H460 A Level Economics - Component 1
Name ………………………………………………………………….My minimum expected grade: ……..My target grade: ………
Please indicate your level of understanding of each topic. If required also decide by when you’re going to check again by inserting the appropriate dates.
Red = Emerging (At the moment I am not confident with this topic)
Amber = Secure (I can apply this but not consistently)
Green = Mastered (I can confidently apply this knowledge repeatedly)
Area of Study / Topic / Learners should be able to: / RAG / Review date / RAGScarcity and choice / The basic economic problem / •explainwhatismeantbyeconomicgoodsandfree goods
•distinguishbetweeneconomicgoodsandfree goods
•explainwhatismeant bythebasic‘economicproblem’
•evaluatetheimplications ofthebasic ‘economicproblem’
•explainwhatismeant bynormativeandpositivestatements
•distinguishbetweennormativeandpositive statements
•explainwhatismeantby‘needs’and‘wants’
•distinguishbetween‘needs’and‘wants’
•explainwhatismeantbyscarcity
•evaluate,usingexamples,theproblemofscarcityandtherequirementtomakechoices
•explain,using examples,theimpactofsustainabilityonscarcityand choice
•explaintheroleofeconomicagents:
- government
- firms
- households
•explaintherewardstothefactorsofproduction.
The market economy / •evaluatethestrengthsandweaknessesofthemarketeconomy
•evaluatetheroleofgovernmentwithinthemarketeconomy.
The concept of the margin / •explainwhatismeant bythe conceptofthemargin
•calculatetheappropriatemarginal valuefromagivensetofdata
•evaluatetheextenttowhichthemarginalconceptisusefulto economicagentsindecisionmaking
•evaluatetheconceptof rationalityasaway ofunderstandingthe behaviourofeconomicagents.
Opportunity cost / •explaintheconceptofopportunity cost
•explainwhatismeant bya‘trade-off’
•explainwhatismeant byaproductionpossibilitycurve/frontier (PPC/F)
•explainthefactorscausingaPPC/Ftoshift
•explainhowaPPC/Fcanbeusedtoillustratescarcity,choice, opportunitycostandproductiveefficiency
•evaluatetheusefulnessofthe conceptofopportunity cost.
Specialisation and trade / •explainwhat ismeant by specialisationand the divisionof labour
•evaluatethe roleof specialisation andthe division oflabour in addressingtheproblemofscarcity
•explainhow specialisationencourages tradeand exchangein an economy
•explainhowmoneyfacilitatestradeandexchange comparedto bartersystems.
How competitive markets work / Allocation of resources / •explainwhatis meant by resourceallocation
•explainthe impact of incentiveson the behaviour ofeconomic agentsandresourceallocation
•evaluatetheeffectivenessofincentivesonthebehaviourof economicagentsandresourceallocation
•explainhowmarket,plannedandmixedeconomiesallocateresources
•evaluatetheadvantages anddisadvantagesof differenttypes of economyinallocatingresources.
Area of Study / Topic / Learners should be able to: / RAG / Review date / RAG
The objectives of economic agents / •explain,using examples,whatis meant by maximisation
•identifypossibleobjectivesofeconomicagents
•evaluatethedifferentobjectivesoftheeconomicagentsinan economy.
Supply and demand and the interaction of markets / •explainwhatismeant byamarketandbysub-markets
•explaintherelationshipbetweenindividualandmarketdemand
•explainwhat ismeant by derived,joint, compositeand competitive demand
•explaintherelationshipbetweenpriceandquantitydemanded usingmarginalutilitytheoryandincomeandsubstitution effects
•explain,with theaid ofa diagram,the differencebetween a movementalongthedemandcurve(extension/contraction)anda shiftofthedemandcurve(increase/decrease)
•explainthefactorswhichcause ashiftofthedemand curve
•explain,withtheaidofadiagram,whatismeantbyconsumer surplus
•explainandcalculate howchangesin priceaffectconsumer surplus
•evaluatetheimpactofchangesinpriceon consumersurplus
•explaintherelationshipbetweenindividualsupplyandmarket supply
•explainwhat ismeant by joint,composite andcompetitive supply
•explaintherelationshipbetweenpriceandquantitysupplied
•explain,with theaid ofa diagram,the differencebetween a movementalongthesupplycurve(extension/contraction)anda shiftofthesupplycurve(increase/decrease)
•explainthefactorswhichcause ashiftofthesupply curve
•explain,withtheaidofadiagram,whatismeantbyproducer surplus
•explainandcalculate howchangesin priceaffectproducer surplus
•evaluatetheimpactofchangesinpriceonproducersurplus
•explain,withtheaidofadiagram,howdemandandsupplyinteracttoproducemarketequilibriuminproductmarkets,financialmarkets andthemarketsforfactorsofproduction
•evaluatetheimpactofchangesindemandand/orsupplyinone marketonarelatedmarket(s)
•explainthecausesand consequencesofdisequilibriuminamarket
•explain,withtheaidofadiagram,howchangesinthefactors affectingsupplyanddemandwillimpactonequilibriumpriceand quantityinmovingfroman initialequilibrium toanew equilibrium
•explain,withtheaidofadiagram,whythepriceandoutputofsome goodsandservices maybe volatile
•evaluate,withtheaidofadiagram,theusefulnessofdemandand supplyinanalysingmarkets,suchascommodities,housingand transport
•explaintheassumptions underlyingthe modelof supplyand demand
•explainthewayinwhichthemodelofsupplyanddemandoperatesusinga rangeoftechniques
•analysethemodel todescribeandpredicteconomicbehaviour
•evaluatethe usefulnessand limitationsof theeconomic modelof supplyanddemandinexplainingreal worldphenomena.
