1
Unit 1
Foundations of Economics
Scarcity, choice and economic methodology
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Unit 1
Foundations of Economics
Scarcity, choice and economic methodology
Understanding the Economic Problem
Economics as a social science, scarcity and choice, opportunity cost, the production possibilities curve, and the use of models to represent economic activity.
How Economists Analyse the World
Economic methodology, assumptions and models used in economic analysis, and the development of different schools of economic thought.
2
Unit 2
Microeconomic Analysis
Demand, supply, elasticity, market failure and market power
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Unit 2
Microeconomic Analysis
Demand, supply, elasticity, market failure and market power
Understanding Demand
The relationship between price and quantity demanded, movements along the demand curve, and non-price factors that cause demand to change.
Understanding Supply
The relationship between price and quantity supplied, movements along the supply curve, and non-price factors that cause supply to change.
Market Equilibrium and the Price Mechanism
Equilibrium and disequilibrium in competitive markets, the role of prices in allocating resources, and the calculation and interpretation of consumer and producer surplus.
Consumer and Producer Decision-Making
Rational consumer choice, behavioural economics, deviations from traditional maximising behaviour, and alternative objectives pursued by firms.
Responsiveness of Demand
Price elasticity of demand, the importance and application of PED, and income elasticity of demand as a measure of consumer responsiveness.
Price Elasticity of Supply
Price elasticity of supply, the factors influencing supply responsiveness, and the interpretation of different PES values.
Government Intervention in Markets
Reasons governments intervene in markets, the use of indirect taxation and subsidies, price controls, direct provision, regulation, and behavioural nudges.
Externalities and Shared Resources
Causes of market failure, negative and positive externalities, common access resources, and government and non-government approaches to correcting inefficient outcomes.
Public Goods and Market Provision
The characteristics of public goods, why markets may underprovide them, and the economic consequences of non-excludability and non-rivalry.
3
Unit 3
Macroeconomic Performance and Policy
National income, AD/AS, objectives and policy tools
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Unit 3
Macroeconomic Performance and Policy
National income, AD/AS, objectives and policy tools
Measuring Economic Performance
National income, the circular flow model, GDP and GNI calculations, the business cycle, limitations of income measures as indicators of well-being, and alternative measures of living standards.
Aggregate Demand and Aggregate Supply
Aggregate demand, short-run aggregate supply, alternative interpretations of aggregate supply, changes in long-run productive capacity, and macroeconomic equilibrium.
Key Macroeconomic Goals
Economic growth, low unemployment, stable inflation, sustainable government debt, and the potential conflicts that can arise between major macroeconomic objectives.
Poverty and Income Inequality
Measuring poverty and inequality, identifying their main causes, and evaluating taxation and other government policies designed to reduce economic inequality.
Managing the Economy Through Monetary Policy
The aims of monetary policy, the role of central banks, and the main monetary policy tools used to influence inflation, demand and overall economic activity.
Managing the Economy Through Fiscal Policy
Government spending and taxation as demand-management tools, the Keynesian multiplier, and the strengths and limitations of fiscal policy.
Improving Long-Run Productive Capacity
Different types of supply-side policies, how they affect productive potential, and the factors that determine their effectiveness over time.
4
Unit 4
International Economics and Development
Trade, exchange rates, balance of payments and development
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Unit 4
International Economics and Development
Trade, exchange rates, balance of payments and development
Gains from International Trade
The benefits of free trade, specialisation between countries, and the concepts of absolute and comparative advantage.
Methods of Restricting Trade
Tariffs, import quotas, export subsidies, administrative barriers, and the ways governments use trade protection to influence international commerce.
Evaluating Trade Protection
Economic arguments supporting protectionism, arguments in favour of freer trade, and the consequences of trade barriers for consumers, producers and economies.
Economic Integration Between Countries
The meaning of economic integration, different forms of trading blocs, and the role of the World Trade Organization in promoting and regulating global trade.
Understanding Exchange Rates
Different exchange-rate systems, causes and effects of currency movements, and comparisons between fixed and floating exchange-rate arrangements.
The Balance of Payments
The main components of the balance of payments, links between exchange rates and external balances, causes and effects of persistent current-account deficits and surpluses, and the Marshall-Lerner condition and J-curve effect.
Sustainable Economic Development
The Sustainable Development Goals, the relationship between poverty and sustainability, and the challenges of achieving long-term development without undermining future generations.
Measuring Development
Individual development indicators, composite measures of development, and evaluation of the strengths and limitations of different approaches to measuring living standards.
Obstacles to Growth and Development
Poverty traps and the economic, political and social barriers that can restrict growth and slow improvements in living standards.
Strategies for Economic Growth and Development
Trade-based strategies, diversification and social enterprise, market-led and interventionist policies, merit goods, foreign direct investment, foreign aid, institutional reform, comparisons between market-oriented and government-led approaches, and progress towards sustainable development goals.
Need theory or diagrams first?
Read the Revision Notes before tackling exam questions.