for the forest beyond the financial news trees.
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32 of 34 people found the following review helpful
5.0 out of 5 stars Great, quick primer on the subjects, September 27, 2010
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This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
As someone with a degree in Economics who hasn't worked in the field as directly as Greg Ip, I found this book to be a great review of topics I had long forgotten about. Please don't confuse this with a textbook or a deep dive into any topic. It is to Economics what a cross-country flight is to geography. A lot of overview. A lot of great scenery. You will likely find a topic or two you want to delve in to deeper. Oh, and it takes about as long to read.

Thanks Greg.
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34 of 38 people found the following review helpful
3.0 out of 5 stars Great content, horrible Kindle formatting, May 6, 2011
By 
Eric Crampton (Spring Hill, KS USA) - See all my reviews
(REAL NAME)   
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The content is quite good, albeit very basic. It's really a great US-centric introduction to the basics of economics. The other reviews cover the material quite well, I wanted to mention the Kindle formatting.

It's really bad.

For example, the book has an index. That's nice. But, the index isn't linked to the actual pages, so it's just a list of words. Not much point to that. You can use Kindle's search feature, but come on, just make the index work like it should.

Some tables, like Table 13.1 "How Big is the National Debt?" are painful to read. Some words are cutoff, and the table spans a page break, meaning you have to repeatedly page forwards to read the entries and backwards to read the column headings.

At the end of each chapter is a section entitled "The Bottom Line" which gives a quite bulleted summary of the chapter. It's nice, but the formatting is horrible. The left quarter of the page is whitespace, making the lines short and tiring to read.

Speaking of whitespace, the spacing is bizarre throughout the text, with large blocks of vertical whitespace appearing for no good reason.

I could go on and on with examples. It's clear they just did a quick and dirty conversion of whatever they had to the Kindle and said "ship it".

Maybe I'm just being picky about the formatting. If this was a free download, I wouldn't complain a bit, but for the price of the book (it's almost as expensive on the Kindle as the printed copy), I expect proper editing and formatting.
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16 of 16 people found the following review helpful
5.0 out of 5 stars A Solid Overview, March 4, 2011
This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
Most of us need to have at least a basic understanding of how the economy works, and this book serves as an excellent overview for that purpose. The level of detail is more than adequate to meet the needs of most people, yet the book is also quite clear and easy to read. Here's my summary of the key points from the book:

(1) Economic output depends on population size and productivity.

(2) Productivity depends on capital and ideas. Real pay (after inflation) of employees depends on productivity, although pay inequalities have increased in recent decades due to factors unrelated to productivity (arguably a flaw of capitalism).

(3) Increase in available capital for investment requires savings (rather than consumption of all output). Business investment is primarily driven by sales outlook (expectations).

(4) Quality government can foster productivity by directing output into investment capital, supporting education and training, enforcing rule of law, and preventing monopolies.

(5) Competition (eg, via reasonably free markets) can foster copying of good ideas and development of better ideas.

(6) An annual productivity growth rate averaging 2% to 3% is considered sustainable for the US. Economic growth has tended to be faster under Democratic rather than Republican presidents (though this doesn't prove causality).

(7) Even economies with long-term growth invariably experience shorter-term cycles of expansion and recession, with recessions usually being more acute than expansions. Such cycles are usually driven by imbalances due to unrealistic expectations (both optimistic and pessimistic), often involving positive feedback processes and leverage. Cycles average 4 or 5 years, and range from about 2 to 10 years. Depressions are unusually bad recessions, and typically involve a failure of the financial system.

(8) Effective government action can shorten the duration of economic cycles and/or reduce their amplitude (via negative feedback), but ineffective government action can make things worse. The Federal Reserve serves as a "lender of last resort" and can influence economic cycles by adjusting interest rates, although the effects of the Fed's action usually have a considerable time lag (months to years). If the Fed has already lowered interest rates to zero, government stimulus is generally necessary to respond to recessions.

(9) Bubbles can often be detected, but it's difficult to predict when they'll burst.

(10) Consumer spending is about 2/3 of the economy and government spending is about 20%. About 60% of government spending is in mandatory entitlements, and the rest is discretionary spending. Earmarks represent only about 1% or less of government spending. Most government revenue comes from income-related taxes rather than consumption taxes.

(11) The stock market often anticipates a change in direction of the economy 1 to 12 months in advance. The value of all stocks held in the US is about $20 trillion (compared to a GDP of about $14 trillion).

(12) Only about 65% of the working-age population is either working or looking for work. The "natural" minimum rate of unemployment among people who want to work is about 5%, and the unemployment rate typically increases during recessions.

(13) In order to prevent increased unemployment in the US, the number of new jobs has to match the increase in the labor force, which is about 80,000 to 120,000 people per month (about 0.03% of the population).

(14) According to the Philip's curve, there's an inverse relationship between unemployment and inflation.

(15) Inflation can be viewed as a form of hidden tax. An inflation rate of less than about 5% is sustainable without major adverse effects, with 1% to 3% being considered the desirable range, and 2% being ideal. High inflation can lead to social upheaval, not just economic impact.

(16) Deflation can generally be even worse than inflation because it increases the burden of debt (less money available to pay back loans), and deflation is also harder to cure. This is one reason why too low an inflation rate is risky.