Elasticity / •explainwhatismeant byelasticity
•explainwhat ismeant byprice elasticityof demand(PED)
•calculatePEDusingpointelasticity
•explain,with theaid ofa diagram,the differentvalues of PED
•explainwhy priceelasticity ofdemand variesalong a straightline demandcurve
•explain,withthe aidofa diagram,therelationship betweenPEDand afirm’stotalrevenue
•evaluatethefactorswhichdeterminethedegreeofPED
•evaluatethe effectof PEDon the impactof anindirect tax andof a subsidy
•explainwhat ismeant byincome elasticityof demand(YED)
•calculateYED
•evaluatethesignificance ofthenumerical valueand signofYED
•explainthe differencein YEDof inferior,normal andsuperior goods
•explainwhat ismeant bycross elasticityof demand(XED)
•calculate XED
•evaluatethesignificance ofthenumerical valueand signofXED
•explainthedifferenceinXEDofsubstitute,complementaryandnon-relatedgoods
•explainwhat ismeant byprice elasticityof supply(PES)
•calculatePESusingpointelasticity
•explain,with theaid ofa diagram,the differentvalues of PES
•evaluatethe factorswhich determinethe degreeof priceelasticity
ofsupply
•evaluatetheusefulness ofand significanceof PED,YED,XED andPES toalleconomicagents.
Productive and allocative efficiency / •explainwhatismeantbyproductive efficiency
•explainwhatismeantbyallocativeefficiency
•explainwhatismeant byeconomicefficiency
•distinguishbetween staticanddynamicefficiency
•explainwhatismeant byx-inefficiency
•explainthe conditionsunderwhichproductiveandallocative efficiencycanbeachieved
•evaluatewhetherothermarketstructuresmaynotalwaysleadto
productiveandallocativeefficiency
•evaluatetheimportanceofproductive,allocativeanddynamic efficiency.
Competition and market power / Business objectives / •evaluatetheassumptionsunderlyingprofitmaximisationasa businessobjective
•evaluatetherelevanceofprofitmaximisationtobusinesses
•evaluatealternativemaximisationobjectivesforbusinesses toprofitmaximisation,includingsalesrevenuemaximisation,sales volume maximisation,growthmaximisationandutilitymaximisation
•evaluatenon-maximisingobjectivesforbusinesses,suchasprofitsatisficing,socialwelfare,corporatesocialresponsibility(CSR)
•explaintheprincipleagentproblem
•evaluatethefactorswhichinfluencethechoiceofobjectives.
Market structures and
their implications for the way resources are allocated and the interdependence of firms / •distinguishbetweentheshort runandlong runinterms offixedand
variable factors
•explainthelawofdiminishingreturns
•evaluatethesignificanceofthe lawofdiminishingreturns
•explainwhat is meant by: total cost (TC), total fixedcost (TFC), totalvariablecost(TVC),averagecost/average totalcost(AC/ATC),averagefixed cost (AFC), average variable cost (AVC), marginalcost (MC)
•calculate:TC,TFC,TVC,AC(ATC),AFC,AVC,MC
•explain,withtheaid ofadiagram(s),the relationshipbetweencostsandoutput
•explaintherelationshipbetween shortrunACand longrunAC
•explainwhatismeantbyinternalandexternaleconomiesand diseconomiesofscale
•evaluatethecausesofinternalandexternaleconomiesand diseconomiesofscale
•evaluatethesignificanceof economiesanddiseconomies ofscaleto
businessesandothereconomicagents
•explainwhatismeant bytheminimumefficientscale(MES)
•evaluatetheimportanceofMES
•explainwhatismeant by:
ototalrevenue(TR),averagerevenue(AR),marginalrevenue(MR)
•calculate:TR,AR,MR
•calculateprofit/loss
•explain,withtheaid ofadiagram(s),the relationshipbetweenprice,
revenue,PEDandoutput
•explainwhatismeant byaccountingprofitandeconomicprofit
•distinguishbetweenaccountingprofitandeconomicprofit
•explainwhat ismeant bysupernormal (abnormal)profit, normal profitandloss
•explain,using calculationsand/ordiagrams,therelationshipbetweensupernormalprofit,normalprofit,loss,TRandTC
•explain,usingdiagrams, whysupernormal profitsare maximized (lossesminimised) atthelevelofoutputwhereMC=MR
•explainthecharacteristicsofperfectcompetition
•explain,with the aidof a diagram,why the individualfirm in perfect competitionisapricetaker
•explain,withtheaidofadiagram,theequilibriumpriceandoutput forafirminperfectcompetitioninthelongrun
•explain,with the aidof a diagram,why the individualfirm in perfect competitioncanmakesupernormalprofitsorlossesin theshortrun
•explain,with the aidof a diagram,why the individualfirm in perfect competitioncanonlyearnnormalprofitsinthelongrun
•explain,with the aidof a diagram,why the individualfirm in perfect competitionwillbeallocativelyefficient
