The whole course, theme by theme

1.1 Nature of economics

• 1.1.1
  Economics as a social science

  • Use simplified models and ceteris paribus to isolate a mechanism
  • Explain why observation and evidence can test a claim but controlled experiments are difficult in economics
  LessonPractice
• 1.1.2
  Positive and normative economic statements

  • Classify testable claims and value judgements with reasons
  • Explain how normative priorities influence policy choices even when evidence is shared
  LessonPractice
• 1.1.3
  The economic problem

  • Distinguish scarcity from a temporary shortage and identify the factors of production
  • Calculate opportunity cost and apply trade-offs to households, firms and government
  • Contrast renewable and non-renewable resources and explain sustainable allocation
  LessonPractice
• 1.1.4
  Production possibility frontiers

  • Construct a PPF for capital and consumer goods or other outputs and identify attainable, inefficient and unattainable combinations
  • Infer opportunity cost and distinguish productive from allocative efficiency
  • Explain movement along, outward/inward shifts and asymmetric capacity change
  LessonPractice
• 1.1.5
  Specialisation and the division of labour

  • Explain how specialisation and division of labour can increase productivity
  • Evaluate worker and firm benefits against monotony, dependence and coordination costs
  • Explain exchange and money as a means of payment, unit of account, store of value and deferred-payment standard
  LessonPractice
• 1.1.6
  Free market economies, mixed economy and command economy

  • Compare resource allocation in market, mixed and command systems
  • Evaluate incentives, information and distribution under each system
  • Explain the contributions of Adam Smith, Friedrich Hayek and Karl Marx to these views
  LessonPractice

1.2 How markets work

• 1.2.1
  Rational decision making

  • Apply utility-maximising consumer and profit-maximising firm assumptions
  • Recognise when a prediction relies on rational behaviour or complete information
  LessonPractice
• 1.2.2
  Demand

  • Separate a price-led movement from a non-price demand shift
  • Explain demand through diminishing marginal utility and determinants
  • Construct an individual or market demand change using accurate labels
  LessonPractice
• 1.2.3
  Price, income and cross elasticities of demand

  • Calculate signed PED, YED and XED using percentage changes
  • Classify PED magnitude, normal/inferior and luxury/necessity goods, complements/substitutes
  • Explain determinants and time effects of elasticities
  • Use PED to infer total-revenue effects and evaluate decisions using all three demand elasticities
  LessonPractice
• 1.2.4
  Supply

  • Separate a price-led supply movement from a supply shift
  • Explain supply changes through costs, technology, productivity, taxes/subsidies and other determinants
  • Draw and interpret initial/final supply correctly
  LessonPractice
• 1.2.5
  Elasticity of supply

  • Calculate and interpret PES including perfectly elastic/inelastic and unit-elastic cases
  • Explain capacity, stocks, factor mobility and time as supply responsiveness constraints
  LessonPractice
• 1.2.6
  Price determination

  • Locate equilibrium, shortage and surplus and explain price adjustment
  • Draw single and simultaneous demand/supply shifts
  • Distinguish a certain price/output direction from an ambiguous one under simultaneous shifts
  LessonPractice
• 1.2.7
  Price mechanism

  • Explain rationing, signalling and incentive functions of prices
  • Trace how incentives allocate scarce resources in a changing market
  LessonPractice
• 1.2.8
  Consumer and producer surplus

  • Identify and calculate consumer and producer surplus
  • Show how price and market shifts change each surplus area
  • Relate surplus changes to elasticity and stakeholder effects
  LessonPractice
• 1.2.9
  Indirect taxes and subsidies

  • Draw an indirect-tax or subsidy wedge and distinguish buyer and seller prices
  • Calculate tax revenue or subsidy expenditure and identify incidence
  • Explain incidence using relative elasticities and compare affected stakeholders
  LessonPractice
• 1.2.10
  Alternative views of consumer behaviour

  • Explain habitual behaviour, influence of others and weak computation as deviations from rational choice
  • Use these deviations to qualify market or policy predictions without assuming all decisions are irrational
  Practice

