This completely revised and updated third edition of Thomas Sowell's instrumental work includes a new chapter on government finance. Basic Economics is a citizen's guide to economics--for those who want to understand how the economy works but have no interest in jargon or equations. Sowell reveals the general principles behind any kind of economy--capitalist, socialist, feudal, and so on. In readable language, he shows how to critique economic policies in terms of the incentives they create, rather than the goals they proclaim. With clear explanations of the entire field, from rent control and the rise and fall of businesses to the international balance of payments, this is the first book for anyone who wishes to understand how the economy functions.