•explain,with the aidof a diagram,why the individualfirm in perfect competitionwillbeproductivelyefficientinthelongrun
•evaluate,withtheaidofadiagram,theusefulnessofperfect competitiontheory
•explainthecharacteristicsofmonopoly
•explainwhatismeantbymonopsony
•explain,withtheaidofadiagram,anaturalmonopoly
•evaluatetheimpactoftheexistenceofanaturalmonopoly
•explain,withtheaidofadiagram,whyamonopolistisapricemaker
•explain,withtheaidofadiagram,theequilibriumpriceandoutput foraprofitmaximisingmonopolist
•explain,withtheaidofadiagram,whyamonopolistcanmake supernormalprofits inboth the shortrun andthe long run
•explain,with the aidof a diagram,why the profitmaximising monopolistmaybeneitherallocativelynorproductivelyefficient
•explain,withtheaidofadiagram,whatismeantbyprice discrimination bya businesswith monopolypower
•evaluate,withtheaidofadiagram,theadvantagesand disadvantagesofmonopolypower
•explainthecharacteristicsofmonopolistic competition
•forabusiness inmonopolistic competitioninthe shortrun andthe longrun
•explain,with the aid of adiagram, why a business inmonopolisticcompetitioncanmakesupernormalprofitsorlossesin theshortrun butonlynormal profitsin thelong run
•evaluate,withtheaidofadiagram,theadvantagesand disadvantagesofmonopolistic competition
•explainthecharacteristicsofoligopoly
•explainwhatismeant by non-pricecompetition
•explainthesignificanceofinterdependenceinoligopolymarkets using,forexample,gametheoryandthekinkeddemandcurve
•explainthesignificanceof typesofcollusion inoligopolymarkets
•explainthesignificanceofproductdifferentiationinoligopoly markets
•evaluate,withtheaidofadiagram,theadvantagesand disadvantagesofoligopolymarkets
•explainand calculate concentrationratios
•explainbarriers toentryandexit
•usingdiagrams,compareandcontrasttheoutcomesofperfect competition,monopolisticcompetition,oligopolyandmonopoly
•evaluate,using examples,the extent towhich theory ofthe firmexplainsthebehaviourandperformance offirms
•explainthe characteristicsof aperfectly contestablemarket
•explainwhyabusinessinaperfectly contestablemarketwillbeboth allocativelyandproductivelyefficient
•evaluate,withtheaidofadiagram,theadvantagesand disadvantagesofaperfectlycontestablemarket
•evaluatethecontributionofcontestablemarkettheorytothe analysisofbehaviourandperformance offirms
•explainwhat ismeant byhorizontal,vertical andconglomerate integration/merger
•evaluatethe advantagesanddisadvantages ofintegration to economicagents
•evaluatethefactorswhichinfluencethegrowthoffirms
•evaluatethe impactof regulation and ownership onthe behaviour offirms
•evaluatetheimpactofcompetitionpolicyonthebehaviouroffirms
•evaluatetheextent towhichfirms areinterdependent.
Labour market / Wage determination / •explainthe conceptofthederiveddemandforlabour
•explainthe conceptofsub-marketswithrespecttothemarketforlabourinaneconomy
•explainthedifference betweennominal(money) andreal wages
•explainthefactorsaffectingthedemandforlabourinanindustry/economy
•explainthefactors affectingthewageelasticityofdemandforlabour
•explainwhatismeantbyproductivity
•explainwhatismeantbyunitlabour costs
•evaluatetheimplicationsofvariationsinunitlabour costsand productivitybetweenfirmsandcountries
•explainwhatismeantbyhuman capital
•evaluatetheimpactofchangesinwagesandunitlabourcostson firms
•explainthemonetaryandnon-monetaryfactors affectingthesupply oflabourtoanindustry/economy
•explainthefactorsaffectingthewageelasticityofsupplyoflabour
•explainthe differencebetween theshort runand longrun supply of labour
•evaluate,withthe aidofa diagram,thesubstitution andincome effectsonanindividual’ssupplyoflabour
•explain,with theaid ofa diagram,the differencebetween economic rentandtransferearnings
•explainthedeterminantsofeconomicrentandtransferearnings
•explain,withtheaidofadiagram,howwagesaredeterminedina highly competitivelabourmarket
•explain,withtheaidofadiagram,marginal revenueproducttheory inrelationtoemploymentandwagedetermination
•evaluate,withtheaidofadiagram,theimpactoftradeunion activityonlabourmarkets
•evaluate,withtheaidofadiagram,theimpactofamonopsonistemployeronalabourmarket
•evaluate,withtheaidofadiagram,theimpactofabilateral monopolyonalabourmarket
•explainthereasonswhywagedifferentialsexistinaneconomy
•evaluatethe usefulnessofwage determinationtheories in explainingthedeterminationofwagesindifferentregionaland occupationalsectorsofaneconomy.
