This book is about what aspects of economics it is necessary to know about to understand why financial markets are so volatile. It is designed to demonstrate that behind all the jargon associated with the financial markets there are some basic economic ideas operating. What these basic ideas are is not evident from either existing textbooks nor from reading the financial press. The text is not designed as a standard economics textbook as the market place is full of excellent textbooks for anyone seeking to understand basic economic ideas.
Prior to the publication of this text readers seeking to understand how the economics world and the real financial market place interact have had a problem. The financial markets are unundated with information. From all this infor- mation how can one make sense of this to see the big financial market picture? Certainly not by reading standard economics textbooks.
The text is designed for a broad readership including stu- dents, both undergraduate or postgraduate majoring in eco- nomics of finance, practitioners in the markets seeking a fresh insight into what is going on around them every day, and for newcomers to the financial markets who need a clear perspec- tive on all the daily ups and downs in the markets. To repeat, these objectives are not achieved by reading the existing literature.