1.3 Market failure

• 1.3.1
  Types of market failure

  • Identify externalities, underprovided public goods and information gaps as failures of allocation
  • Explain why market outcomes may differ from efficient social outcomes
  Practice
• 1.3.2
  Externalities

  • Separate private, external and social marginal costs and benefits
  • Draw negative production externality with market/social outputs and welfare loss
  • Draw positive consumption externality with market/social outputs and potential welfare gain
  • Evaluate measurement of external effects and effects on third parties
  Practice
• 1.3.3
  Public goods

  • Apply non-rivalry and non-excludability and distinguish public from private goods
  • Explain free riding and why private provision may be insufficient
  Practice
• 1.3.4
  Information gaps

  • Explain symmetric/asymmetric information gaps and affected decisions
  • Develop contextual examples of overconsumption or underconsumption caused by information failure
  Practice

1.4 Government intervention

• 1.4.1
  Government intervention in markets

  • Compare specific/ad valorem taxes, subsidies and binding maximum/minimum prices graphically
  • Explain permits, state provision, information and regulation as responses to failure
  • Evaluate each intervention by target, incidence, elasticity, welfare and unintended effects
  Practice
• 1.4.2
  Government failure

  • Explain how intervention can reduce welfare through distorted incentives, information limits and administrative cost
  • Analyse unintended consequences and compare government failure with the original market failure
  Practice

2.1 Measures of economic performance

• 2.1.1
  Economic growth

  • Calculate and distinguish real/nominal, total/per-capita GDP and GDP/GNI, including value versus volume of output
  • Use PPP-adjusted comparisons and critique national-income data for living standards
  • Explain income/happiness links and UK national-wellbeing measures and assess GDP limitations as a welfare measure
  Coming
• 2.1.2
  Inflation

  • Distinguish inflation, disinflation and deflation and interpret price indices
  • Explain CPI measurement, weights and limitations and compare CPI/RPI where relevant
  • Develop demand-pull, cost-push and money-growth explanations
  • Evaluate inflation effects on consumers, firms, workers and government
  Coming
• 2.1.3
  Employment and unemployment

  • Compare claimant-count with ILO unemployment estimated through the UK Labour Force Survey and distinguish unemployment from inactivity
  • Explain underemployment, employment/unemployment changes and the effects of migration and skills on employment
  • Distinguish frictional, seasonal, structural and cyclical unemployment and real-wage effects
  • Evaluate unemployment consequences for individuals, firms, society and public finances
  Coming
• 2.1.4
  Balance of payments

  • Identify current-account goods, services, primary-income and secondary-income flows
  • Calculate current-account balances and explain deficits/surpluses
  • Relate current-account imbalances to other macroeconomic objectives
  Coming

2.2 Aggregate demand (AD)

• 2.2.1
  The characteristics of AD

  • Construct AD from C+I+G+(X-M) and compare the relative sizes of its components
  • Explain downward slope and distinguish movements from AD shifts
  Coming
• 2.2.2
  Consumption (C)

  • Explain disposable income, interest rates, confidence and wealth as consumption drivers
  • Apply the relationship between saving and consumption to AD
  Coming
• 2.2.3
  Investment (I)

  • Distinguish gross from net investment
  • Explain growth/export demand, Keynesian animal spirits, business confidence, interest, finance, government and regulation as investment drivers
  Coming
• 2.2.4
  Government expenditure (G)

  • Explain how trade-cycle conditions and discretionary fiscal choices change G
  • Trace an expenditure change into aggregate demand
  Coming
• 2.2.5
  Net trade (X-M)

  • Explain how real incomes, exchange rates, competitiveness, protectionism and external conditions change net exports
  • Trace changes in X and M separately into AD
  Coming

2.3 Aggregate supply (AS)

• 2.3.1
  The characteristics of AS

  • Distinguish short-run from long-run aggregate supply
  • Draw AS and distinguish price-level movements from shifts
  Coming
• 2.3.2
  Short-run AS