Labour market issues and themes / •explainwhatismeant bythelabourforce
•explainwhat ismeant by theworking population
•explainwhatismeant bythedependencyratio,theparticipationrate,andthe replacementratio
•evaluate,withtheaidof adiagram,theimpactof theimpositionof andchangesinmaximum wages,minimum wagesandthe‘living wage’
•evaluatetheimpactoftheimpositionof,andchangesin,maximum wages,minimumwagesandthe‘livingwage’
•evaluatethe impact of changes in labourmarket flexibility
•evaluatetheimpact ofchanges inthe occupationalandgeographical mobilityoflabour
•evaluatetheimpactofindividualbargaining,collectivebargaining, productivitybargainingandtradeunionactivityonlabourmarkets
•evaluatetheimpactonlabourmarketsof:
omigration,discrimination,demographicchanges,incentives.
•evaluatethesignificanceofinformallabourmarkets.
•evaluatetheeffectivenessofgovernmentpoliciestoreducelabour immobilityand increase labourflexibility.
Area of Study / Topic / Learners should be able to: / RAG / Review date / RAG
Government intervention / •explainwhatismeant byincomeinequality
•explainwhatismeant bywealthinequality
•distinguishbetweenincomeinequalityandwealthinequality
•evaluatetheimpactoftheintroductionandchangesin government interventioninthelabour market,including:
opensions,migration,educationandtraining,UKandEU legislationand regulation,participationages, taxandbenefitsystem.
Market failure and government intervention / Market failure / •explainwhatismeant bymarketfailure
•explaintheimplication(s)ofmarketfailureforefficiency/inefficiency
•explainwhatismeant bymarketfailurein termsofoverorunder consumption/productionandresourceallocation.
Externalities / •explain,with theaid ofa diagram,what ismeant bypositive and negativeexternalities(externalbenefitsandexternal costs)of consumption
•explain,with theaid ofa diagram,what ismeant bypositive and negativeexternalities(externalbenefitsandexternal costs)of production
•explainwhatismeant bymarginalsocialcost,marginalexternal cost,marginalprivatecost,marginalsocialbenefit,marginalexternal benefitandmarginalprivatebenefit
•explain,withtheaidofadiagram,whythefollowingcausemarketfailure:
- negativeexternalitiesofconsumption
- negativeexternalitiesofproduction
- positiveexternalitiesofconsumption
- positiveexternalitiesofproduction
Area of Study / Topic / Learners should be able to: / RAG / Review date / RAG
Market power/ Information asymmetries / •explainwhatis meant by informationfailure
•explainwhat ismeant by asymmetricinformation andmoral hazard
•explain,with theaid of adiagram, how informationfailure causes marketfailure
•explainwhatismeantbymeritanddemerit goods
•explainwhatismeant bymeritanddemerit goodsintermsof informationfailures
•evaluatethesignificanceofmeritanddemeritgoods.
Public goods / •explainwhatismeantbyaprivategood,a publicgoodandaquasi- publicgood
•distinguishbetweenaprivate good,apublic goodandaquasi-public good
•explainthe characteristicsof apublic good,including:
onon-excludability,non-diminishability/non-rivalry,non- rejectabilityandzeromarginalcost
•explainwhytheexistenceofpublicgoods resultsinthefreeriderproblem
•explainwhytheexistenceofpublicgoodsmayresultinmarketfailure
•evaluatethesignificanceofpublicgoods
•evaluatetheroleofthe governmentintheprovisionofapublic good.
Inequity / •explainthecausesofinequalityofincomeand wealth
•evaluatethesignificanceofinequality ofincomeandwealth
•explainwhythere maybe differencesin accessto resources
•evaluatethesignificanceofdifferencesinaccesstoresources.
Environment / •explainthethreefunctionsoftheenvironment:providerof resources,providerofamenitiesandabsorberofwaste
•explain,withtheaid ofadiagram,how externalitiesarisingfromthe impactofproductionontheenvironmentcausemarketfailure
•explain,withtheaid ofadiagram,how externalitiesarisingfromthe impactof consumptionon theenvironment causemarket failure
•explain,withtheaidofadiagram,theenvironmentalKuznetscurve
•evaluatewhethereconomicgrowthwillresultinenvironmental
degradation/resourcedepletionandlimitsustainabledevelopment
•evaluatetheeffectivenessofpoliciesusedtoreducetherateof environmentaldegradation/resourcedepletionatalocal,national,regionalandgloballevel,includingforexample:
- indirecttaxationandsubsidies
- legislationandregulation,includingenvironmentalstandards
- tradablepollutionpermits
- informationprovision
- governmentexpenditure
- publicandprivatepartnerships.
Alternative methods of government intervention / •explainwhygovernmentsinterveneinmarkets
•explain,with theaid of adiagram, how governmentintervention in marketscorrectsor reducesmarketfailureandinequitybyusing,forexample:
- taxationandsubsidies
- governmentexpenditure/stateprovision
- bufferstocksystems
- pricecontrols
- public/privatepartnerships
- legislationandregulation
- tradablepollutionpermits
- informationprovision
- competitionpolicy
•explainwhat is meant byCost Benefit Analysis (CBA)
•explainhowCBA canbeusedinassessinginfrastructureprojects,
suchasin education,the environment,health andtransport
•evaluatethevalueofCBAinhelpinggovernmentstomakedecisions
insituationswherethere ismarketfailure.
