1.1 Nature of Economics
Subtopics:
1.1.1 Economics as a social science
1.1.2 Positive and normative economic statements
1.1.3 The economic problem
1.1.4 Production possibility frontiers
1.1.5 Specialisation and the division of labour
1.1.6 Free market economies, mixed economy and command economy
The increase in the value of real output in an economy over time It is a key measure of performance. There are two measures of economic growth: Gross Domestic Product (GDP) GDP per capita
A general rise in prices over a period of time or a fall in the purchasing power of money
Downward pressure on prices in an economy
The number of people in the economy who are economically active i.e. willing and able to work and have a job
The number of economically active people who cannot find a job at a point in time
A record of a country’s trade and transactions with the rest of the world
The total demand for all goods and services in an economy at any given price level over a period of time
The amount of personal income an individual has after direct tax e.g. income tax
The addition to the capital stock of the economy
Spending on capital assets such as buildings, machinery and equipment having taken into account depreciation of assets
Expenditure by the state e.g. infrastructure and education
The difference between exports minus imports: Exports (X) – Imports (M) = Net exports
Student will have the opportunity to understand the reason why scarcity of resources exist and understand the role of entrepreneurs.
Through group and individual work the student will start to learn the skills of analysis and evaluation.
1.2 How markets work
Subtopics:
1.2.1 Rational decision-making
1.2.10 Alternative views of consumer behaviour
1.2.2 Demand
1.2.3 Price, income and cross elasticities of demand
1.2.4 Supply
1.2.5 Elasticity of supply
1.2.6 Price determination
1.2.7 Price mechanism
1.2.8 Consumer and producer surplus
1.2.9 Indirect taxes and subsidies
1.2.10 Alternative views of consumer behaviour
When decisions made by economic agents are based on reason
The amount of a good or service that consumers are willing and able to buy at any given price
A measure of the responsiveness of demand to a change in income
A perfectly price elastic product will have a PED coefficient of ∞ (infinity)
A measure of the responsiveness of demand for one good, x to a change in price of another good, y
The amount of a good or service that producers are willing and able to sell at any given price
A measure of the responsiveness of supply to a change in price
Market equilibrium where demand is equal to supply
The method by which prices for goods and services are achieved in an economy
The difference between the price a consumer is willing to pay for a product and the price that they actually pay
The difference between the price a producer is willing to supply a product at and the price actually received for the product
Taxes charged by the government on a good or a service
Finance provided to producers to encourage them to produce goods and services
The study of economic agents such as individuals and the reasons why they make decisions
When people follow the same routines, repeating actions on a regular basis
Actions undertaken by economic agents such as individuals that are based on reason
Actions undertaken by economic agents such as individuals that are not based on reason
The student will gain an insight into basic supply and demand and factor that influence price giving them a great understanding of the economy.
Through group work the student will learn how to challenge assumptions and understand other peoples point of view.
1.3 Market failure
Subtopics:
1.3.1 Types of market failure
1.3.2 Externalities
1.3.3 Public goods
1.3.4 Information gaps
1.4.1 Government intervention in markets
1.4.2 Government failure
When the market is unable to efficiently allocate scarce resources to meet the needs of society
The costs and benefits to a third party created by economic agents when undertaking their activities These costs and benefits can be either negative or positive
A good where its use by an individual does not stop others from using it whilst its consumption does not reduce the amount available for consumption by others
A good where its use by an individual stops others from using it whilst its consumption reduces the amount available for consumption by others
The difference in information between two parties
The use of regulatory frameworks to improve the working of individual markets
When government intervention in markets leads to a net welfare loss in comparison to the free market operating alone
Gain an understanding of government policy and the positive and negative effect action can have on people, the economy and the environment.
Through group work and independent study the student will gain life long transferable skills.