  • Explain cost-led SRAS changes including wages, commodity prices, exchange rates and taxes
  • Draw a cost shock and interpret output/price-level consequences
  Coming
• 2.3.3
  Long-run AS

  • Compare classical vertical and Keynesian LRAS shapes and their assumptions
  • Explain productivity, skills, technology, enterprise, migration, competition and resource changes
  • Draw capacity shifts and relate them to potential output
  Coming

2.4 National income

• 2.4.1
  National income

  • Trace real and money flows between households and firms
  • Distinguish income and wealth as flow and stock
  Coming
• 2.4.2
  Injections and withdrawals

  • Classify investment, government spending and exports as injections and saving, tax and imports as withdrawals
  • Explain how changes in their balance affect national income
  Coming
• 2.4.3
  Equilibrium levels of real national output

  • Draw equilibrium and AD/AS changes with real output and price-level axes
  • Compare predicted effects across spare-capacity and full-capacity conditions
  Coming
• 2.4.4
  The multiplier

  • Explain successive rounds of induced spending and leakage
  • Calculate MPC, MPS, MPT and MPM from incremental data
  • Calculate k=1/(1-MPC) in the simple model and k=1/(MPS+MPT+MPM) in the withdrawal model
  • Apply delta Y=k times delta injection and evaluate assumptions with an AD/AS interpretation
  Coming

2.5 Economic growth

• 2.5.1
  Causes of growth

  • Distinguish actual growth from potential growth
  • Explain demand-driven and supply-driven growth using AD/AS and PPF
  • Explain international trade as a growth channel
  Coming
• 2.5.2
  Output gaps

  • Identify positive and negative output gaps against potential output
  • Draw output gaps and explain measurement uncertainty
  Coming
• 2.5.3
  Trade (business) cycle

  • Interpret boom, slowdown, recession and recovery in a cycle
  • Relate the cycle to growth, inflation, employment, investment and capacity utilisation
  Coming
• 2.5.4
  The impact of economic growth

  • Evaluate growth effects on households, firms, government, current/future living standards and the environment
  • Compare growth benefits with distributional and sustainability costs
  Coming

2.6 Macroeconomic objectives and policies

• 2.6.1
  Possible macroeconomic objectives

  • Identify growth, price stability, employment, external balance, fiscal balance, environmental and distributional objectives
  • Use indicators and contexts to explain why priorities differ
  Coming
• 2.6.2
  Demand-side policies

  • Distinguish fiscal and monetary policies and their instruments
  • Trace spending, tax, interest-rate and asset-purchase changes through AD/AS
  • Explain the role of the Bank of England and MPC without freezing changing institutional facts
  • Compare US/UK Great Depression and 2008 crisis responses and evaluate demand-side limitations
  • Distinguish fiscal deficits from surpluses and direct from indirect taxation with suitable examples
  Coming
• 2.6.3
  Supply-side policies

  • Distinguish market-oriented from interventionist supply-side instruments
  • Explain skills, infrastructure, R&D, labour/competition reforms and tax/benefit incentives through LRAS
  • Evaluate time, cost, distribution and effectiveness of alternative supply-side policies
  Coming
• 2.6.4
  Conflicts and trade-offs between objectives and policies

  • Explain conflicts between growth, inflation, employment, external balance and other objectives
  • Draw and use the short-run Phillips relationship
  • Evaluate policy trade-offs and conditions under which they can weaken
  Coming

3.1 Business growth

• 3.1.1
  Sizes and types of firms

  • Compare small/large, public/private and profit/non-profit firms
  • Explain separation of ownership and control and the principal-agent problem
  Coming
• 3.1.2
  Business growth

  • Compare organic growth with vertical, horizontal and conglomerate integration
  • Explain finance, market size, owner objectives and regulation as growth constraints
  • Evaluate growth consequences for firms and other stakeholders
  Coming
• 3.1.3
  Demergers

  • Explain strategic and financial reasons for demergers
  • Evaluate effects on firms, workers and consumers
  Coming