Government failure / •explainwhatismeantbygovernmentfailure
•explainwhatmaycausegovernmentfailure
•evaluatetheconsequencesofgovernmentfailure.
H460 A Level Economics - Component 2
Name ………………………………………………………………….My minimum expected grade: ……..My target grade: ………
Please indicate your level of understanding of each topic. If required also decide by when you’re going to check again by inserting the appropriate dates.
Red = Emerging (At the moment I am not confident with this topic)
Amber = Secure (I can apply this but not consistently)
Green = Mastered (I can confidently apply this knowledge repeatedly)
Area of Study / Topic / Learners should be able to: / RAG / Review date / RAGEconomicpolicyobjectivesand indicators of macro-economic performance / Economic growth and development / •explainwhatismeant bythe structureofaneconomyin termsof
primary,secondaryandtertiarysectors
•explainwhatismeantbyeconomicgrowth
•explainwhatismeantbyeconomicdevelopment
•explainwhatismeant bysustainabledevelopment
•evaluatetherelationshipbetweeneconomicgrowth,changesinthe structureofaneconomyandsustainabledevelopment
•explainwhatismeant by themacroeconomicpolicyobjectivesof sustainedandsustainableeconomicgrowth
•explainwhatismeantbyarecession
•explainwhat is meant byreal gross domestic product(GDP)
•explainwhatismeantbynominal(money)grossGDP
•distinguishbetweenrealandnominal(money)grossdomestic product(GDP)
•comparechangesinrealandnominal(money)valuesofGDPover time
•explainwhyGDPandeconomicgrowtharemeasured
•evaluatethedifficultiesofmeasuringeconomicgrowthandGDP
•calculaterealandnominal(money)economicgrowthrates
•calculateGDPper capita
•evaluatethecausesofeconomicgrowthintheshortandlongrun
•explain,withtheaidofaproductionpossibilityfrontier/curve (PPF/C)andan AD/ASdiagram, thedifference betweenshort run andlongrungrowth
•evaluatethe costsand benefits ofeconomic growth
•evaluatethe consequencesofarecession
•evaluatetherelationshipbetweeneconomicgrowthandeconomic development
•evaluatetherelationshipbetweeneconomicgrowthandsustainable development
•explainhowOverseasDevelopmentAssistance(ODA)andtradecan promoteeconomicgrowthanddevelopment
•evaluatetheusefulnessofmacroeconomicmeasuressuchas GDP,theHumanDevelopmentIndex(HDI),theGenuineProgressIndicatorand other alternativesocial and culturalindicators
•evaluatetherelationshipbetweeneconomicgrowthandhappiness, including,for example,a consideration ofthe EasterlinParadox and theOfficeforNationalStatistics(ONS)MeasuringNationalWell- beingprogramme
•explaintheroleofinternationalorganisations,suchasthe InternationalMonetaryFund (IMF),theWorld Bankandthe WorldTradeOrganization,inpromotingeconomicgrowthand development
•evaluatetheeffectivenessofinternationalorganisations,suchasthe IMF,theWorldBank andtheWTO,in promotingeconomicgrowth anddevelopment.
Unemployment/ Employment / •explainwhatismeantbyunemployment
•explainwhatismeantbyemployment
•explainwhatismeant bythemacroeconomic policyobjectiveoffull employment
•distinguishbetweentheLabourForceSurveyandclaimantcount measuresofunemployment
•explainwhatismeant bythenatural/non-acceleratinginflationrate ofunemployment
•evaluatethedifficultiesofaccuratelymeasuringunemployment
•evaluatethecausesofunemployment
•evaluatetheconsequencesofunemployment
•evaluatethecausesandconsequences ofchangesinthepattern of employment
•evaluatetheeffectsoffullemployment.
Inflation / •explainwhatismeant byinflation
•explainwhatismeant bythemacroeconomic policyobjectiveoflow and stableinflation
•explainwhatismeantbydeflation,disinflationandhyperinflation
•explainhowthecurrentofficialmeasureofinflationintheUKis constructed
•calculatetherateofinflationusing indexnumbers
•calculaterealvaluesusingindexnumbers
•evaluatetheadvantagesanddisadvantagesofusinganindex,such astheConsumerPricesIndex(CPI)andtheRetailPricesIndex,to measureinflation
•evaluatethecausesofinflation
•evaluatetheconsequencesofinflation
•evaluatethecausesofdeflation
•evaluatethe consequencesofdeflation.
Income distribution and welfare / •distinguishbetweenincomeandwealthdistribution
•distinguishbetweenincomeandwealthinequality
•explainwhyachievinga moreevendistribution ofincomemaybe an importantmacroeconomicpolicyobjective
•explainhowincomeand wealtharedistributedwiththeaidofa LorenzCurvediagram
•explainandinterpretinequalitydata,includingGinicoefficientsand relevantquantiles
•explainthecausesofincomeandwealthinequality
•explainwhatismeant byabsolutepoverty
•explainwhat ismeant by relativepoverty
•distinguishbetweenabsoluteandrelativepoverty
•evaluatethe causesofpovertyandinequality
•evaluatethe consequencesofpovertyandinequality.
