Economics 0455 — specification explorer

1. The nature of the economic problem

• 1.1.1finite resources and unlimited wants
• 1.1.2economic and free goods

2. The factors of production

• 1.2.1definitions of the factors of production and
• 1.2.2mobility of the factors of production
• 1.2.3quantity and quality of the factors of

3. Opportunity cost

• 1.3.1definition of opportunity cost
• 1.3.2the influence of opportunity cost on decision

4. Production possibility curve (PPC) diagrams

• 1.4.1definition of PPC
• 1.4.2points under, on and beyond a PPC
• 1.4.3movements along a PPC
• 1.4.4shifts in a PPC

1. Microeconomics and macroeconomics

• 2.1.1microeconomics
• 2.1.2macroeconomics

2. The role of markets in allocating resources

• 2.2.1the market system
• 2.2.2key resources allocation decisions
• 2.2.3introduction to the price mechanism

3. Demand

• 2.3.1definition of demand
• 2.3.2price, demand and quantity
• 2.3.3individual and market demand
• 2.3.4conditions of demand

4. Supply

• 2.4.1definition of supply
• 2.4.2price, supply and quantity
• 2.4.3individual and market supply
• 2.4.4conditions of supply

5. Price determination

• 2.5.1market equilibrium
• 2.5.2market disequilibrium

6. Price changes

• 2.6.1causes of price changes
• 2.6.2consequences of price changes

7. Price elasticity of demand (PED)

• 2.7.1definition of PED
• 2.7.2calculation of PED
• 2.7.3determinants of PED
• 2.7.4PED and total spending on a product/revenue
• 2.7.5significance of PED

8. Price elasticity of supply (PES)

• 2.8.1definition of PES
• 2.8.2calculation of PES
• 2.8.3determinants of PES
• 2.8.4significance of PES

9. Market economic system

• 2.9.1definition of market economic system
• 2.9.2advantages and disadvantages of the market

10. Market failure

• 2.10.1.definition of market failure
• 2.10.2causes of market failure

11. Mixed economic system

• 2.11.1definition of the mixed economic system
• 2.11.2government intervention to address market

1. Money and banking

• 3.1.1money
• 3.1.2banking

2. Households

• 3.2.1the influences on spending, saving and

3. Workers

• 3.3.1factors affecting an individual’s choice of
• 3.3.2wage determination
• 3.3.3reasons for differences in earnings
• 3.3.4division of labour/specialisation

4. Trade unions

• 3.4.1definition of a trade union
• 3.4.2the role of trade unions in the economy
• 3.4.3the advantages and disadvantages of trade

5. Firms

• 3.5.1classification of firms
• 3.5.2small firms
• 3.5.3causes and forms of the growth of firms
• 3.5.4mergers
• 3.5.5economies and diseconomies of scale

6. Firms and production

• 3.6.1demand for factors of production
• 3.6.2labour-intensive and capital-intensive
• 3.6.3production and productivity

7. Firms’ costs, revenue and objectives

• 3.7.1definition of costs of production
• 3.7.2calculation of costs of production
• 3.7.3definition of revenue
• 3.7.4calculation of revenue
• 3.7.5objectives of firms

8. Market structure

• 3.8.1competitive markets
• 3.8.2monopoly markets

1. The role of government

• 4.1.1the role of government

2. The macroeconomic aims of government

• 4.2.1the macroeconomic aims of government
• 4.2.2possible conflicts between macroeconomic

3. Fiscal policy

• 4.3.1definition of the government budget
• 4.3.2reasons for government spending
• 4.3.3reasons for taxation
• 4.3.4classification of taxes
• 4.3.5principles of taxation
• 4.3.6impact of taxation
• 4.3.7definition of fiscal policy
• 4.3.8fiscal policy measures
• 4.3.9effects of fiscal policy on government

4. Monetary policy

• 4.4.1definition of money supply and monetary
• 4.4.2monetary policy measures
• 4.4.3effects of monetary policy on government

5. Supply-side policy

• 4.5.1definition of supply-side policy
• 4.5.2supply-side policy measures
• 4.5.3effects of supply-side policy measures on

6. Economic growth

• 4.6.1definition of economic growth
• 4.6.2measurement of economic growth
• 4.6.3causes and consequences of recession
• 4.6.4causes of economic growth
• 4.6.5consequences of economic growth
• 4.6.6policies to promote economic growth

7. Employment and unemployment

• 4.7.1definition of employment, unemployment and
• 4.7.2changing patterns and level of employment
• 4.7.3measurement of unemployment
• 4.7.4causes/types of unemployment
• 4.7.5consequences of unemployment
• 4.7.6policies to reduce unemployment

8. Inflation and deflation

• 4.8.1definition of inflation and deflation
• 4.8.2measurement of inflation and deflation
• 4.8.3causes of inflation and deflation
• 4.8.4consequences of inflation and deflation
• 4.8.5policies to control inflation and deflation

1. Living standards

• 5.1.1indicators of living standards
• 5.1.2comparing living standards and income

2. Poverty

• 5.2.1definition of absolute and relative poverty
• 5.2.2the causes of poverty
• 5.2.3policies to alleviate poverty and redistribute

3. Population

• 5.3.1the factors that affect population growth
• 5.3.2reasons for different rates of population
• 5.3.3the effects of changes in the size and structure

4. Differences in economic development between countries

• 5.4.1differences in economic development

1. International specialisation

• 6.1.1specialisation at a national level
• 6.1.2advantages and disadvantages of specialisation

2. Globalisation, free trade and protection

• 6.2.1definition of globalisation
• 6.2.2role of multinational companies (MNCs)
• 6.2.3the benefits of free trade
• 6.2.4methods of protection
• 6.2.5reasons for protection
• 6.2.6consequences of protection

3. Foreign exchange rates

• 6.3.1definition of foreign exchange rate
• 6.3.2determination of foreign exchange rate in
• 6.3.3causes of foreign exchange rate fluctuations
• 6.3.4consequences of foreign exchange rate
• 6.3.5floating and fixed foreign exchange rates

4. Current account of balance of payments

• 6.4.1structure
• 6.4.2causes of current account deficit and surplus
• 6.4.3consequences of current account deficit and
• 6.4.4policies to achieve balance of payments