3.2 Business objectives

• 3.2.1
  Business objectives

  • Compare profit, revenue and sales maximisation with satisficing and explain why objectives differ
  • Calculate and draw profit maximisation at MC=MR and revenue maximisation at MR=0
  • Locate sales maximisation subject to normal profit at AR=AC and compare prices/output
  Coming

3.3 Revenues, costs and profits

• 3.3.1
  Revenue

  • Calculate and distinguish TR, AR and MR
  • Draw revenue relationships for price-taking and price-setting firms
  • Connect PED to revenue and the sign of MR
  Coming
• 3.3.2
  Costs

  • Calculate total, fixed, variable, average and marginal costs
  • Draw short-run cost relationships and explain diminishing marginal productivity
  • Distinguish short-run fixed factors from long-run adjustment and interpret LRAC
  Coming
• 3.3.3
  Economies and diseconomies of scale

  • Explain internal/external economies and internal diseconomies of scale
  • Draw LRAC and minimum efficient scale
  • Evaluate how firm growth or industry clustering changes average costs
  Coming
• 3.3.4
  Normal profits, supernormal profits and losses

  • Calculate economic profit/loss and distinguish normal from supernormal profit
  • Draw profit/loss rectangles at the relevant output
  • Use AVC for short-run continuation and AC for long-run viability and show shutdown boundaries
  Coming

3.4 Market structures

• 3.4.1
  Efficiency

  • Compare allocative, productive, dynamic and X-efficiency
  • Identify P=MC, minimum AC and avoidable cost inefficiency graphically
  • Evaluate static efficiency against investment/innovation outcomes
  Coming
• 3.4.2
  Perfect competition

  • Explain price-taking, entry conditions and other competitive assumptions
  • Draw short-run profit/loss and long-run normal-profit equilibrium
  • Explain entry/exit and evaluate competitive efficiency
  Coming
• 3.4.3
  Monopolistic competition

  • Explain differentiated products, entry and price-setting power
  • Draw short-run and long-run monopolistic-competition equilibria
  • Evaluate excess capacity, choice and efficiency
  Coming
• 3.4.4
  Oligopoly

  • Calculate n-firm concentration ratios and infer market concentration cautiously
  • Explain interdependence, overt/tacit collusion, cartels/price leadership, entry barriers and product differentiation
  • Construct and interpret a simple prisoner-dilemma payoff matrix
  • Evaluate price/non-price competition, price wars, predatory/limit pricing, price leadership, cartel/tacit collusion and reasons for collusive instability
  Coming
• 3.4.5
  Monopoly

  • Explain monopoly power, entry barriers and stakeholder consequences
  • Draw monopoly equilibrium and compare relevant efficiency outcomes
  • Explain third-degree discrimination conditions and construct segmented-market diagrams
  • Explain natural monopoly and evaluate its costs/benefits
  Coming
• 3.4.6
  Monopsony

  • Explain single-buyer power and conditions enabling monopsony
  • Analyse consequences for sellers, consumers, workers and the buyer
  Coming
• 3.4.7
  Contestability

  • Explain actual versus potential competition, entry/exit barriers and sunk costs
  • Evaluate how contestability constrains pricing, profit and investment
  Coming

3.5 Labour market

• 3.5.1
  Demand for labour

  • Explain derived labour demand and determinants
  • Construct labour-demand changes and link productivity/revenue changes to hiring
  Coming
• 3.5.2
  Supply of labour

  • Explain monetary/non-monetary determinants of labour supply
  • Analyse occupational and geographical immobility and labour-supply elasticity
  Coming
• 3.5.3
  Wage determination in competitive and non-competitive markets

  • Draw competitive and non-competitive wage determination and explain wage differences
  • Analyse minimum/maximum wages and public-sector wage setting
  • Evaluate intervention against labour immobility using labour demand/supply elasticities
  Coming

3.6 Government intervention

• 3.6.1
  Government intervention

  • Compare merger control, monopoly regulation and policies to promote competition
  • Explain price/profit regulation, quality standards, performance targets, privatisation and nationalisation
  • Apply support for small firms, deregulation and competitive tendering to a specific competition problem
  • Explain restrictions on monopsony power intended to protect suppliers and employees
  Coming
• 3.6.2
  The impact of government intervention