Trends in macroeconomic indicators / •explainthekeytrendsinUKmacroeconomicperformanceinthelast20years
•evaluatethecurrentperformanceoftheUKeconomycomparedwithotherdevelopedeconomies,emergingeconomiesand developingeconomies.
Aggregate demandandaggregate supply / Circular flow of income / •explaintheincome,outputandexpendituremethodsofmeasuring nationalincome
•explainwhat is meant by the circular flowof income
•explainwhatismeant byinjectionsandleakages withinthecircular flow
•distinguishbetweenphysicalandmonetaryflows
•explainwhatismeant bytheaverageandmarginalpropensitiesto consumeandsave
•explainwhatismeantbythemarginalpropensity towithdraw(marginalpropensitytosave,marginalrateof tax,marginal propensity toimport)
•calculateaverageandmarginalpropensitiestoconsume,saveand withdraw.
Aggregate demand (AD) / •explainwhatismeant byaggregatedemand
•explainthedeterminantsofthe componentsofaggregatedemand
•evaluatetherelationshipbetweenchangesinincomeand consumption
•evaluatehowtheacceleratortheorycanbeusedtoexplainthelevel ofinvestment
•explaintherelationshipbetweenaggregatedemandandtheprice level
•explainwhytheaggregatedemandcurvemayshift.
Area of Study / Topic / Learners should be able to: / RAG / Review date / RAG
Aggregate supply (AS) / •explainwhatismeant byaggregatesupply
•distinguishbetweentheKeynesianandneo-classicalapproachesto aggregatesupply
•explaintherelationshipbetweenaggregatesupplyandtheprice levelinboththeshortrunandthelongrun
•explainwhytheaggregate supplycurvemay shiftinboththe short runandthelongrun.
Aggregate demand and supply / •complete,understandandinterpretAD/ASdiagrams
•understandtheassumptionsunderlying theAD/ASmodel
•usetheaggregateAD/ASmodelanddatatounderstandwhysupply- sideand/ordemandsidepoliciesmaybeseenasappropriateways ofmanaginganeconomy.
Macroeconomic equilibrium / •explainwhatismeant byequilibriuminthemacroeconomyandhowitmightchange
•evaluate,usinganAD/ASdiagram,howchangesinaggregatedemandandaggregatesupplymayaffectmacroeconomic performance,includingeconomicgrowth,unemploymentand inflation
•evaluatetheKeynesian,neo-classicalandAustrianschoolsof thoughtonhowthemacroeconomyoperates.
The Phillips Curve / •explainwhatismeant bythePhillipsCurve
•explainwhatismeant bythenaturalrateofunemployment
•explainwhythenaturalrateofunemploymentcanbereferredtoasthenon-acceleratinginflationrateofunemployment(NAIRU)
•explainwhy the PhillipsCurve may bevertical inthe long run,using theoriessuchastheadaptive-expectationshypothesis
•evaluatewhetherthePhillipsCurveaccuratelyexplainstherelationshipbetweeninflation(moneywages)andchangesin unemployment
•evaluatetheusefulnessofthePhillipsCurveformacroeconomic policymakers.
The economic cycle / •explainthedifferentstages oftheeconomic cycle
•distinguishbetweenactualandtrendratesofgrowth
•evaluatethefactorswhichdeterminethetrendrateofeconomic growth
•explainwhatismeant bythenationalincomemultiplier
•explaintheroleandpurposeofthemultiplier
•explainthefactors whichdetermine thesize ofthe nationalincome multiplier
•calculatethesizeofthenationalincomemultiplier
•explaintheconceptofthemultiplierusingthecircularflowmodel
•explaintheimpactofthemultiplierin termsofshiftsinthe aggregatedemandcurve
•explaintheeconomiccycleusingthemultiplier-acceleratormodel
•explaintheconceptofoutputgapsusingadiagramoftheeconomic cycle,anAD/ASdiagramandaPPF/Cdiagram
•evaluatethecausesofanoutputgap
•evaluatetheconsequencesofanoutputgap.
Theapplicationofpolicyinstruments / Fiscal policy / •explainwhatismeantbythegovernmentbudget
•identifythe main sources oftax revenue and government
expenditureintheUKeconomy
•explainwhatismeantbycurrentandcapitalgovernmentexpenditure
•distinguishbetweencurrentandcapitalgovernmentexpenditure
•explainwhatismeant byprogressive,proportionalandregressive taxation
•distinguishbetweenprogressive,proportionaland regressive taxation
•calculateaverageandmarginaltaxrates
•explainwhatis meant by directtaxation
•explainwhatis meant by indirecttaxation
•distinguishbetweendirectandindirecttaxation
•explainthefeaturesofa‘good’ tax
•evaluatetherelationshipbetweenthe taxrateandtaxrevenue, including considerationoftheLafferCurve
•evaluatethe advantages and disadvantagesof a flat rate taxsystem
•explainwhatismeant bythebudgetposition/fiscalstance
•explainwhat is meant by a budget surplus,a budget deficitand a
balancedbudget
•distinguishbetweenabudgetsurplus,abudgetdeficitanda
balancedbudget
•distinguishbetweenthecyclicalbudgetpositionandthe structural budgetposition
•distinguishbetweenanoverallbudgetpositionandthebudget positiononcurrentexpenditure
•distinguishbetweenabudgetdeficitandgovernmentdebt
•explainhowbudgetdeficits canbefinanced
•evaluatepolicies tocorrect abudget surplus ordeficit
•evaluatetheconsequencesofgovernmentdebt
•explainwhatismeant bythenationaldebt
•explainhow automatic stabiliserswork to achieve economicstability
•explainhowdiscretionaryfiscalpolicymaybeusedtoimprove
macroeconomicperformance
•explainhowcrowdingoutandcrowdingin canoccurasaresultof
fiscalpolicy
•evaluatetheeffectivenessofusingfiscalpolicy toachievethe government’smacroeconomicobjectives
•explainhowfiscalrulescaninfluencethebehaviourofeconomic agents
•evaluatethe effectivenessoffiscalrules.