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The use of regulatory frameworks to improve the working of individual markets
When government intervention in markets leads to a net welfare loss in comparison to the free market operating alone
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The managers of the firm who control its operations on a day to day basis and are separated from the owners of the firm, typically shareholders
A situation that occurs when there is a difficulty in getting one party, the manager or director, to work in the best interests of the principal party, the owners
That sector of the economy that is owned and controlled by the government rather than individuals or groups of individuals
The sector of the economy that is owned and controlled by individuals or groups of individuals rather than by the government
A business with a main motive of making a profit
Businesses with a motive other than profit
2.1 Measures of economic performance
Subtopics:
2.1.1 Economic growth
2.1.2 Inflation
2.1.3 Employment and unemployment
2.1.4 Balance of payments
2.2 Aggregate demand (AD)
Subtopics:
2.2.1 The characteristics of AD
2.2.2 Consumption (C)
2.2.3 Investment (I)
2.2.4 Government expenditure (G)
2.2.5 Net trade (X-M)
A measurement of the value or volume of goods and services produced in an economy over a period of time
The annual GDP of a country divided by the average population in that year
The increase in the value of real output in an economy over time
Gross Domestic Product plus net property income from abroad such as dividends, interest and profit
The value of income of domestic economic agents minus that of income sent home by foreigners plus that of UK citizens repatriated from abroad
A general rise in prices over a period of time or a fall in the purchasing power of money
Downward pressure on prices in an economy
When the inflation rate is positive but falling
The number of people in the economy who are economically active i.e. willing and able to work and have a job
The number of economically active people who cannot find a job at a point in time
The number of people claiming Job Seekers Allowance (JSA)
A specialist United Nations agency that looks to promote the workforce worldwide
A record of a country’s trade and transactions with the rest of the world
A BoP surplus is when the sum of exports of goods, services, investment income and transfers is greater than imports
When the sum of exports of goods, services, investment income and transfers is less than imports
The individual will gain insight into government policy and the targets and trade-offs for a government.
The student will learn how to develop balanced arguments and see economic policy form various angles.
2.3 Aggregate supply (AS)
Subtopics:
2.3.1 The characteristics of AS
2.3.2 Short-run AS
2.3.3 Long-run AS
2.4 National income
Subtopics:
2.4.1 National income
2.4.2 Injections and withdrawals
2.4.3 Equilibrium levels of real national output
2.4.4 The multiplier
The period of time in which the rewards paid for the factors of production are fixed e.g. wages for labour
The time period where all factors of production are variable and can be increased over time
The total demand for all goods and services in an economy at any given price level over a period of time
Consumer spending on goods and services
Business spending on capital equipment to provide future output e.g. factories and machinery
Expenditure by the state e.g. infrastructure and education
The difference between exports minus imports
The total value of output of the economy at any given price level at a given point in time
Students understand factors that impact the success and failure of firms.
Through group work and challenging themselves to come up with alternative view and ideas student will develop evaluative skills.
2.5 Economic growth
Subtopics:
2.5.1 Causes of growth
2.5.2 Output gaps
2.5.3 Trade (business) cycle
2.5.4 The impact of economic growth
2.6 Macroeconomic objectives and policies
Subtopics:
2.6.1 Possible macroeconomic objectives
2.6.2 Demand-side policies
2.6.3 Supply-side policies
2.6.4 Conflicts and trade-offs between objectives and policies
The total annual value of all goods and services produced within an economy
An economic model showing the flow of goods and services, the factors of production and their payments between households and firms within an economy
An initial injection into the economy is multiplied by the amount of economic activity to create an overall boost to the economy
The total value of all goods and services produced in an economy after taking into account inflation
Spending in the economy from sources other than households that adds to the circular flow
Expenditure in the economy that does not flow back to firms and leaves the circular flow
Understand how various government policies can impact the economy.
Group work and individual study develops team working and independent working.
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The increase in the value of real output in an economy over time
A measure of the difference between the actual level of GDP and the potential GDP at a point in the future
Variations in the level of economic activity over time
A measurement used to see how well individuals and societies needs and wants are being met
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Government objectives for the economy as a whole
Any government policy that impacts on aggregate demand in an economy
These seek to improve the long run productive potential of the economy
When policies used to control the economy conflict with one another
When an economic unit substitutes the production of one good or service for another
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