  • Evaluate regulation using benefits, costs, information, regulatory capture and unintended consequences
  • Compare effects of intervention on prices, output, efficiency and stakeholder welfare
  Coming

4.1 International economics

• 4.1.1
  Globalisation

  • Explain globalisation through technology, liberalisation and transnational firms
  • Evaluate globalisation effects on countries, governments, producers, consumers, workers and the environment
  Coming
• 4.1.2
  Specialisation and trade

  • Calculate absolute and comparative advantage with opportunity costs
  • Draw comparative-advantage trade/PPF models and explain gains
  • Evaluate assumptions, specialisation risks and terms for mutually beneficial exchange
  Coming
• 4.1.3
  Pattern of trade

  • Explain how comparative advantage, emerging economies, blocs and relative exchange rates alter trade patterns
  • Interpret changing partner/product shares without treating one cause as sufficient
  Coming
• 4.1.4
  Terms of trade

  • Calculate the export-price/import-price index ratio times 100
  • Explain drivers of improved/deteriorated terms of trade
  • Evaluate consequences and distinguish terms of trade from the trade balance
  Coming
• 4.1.5
  Trading blocs and the World Trade Organisation (WTO)

  • Compare free-trade areas, customs unions, common markets and monetary unions
  • Evaluate trade creation/diversion and other costs/benefits of regional integration
  • Explain WTO trade rules, bilateral agreements and conflicts between regional agreements and WTO objectives
  • Assess monetary-union success conditions with particular reference to Eurozone economies
  Coming
• 4.1.6
  Restrictions on free trade

  • Explain reasons for protectionism and tariff, quota, subsidy and non-tariff instruments
  • Analyse price, quantity, welfare and stakeholder consequences
  • Evaluate retaliation, infant-industry and employment arguments against wider trade effects
  Coming
• 4.1.7
  Balance of payments

  • Distinguish current, capital and financial accounts
  • Explain causes and effects of external deficits/surpluses
  • Evaluate policies addressing imbalances and global interdependence
  Coming
• 4.1.8
  Exchange rates

  • Compare floating, fixed and managed exchange-rate systems
  • Explain currency-market determinants and appreciation/depreciation versus revaluation/devaluation
  • Apply Marshall-Lerner and J-curve reasoning conditionally
  • Evaluate exchange-rate effects on AD, inflation, growth, investment and trade, including competitive depreciation/devaluation
  Coming
• 4.1.9
  International competitiveness

  • Measure competitiveness through relative export prices, relative unit labour costs and appropriate non-price indicators
  • Explain productivity, unit labour costs, exchange rates and quality as determinants
  • Evaluate competitiveness effects on growth, jobs and external balances
  Coming

4.2 Poverty and inequality

• 4.2.1
  Absolute and relative poverty

  • Distinguish absolute from relative poverty and compare measures
  • Explain causes and changes in poverty with country-specific evidence
  Coming
• 4.2.2
  Inequality

  • Distinguish income from wealth inequality
  • Construct and interpret Lorenz curves and Gini coefficients
  • Explain causes within/between countries and how growth/development changes inequality
  • Evaluate how capitalism and policy institutions affect distribution
  Coming

4.3 Emerging and developing economies

• 4.3.1
  Measures of development

  • Explain HDI through health/life expectancy, education and real GNI per capita, and its construction as a composite indicator
  • Compare HDI with income and other development indicators and critique limitations
  Coming
• 4.3.2
  Factors influencing growth and development

  • Explain primary-product dependence, volatile prices and savings/foreign-currency gaps
  • Use Harrod-Domar reasoning and examine capital flight, demographics, debt and access to finance
  • Analyse infrastructure, education, property rights and non-economic constraints
  • Prioritise interacting growth/development constraints in a specific country
  Coming
• 4.3.3
  Strategies influencing growth and development