Monetary policy / •explainwhatismeantbymonetarypolicyinstruments/measures,suchasinterestrates,moneysupply,techniquessuchasquantitative easingandexchangerates
•explainhowthesecanbeused toinfluencemacroeconomic variables
•explainhowmonetarypolicyinstrument(s)/measuresaffectthe macroeconomicperformance
•explainwhatismeant bytheliquiditytrap
•explainwhatismeantbyinflationratetargeting
•explainhowinflationtargetingmay affectthebehaviourof economicagents
•explainwhatismeant bysymmetricandasymmetric inflationtargeting
•distinguishbetweensymmetricandasymmetricinflation targeting
•evaluatetheeffectivenessofusingmonetarypolicytoachievethe government’smacroeconomicobjectives
•explainhowacentralbankworkstoachieveitsaim(s).
Supply side policy / •explainpolicies which areused to increase thequality or quantity of factorsofproduction,including:
- educationandtraining
- reformingtaxandbenefits
- reducingmarginaltaxrates
- NationalMinimumWagelegislationandpromotinga‘living wage’
- improvinglabourmarketflexibility –including consideration ofthehousingmarket
- immigration
- privatisation
- deregulation
- tradeunionreform
- infrastructureinvestment–including considerationoftransport market
- researchanddevelopmentincentives
- subsidies
Policy conflicts / •explainthepossibletrade-offswhichexistbetweenpolicy objectives,suchas:
- unemploymentandinflation
- growthandinflation
- inflationandthebalanceofpayments
- growthandthebalanceofpayments
- growthandincomeandwealthequality
•evaluatethe methodsthrough whichpolicy conflictscan beresolved or reduced.
Approaches to policy and
macro-economic context / •evaluate debates in macroeconomic thinking concerning:
•theextent to which prices and wagesare flexible
•theflexibility/elasticityofaggregatesupply
•theroleofexpectations
•explainwhyapproachestomacroeconomicpolicychangein accordancewitheconomiccircumstances,withreferenceto:theGreatDepression
•Keynesian demand management in the 1970s
•the monetarist approach in the 1980s
•the2007–08financialcrisisanditsaftermath.
The global context / Globalisation / •explainwhatismeant byglobalisation
•explainthecharacteristicsofglobalisation
•explainthecausesofglobalisation
•evaluatethe impactof globalisationon developed,emerging and developingeconomies
•evaluatetheimpactofmultinationalfirmsonthe worldeconomy
•evaluatetheimpactoftheperformanceofemergingeconomieson othereconomies.
International trade / •explainwhatismeant byinternationaltrade
•explainwhatismeant byabsoluteadvantage
•explainwhat ismeant by comparativeadvantage
•distinguishbetweenabsoluteand comparativeadvantage
•calculateopportunity costratios to illustratethe gains fromtrade derivedfrom absoluteand comparativeadvantage
•explainwhatismeant bythetermsoftrade
•calculatethetermsoftrade
•explainwhatdeterminesthetermsoftrade,includingHeckscher- Ohlintheory
•explainhowthepatternofglobaltradehaschanged overtime
•evaluatecomparativeadvantageas anexplanationofglobal trade patterns
•explainhow countriesachieveinternational competitiveness, considering,forexample,productivity,unitlabourcosts,exchange rates,andproductquality
•evaluatetheadvantagesand disadvantagesofinternationaltrade andaidtodeveloped,emerginganddevelopingeconomies.
Balance of payments / •explainwhatismeant bythebalanceofpayments
•distinguishbetweenthecurrentaccount,capitalaccountand financialaccountcomponentsofthebalanceofpayments
•explainthe componentsofthecurrentaccount–tradeingoods, tradeinservicesandincomeandcurrenttransfers
•calculatethebalances onthe differentcomponents onthe balance ofpayments
•explainwhatismeant byimbalancesonthebalanceofpayments
•explainwhyachievingasustainable balanceofpaymentspositionis animportantmacroeconomicpolicyobjective
•evaluatethe causesofimbalancesonthebalanceofpayments
•evaluatetheconsequencesofimbalancesonthebalanceof payments
•evaluatepoliciesto correctimbalancesonthebalanceofpayments.
