• The economic problem of scarcity (unlimited wants and finite resources).
• Renewable, non-renewable and sustainable resources.
• Production possibility frontiers to show opportunity cost and economic growth.
• Specialisation and the division of labour.
• Free market and mixed economies.
• Positive and normative economics.
• Demand and supply schedules and movements along curves.
• Shifts of demand and supply curves.
• Price, cross and income elasticities of demand and price elasticity of supply.
• The price mechanism and the determination of market equilibrium.
• Consumer and producer surplus.
• The functions of the price mechanism (rationing, signalling and incentives).
• The impact of indirect taxes and subsidies on markets.
• Use of demand and supply analysis in share, oil, precious metal and agricultural markets.
• The derived demand and supply of labour.
• The impact of migration, taxation, minimum wage and trade unions on labour markets.
• Labour immobility (geographical and occupational).
• Market failure and the inefficient allocation of resources.
• Public goods, private goods, merit goods and demerit goods.
• Externalities (external costs from production and the external benefits from consumption).
• The impact of imperfect information on markets such as transport, education, health and the environment.
• Market equilibrium and social optimum.
• Welfare loss and welfare gain.
• Unstable commodity markets (fluctuating demand, supply and prices).
• The impact of government intervention on unstable markets (price fixing and buffer stocks).
• Types of government intervention (taxes, subsidies, permits, property rights, and regulation).
• The effectiveness of government intervention.
• The causes and effects of government failure.

UNIT TWO – MANAGING THE ECONOMY

• Measuring economic growth (real, nominal, total and per capita values).
• The problems of accurately measuring economic growth.
• Measuring development using the Human Development Index (HDI).
• Advantages and limitations of the HDI and other measures of development.
• Comparing developed and developing countries.
• Measuring the rate of inflation (weighted indexes such as the CPI and RPI).
• Measuring unemployment (claimant count and the ILO measure).
• Types and costs of unemployment.
• The impact of changes such as migration on the rate of employment and unemployment.
• Surpluses and deficits on the Balance of Payments.
• The causes and effects of an imbalance on the Balance of Payments current account.
• The circular flow of National Income model.
• Income and wealth
• Injections and withdrawals (or leakages).
• Components of aggregate demand (AD = C+I+G+(X-M)).
• The influences on consumption (C) such as interest rates, confidence, house prices and wealth).
• The influences on investment (I) such as interest rates, confidence, risk and government policy.
• The influences on government spending (G) and the role of fiscal policy.
• The impact on foreign trade (X-M) of exchange rates and changes in the world economy.
• Movements along and shifts of AD curves.
• Aggregate supply.
• Movements along and shifts of Aggregate Supply curves.
• Equilibrium level of national output.
• The multiplier and the marginal propensity to consume.
• The impact of the multiplier on Aggregate Demand.
• Actual and potential economic growth.
• Economic growth trends, sustainable growth and output gaps in developed countries.
• The causes and constraints of economic growth such as migration, population and export-led.
• The benefits of economic growth such as higher living standards, profits and tax revenues.
• The costs of economic growth such as environmental issues, inequality and trade deficits.
• Macro-economic objectives.
• Conflicts or trade-offs between macro-economic objectives.
• Demand-side fiscal and monetary policies.
• The role of the Bank of England’s Monetary Policy Committee.
• Supply-side fiscal and monetary policies.
• Conflicts or trade-offs between macro-economic policies.
• Use of AD / AS analysis to show the use of macro-economic policy to achieve objectives.