(17) Economic globalization appears to be beneficial overall, but it creates both winners and losers, and also tends to widen pay inequalities. It also tends to link economic cycles globally.
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21 of 22 people found the following review helpful
5.0 out of 5 stars Excellent text for public policy classes, September 24, 2010
By 
Len Burman (Minneapolis, MN, US) - See all my reviews
This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
The Little Book of Economics is engaging and interesting and written at a level that is perfect for students without much economics background. It gives them a basic understanding of the drivers of the economy and the effects of government policies. As an economist, I'd love to use the IS-LM and aggregate supply and demand framework, but I know from experience that economic models confuse and frighten some Masters in Public Administration [MPA] students. My students can get what they need without the math from Greg's book.
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16 of 17 people found the following review helpful
5.0 out of 5 stars Making Sense of Economics, November 19, 2010
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This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
Anyone who reads The Economist magazine on a regular basis has read plenty of Greg Ip's work, as he is one of those nameless journalists who make that magazine what it is. Mr. Ip has taken his considerable skills, knowledge, and understanding of economics and the financial world and used them to research and write a delightful--hard to imagine anyone using that term to describe a book on economics--survey of the field and how it works in the real world. I finished its 237 pages in just under three hours, and I believe I am much better informed as a result. Mr. Ip's work is jargon-free, and his clear explanations of such esoterica as credit default swaps and collaterized debt obligations make them almost seem comprehensible to a non-economist. His strength also lies in the wonderful analogies that are sprinkled throughout the book: one is struck by their aptness and the way they convey the essential image. "A central banker with dovish tendencies," he says, meaning one who cares more about unemployment rates than inflation, "is like a wine critic who drinks Merlot out of a box. Nothing wrong with it, but best kept behind closed doors." The global capital market is like a cookie sheet filled with water. "Just the slightest trip," suggests Mr. Ip, "and water sloshes over the sides." Or, "The job market is a wonderfully chaotic Petri dish in which new jobs are constantly being created or destroyed as new firms grow and old firms die." Neither is Mr. Ip limited to the facility of his analogies. His discussion of the dangers of Chinese holdings of US Treasury bills should be of concern to anyone who thinks about US national security in its broadest sense. "In other words," says Mr. Ip, "if one day China takes a dislike to American foreign policy it may threaten to dump Treasurys, which would perhaps drive up American interest rates. Skeptics note that by hurting its biggest customer this would also hurt China. But then countries routinely put national security ahead of economic expedience: it's why the United States embargoes Cuba." Mr. Ip also explains less portentous concepts like The Economist magazine's Big Mac index (BMI), which uses the local price of a Big Mac hamburger to compare purchasing power parity. Using the BMI and comparing the price of a McDonald's product in the United States and Mexico, Mr. Ip concludes that the peso is 33 percent undervalued against the dollar. Reason enough to visit that country, despite the drug war violence (my suggestion, not his). There is much, much more to this slim volume than can or should be covered in an Amazon review, but this short paean might give some notion of how good I thought it was. All said, it is a book that is well worth anyone's time, especially if you are not a professional economist.
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12 of 13 people found the following review helpful
5.0 out of 5 stars First-rate introduction for an adult who wants to know, October 18, 2010
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This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
The Little Book series on economics, money and investment is well served by this foundation book which is written so as to be easily accessible and clear about a subject often presented as very complex. It covers the issues that matter to us in our economic lives, shedding light where sometimes we are exposed to nothing but heat. It is a primer that escapes the fury of the Krugman/DeLong or Laffer/Kudlow battle over what theory must prevail in order to correct our employment woes.

This is an ideal book for my grandchildren who are teachers and engineers but with no exposure to economics. It and Jack Bogle's Little Book on funds make a great pair of helpful reads. Both are small enough to be non-threatening to those who live by the computer. It's a way to tell them about the game the real world plays with money and how to participate.
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12 of 14 people found the following review helpful
5.0 out of 5 stars Qucik, Comprehensive, and an Excellent Read, September 28, 2010
By 
Historian (Arlington, VA United States) - See all my reviews
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This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
Simply put... this is a superb read. If you are looking for that one book that tells you how the world really works, and want it done quickly, and without having to do any math with letters and funny symbols this is your book.
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8 of 9 people found the following review helpful
5.0 out of 5 stars Wonderful (Little) Book, November 1, 2010
By 
SSK (Hoboken, NJ) - See all my reviews
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This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
The book is very well written and organized. It's essentially what most people need to know about economics. In fact, I got more useful things out of this book than I did in many of my economics classes back in college. It's definitely worth the price and time to read through this.
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8 of 10 people found the following review helpful
2.0 out of 5 stars No more than a cursory overview of (macro)economics, June 22, 2012
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This review is from: The Little Book of Economics: How the Economy Works in the Real World (Little Books. Big Profits) (Hardcover)
My first complaint: this isn't a "little book of economics" at all, it's a "little book of macroeconomics," in particular monetary policy and financial economics. Ip isn't the only author to claim that macroeconomics is economics (see e.g. Taleb's "The Black Swan"), but as an economist who studies microeconomics it's frustrating.

Secondly, I'm not even sure that it should be called a book of macroeconomics either, since there's not an awful lot of economics in this book. It introduces you to important players (e.g. the Federal Reserve) and important concepts (e.g. inflation, the federal debt). But it never discusses the economics behind any of these issues. Economics is the study of the decisions people make (not just their financial decisions), and macroeconomics is the study of how all of those individual decisions affect aggregate outcomes. This book never talks about how economics models individuals' decisions. Apologies for the cliche, but I don't think that "supply and demand" is ever mentioned here, let alone a utility function or a marginal cost.

Granted, the author makes clear in the introduction that I am not the intended audience ("This is not a book for PhD economists."). Since this is an introduction it is not helpful for those who are already experts in the subject. That's not a problem. But I also think that if you know nothing or next to nothing about economics, then this book won't really be valuable either, since it doesn't have much to say about basic economics.

If you know nothing about economics and want an introduction, I wouldn't recommend this book. What should you read instead? I can't think of anything better than a good introductory undergraduate economics textbook. I understand that this recommendation is off-putting to many potential readers, and there is a need for a non-academic introduction to economics. Unfortunately, this book isn't it.
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