Exchange rates / •explainwhatismeantbyanexchangerate
•explain,withtheaidofadiagram,howexchangeratesare
determinedinfixedandfloatingexchangeratesystems
•explaindifferentmeasuresof exchangerates,such as:
- bilateral
- effective
- nominal
- real
•evaluatethe causesofexchangeratechanges
•evaluatethe consequencesofexchangeratechanges
•explainwhatismeantbyahybridexchangeratesystemandbeable toprovidecurrentexamples
•evaluatetherelativemeritsanddrawbacksofdifferentexchange ratesystems
•explainpurchasingpowerparity(PPP)theory
•evaluatePPPtheory
•explainwhysomecountriesmightmanagetheirexchangerate to achieveinternationalcompetitiveness
•explaintheMarshall-LernerconditionandtheJ-curve
•evaluatetheimpact ofexchangerate changesoninternationalcompetitiveness
•evaluatetheeffectivenessofchangingthevalueofacurrencyto achievemacroeconomicpolicyobjectives.
Trade policies and negotiations / •explaindifferentmethodsofprotectionism
•explaintheimpactofmethodsofprotectionismtoincludea diagrammaticexplanationof tariffsandquotas
•evaluatethe effectivenessofdifferentmethodsofprotectionism
•evaluatethecaseforandagainstprotectionism
•evaluatethecaseforandagainstfreetrade
•evaluatetheeffectivenessofgovernmentpoliciestoachieve internationalcompetitiveness
•explain,withexamples, thestages ofeconomicintegration:
ofreetradeareasocustomsunion omonetaryunion oeconomicunion
•evaluatetheinternalandexternal consequencesofeconomic integration,includingadiagrammaticanalysisoftradecreationand tradediversion
•evaluatetheadvantagesanddisadvantagesofEUmembershipand howthesevarybetweenmemberstates
•evaluatetheroleoftheWTO inpromotingfreetrade
•evaluatetheprogressmadeanddifficultiesfaced bytheWTO,such
asagriculturaldisputesandtradeagreements.
Area of Study / Topic / Learners should be able to: / RAG / Review date / RAG
Thefinancialsector / The role of the financial sector in the real economy / •explainthefunctionsofmoney
•explainthecharacteristicsofmoney
•explainwhatismeant bythemoneysupply
•distinguishbetweennarrowandbroad moneyintermsofliquidity
•explainhowbanks createmoney bothin theoryand inpractice
•explain,withtheaidofadiagram,howtheinterestrateis determined(liquiditypreferencetheoryandloanablefundstheory)
•explaintherelationshipbetweentheinflationrateandthenominal interestrate
•explaintherelationshipbetweenthe moneysupplyandtheprice levelusingthe Fisherequation ofexchange
•evaluatethe relevanceof the quantitytheory of money
•explainthepossibleimpactonthemacroeconomy ofthefinancialsector,includingthe effectof therole ofretail,commercial and investmentbanks;pensionfunds,hedgefundsandinsurancefunds, thestockmarket,thebondmarket;andtheforeignexchangemarket
•explaintheroleofinter-banklendinginthemoderneconomy
•explainthedifferentforms ofborrowing,including mortgages, unsecuredloans, overdrafts,credit cardsandpay daylending
•explainwhy therate ofinterest variesin differentmoney markets usingthe conceptsofriskandsecurity
•evaluatetheroleof thefinancialsectorinthe realeconomy.
The financial sector in developing and emerging economies / •explaintheroleof thefinancialsectorindeveloping andemerging economiesinpromotingeconomicdevelopment
•explaintheroleofsavingand investmentinpromotingeconomic developmentusing,forexample,theHarrod-Domarmodel
•explainwhatismeantbymicrofinance
•evaluatetheroleofmicrofinanceinsupportingeconomic development
•evaluatetheextenttowhichinternationalfinancialmarketshave influencedflowsoffinancial capitalintoandoutofdevelopingand emergingeconomies
•evaluatetheimpactofpublicandprivatesectordebtondeveloping andemergingeconomies
•evaluatetheroleof thefinancialsectorindeveloping andemerging economiesinpromotingeconomicdevelopment
•explainwhatismeant byremittances
•evaluatetheimpactonandimportanceofremittancesto
economies.
The role of the central bank / •explainthefunctionsofacentralbank
•explainhowtheroleandfunctions ofanindependentcentralbank differfromthose ofa centralbank under‘government control’
•explainthepolicymeasuresavailabletoacentralbankinthe achievementofitsprimaryandsecondaryobjectives
•evaluatetheeffectivenessofdifferentpolicymeasuresavailable toacentralbankintheachievementofitsprimaryandsecondaryobjectives
•evaluatetheadvantagesanddisadvantagesofacentralbank targetingmacroeconomic indicators(in the caseof theBank of England–itsinflationtarget(s))
•evaluatetheadvantages anddisadvantages ofacentral bankacting asthelenderoflastresort
•evaluatetheeffectivenessofanindependentcentralbankanda ‘controlled’centralbank.
Financial regulation / •explainwhyfinancialinstitutionsareregulated
•explainthedisadvantagesoftheunder-regulationoffinancialinstitutions
•explainhowfinancialinstitutionscanbe regulated
•explainhowchangesintheregulationoffinancialinstitutionsmay contributetofinancialcrises,suchasin2007–08
•explainthebenefitsofincreasedregulationoffinancialinstitutions inaneconomy
•evaluatetheimportanceoftheregulationoffinancialinstitutions withinaneconomy
•evaluatethe role ofthe IMF and theWorld Bank inregulating the globalfinancial system.