  • Evaluate trade liberalisation, FDI, removal of subsidies, floating exchange rates, microfinance and privatisation as market strategies
  • Evaluate human capital, protectionism, managed exchange rates, infrastructure, joint ventures and buffer stocks as interventionist strategies
  • Explain Lewis industrialisation, tourism, primary industries, Fairtrade, aid and debt relief
  • Compare the roles and limits of World Bank, IMF and NGOs in development
  Coming

4.4 The financial sector

• 4.4.1
  Role of financial markets

  • Explain saving, lending, payments, forward markets and equity-market functions
  • Connect financial intermediation to investment and economic activity
  Coming
• 4.4.2
  Market failure in the financial sector

  • Explain asymmetric information, externalities, moral hazard, speculative bubbles and market rigging
  • Analyse how financial-market failure can transmit to the wider economy
  Coming
• 4.4.3
  Role of central banks

  • Explain central-bank monetary policy, government banking and lender-of-last-resort roles
  • Explain regulation of banks and evaluate financial-stability trade-offs
  Coming

4.5 Role of the state in the macroeconomy

• 4.5.1
  Public expenditure

  • Distinguish capital/current spending and transfer payments
  • Explain changing public-spending size/composition across countries
  • Evaluate spending/GDP effects on productivity, growth, living standards, crowding out, tax and equality
  Coming
• 4.5.2
  Taxation

  • Distinguish progressive, proportional and regressive taxation
  • Explain direct/indirect tax changes through incentives, distribution, output, prices, trade and FDI
  • Draw the Laffer curve and qualify revenue predictions
  Coming
• 4.5.3
  Public sector finances

  • Distinguish automatic stabilisers from discretionary fiscal policy
  • Distinguish debt from deficit and structural from cyclical deficits
  • Explain and evaluate drivers and significance of fiscal deficits and national debt
  Coming
• 4.5.4
  Macroeconomic policies in a global context

  • Compare fiscal, monetary, currency, supply-side and direct-control policies across countries
  • Evaluate responses to debt/deficits, poverty, money/interest changes and competitiveness
  • Analyse global shocks, transnational-firm controls and transfer-pricing regulation
  • Evaluate policy limits caused by imperfect information, uncertainty and uncontrollable external shocks
  Coming

• Quantitative foundations

  • Ratios and fractions
  • Percentages and percentage-point changes
  • Mean, median and relevant quantiles
  • Standard graphical forms
  • Index numbers
  • Money to real terms
  • Written, graphical, tabular and numerical evidence
  • Levels versus rates of change
  • Composite indicators
  • Seasonally adjusted figures
  Coming
• Elasticity and revenue clinic

  • Elasticity calculations and interpretation
  • Costs, revenue and profit
  • Calculate with transparent working
  Coming
• Micro diagram construction and repair

  • Integrate a diagram
  Coming
• Macro diagram construction and repair

  • Integrate a diagram
  Coming
• Firm and labour diagram clinic

  • Integrate a diagram
  • Costs, revenue and profit
  Coming
• Trade, development and distribution clinic

  • Integrate a diagram
  • Percentages and percentage-point changes
  • Composite indicators
  Coming
• Eight-mark examine clinic

  • Read command and scope
  • Apply evidence
  • Develop a causal chain
  • Evaluate an argument
  Coming
• Ten- and twelve-mark development

  • Read command and scope
  • Apply evidence
  • Develop a causal chain
  • Evaluate an argument
  Coming
• Fifteen-mark policy comparison

  • Read command and scope
  • Apply evidence
  • Develop a causal chain
  • Evaluate an argument
  • Integrate a diagram
  Coming
• Twenty-five-mark judgement

  • Read command and scope
  • Apply evidence
  • Develop a causal chain
  • Evaluate an argument
  • Reach a justified judgement
  • Plan under time pressure
  Coming
• Synoptic micro and macro links

  • Connect micro and macro
  • Develop a causal chain
  • Evaluate an argument
  • Reach a justified judgement
  Coming
• Timed data response and error repair

  • Read command and scope
  • Apply evidence
  • Calculate with transparent working
  • Plan under time pressure
  • Critique evidence
  • Written, graphical, tabular and numerical evidence
  Coming