Economics - Year 12

Economics Overview

Term 1 : Introduction to markets and market failure

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

  1. After three weeks there will be an assessment to review suitability to continue the course. EOU assessment will be carried out at the end of term. The assessments will consist of AS level questions and will initially look to reinforce the development of chains of logic and the use of application and evaluation skills.
Economic growth

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

Inflation

A general rise in prices over a period of time or a fall in the purchasing power of money

Deflation

Downward pressure on prices in an economy

Employment

The number of people in the economy who are economically active i.e. willing and able to work and have a job

Unemployment

The number of economically active people who cannot find a job at a point in time

Balance of payments

A record of a country’s trade and transactions with the rest of the world

Aggregate demand (AD)

The total demand for all goods and services in an economy at any given price level over a period of time

Disposable income

The amount of personal income an individual has after direct tax e.g. income tax

Gross investment

The addition to the capital stock of the economy

Net investment

Spending on capital assets such as buildings, machinery and equipment having taken into account depreciation of assets

Government expenditure (G)

Expenditure by the state e.g. infrastructure and education

Net trade (X-M)

The difference between exports minus imports: Exports (X) – Imports (M) = Net exports

  • Spiritual
  • Moral
  • Social
  • Cultural
Develop the individual:

Student will have the opportunity to understand the reason why scarcity of resources exist and understand the role of entrepreneurs.

Create a supportive community:

Through group and individual work the student will start to learn the skills of analysis and evaluation.

Term 2: Introduction to markets and market failure 2

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

  1. End of unit assessments based on Topic 1.2. This assessment will be completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
Rational economic decision making

When decisions made by economic agents are based on reason

Demand

The amount of a good or service that consumers are willing and able to buy at any given price

Income elasticity of demand

A measure of the responsiveness of demand to a change in income

Perfectly price elastic demand

A perfectly price elastic product will have a PED coefficient of ∞ (infinity)

Cross elasticity of demand

A measure of the responsiveness of demand for one good, x to a change in price of another good, y

Supply

The amount of a good or service that producers are willing and able to sell at any given price

Price elasticity of supply

A measure of the responsiveness of supply to a change in price

Price determination

Market equilibrium where demand is equal to supply

Price mechanism

The method by which prices for goods and services are achieved in an economy

Consumer surplus

The difference between the price a consumer is willing to pay for a product and the price that they actually pay

Producer surplus

The difference between the price a producer is willing to supply a product at and the price actually received for the product

Indirect taxes

Taxes charged by the government on a good or a service

Subsidies

Finance provided to producers to encourage them to produce goods and services

Consumer behaviour

The study of economic agents such as individuals and the reasons why they make decisions

Habitual behaviour

When people follow the same routines, repeating actions on a regular basis

Rational behaviour

Actions undertaken by economic agents such as individuals that are based on reason

Irrational behaviour

Actions undertaken by economic agents such as individuals that are not based on reason

  • Spiritual
  • Moral
  • Social
  • Cultural
Develop the individual:

The student will gain an insight into basic supply and demand and factor that influence price giving them a great understanding of the economy.

Create a supportive community:

Through group work the student will learn how to challenge assumptions and understand other peoples point of view.

Term 3: Introduction to markets and market failure 3

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

  1. End of unit assessments based on Topic 1.3. This assessment will be completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
Market failure

When the market is unable to efficiently allocate scarce resources to meet the needs of society

Externalities

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

Public goods

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

Private goods

A good where its use by an individual stops others from using it whilst its consumption reduces the amount available for consumption by others

Information gaps

The difference in information between two parties

Government intervention

The use of regulatory frameworks to improve the working of individual markets

Government failure

When government intervention in markets leads to a net welfare loss in comparison to the free market operating alone

  • Spiritual
  • Moral
  • Social
  • Cultural
Develop the individual:

Gain an understanding of government policy and the positive and negative effect action can have on people, the economy and the environment.

Create a supportive community:

Through group work and independent study the student will gain life long transferable skills.

Term 4 : The UK economy – performance and policies

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)

  1. End of unit assessments based on Topic 2.1 and 2.2, these assessments are completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
  • Spiritual
  • Moral
  • Social
  • Cultural
Develop the individual:

The individual will gain insight into government policy and the targets and trade-offs for a government.

Create a supportive community:

The student will learn how to develop balanced arguments and see economic policy form various angles.

Term 5 : The UK economy – performance and policies 2

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

  1. End of unit assessments based on Topic 2.3 and 2.4, these assessments are completed in timed conditions and are based on A-level exam questions, which helps prepare students for their A-Level examinations
Aggregate supply (AS)

The total value of output of the economy at any given price level at a given point in time

Short-run AS

The period of time in which the rewards paid for the factors of production are fixed e.g. wages for labour

Long-run AS

The time period where all factors of production are variable and can be increased over time

National Income

The total annual value of all goods and services produced within an economy

Circular flow of income

An economic model showing the flow of goods and services, the factors of production and their payments between households and firms within an economy

Injections

Spending in the economy from sources other than households that adds to the circular flow

Withdrawals

Expenditure in the economy that does not flow back to firms and leaves the circular flow

Real national output

The total value of all goods and services produced in an economy after taking into account inflation

Equilibrium real national output

The point where planned AD is equal to planned AS

Multiplier

An initial injection into the economy is multiplied by the amount of economic activity to create an overall boost to the economy

  • Spiritual
  • Moral
  • Social
  • Cultural
Develop the individual:

Students understand factors that impact the success and failure of firms.

Create a supportive community:

Through group work and challenging themselves to come up with alternative view and ideas student will develop evaluative skills.

Term 6 : The UK economy – performance and policies 3

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

  1. UCAS mock exam on theme 1 and theme 2
Economic growth

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

Actual growth

The real rate of growth of GDP over time

Potential growth

That rate of economic growth that can be sustained in the long run without causing inflationary pressure

Output gaps

A measure of the difference between the actual level of GDP and the potential GDP at a point in the future

Trade (business) cycle

Variations in the level of economic activity over time- Boom & Recession

Living standards

A measurement used to see how well individuals and societies needs and wants are being met

Macroeconomic objectives

Government objectives for the economy as a whole These will include objectives on: Economic growth Unemployment Inflation Balance of payments

Demand-side policies

Any government policy that impacts on aggregate demand in an economy

Monetary policy

The manipulation of the rate of interest, the money supply and exchange rates to influence the level of economic activity

Fiscal policy

The manipulation of government spending, taxation and government borrowing to influence the level of economic activity

Supply-side policies

These seek to improve the long run productive potential of the economy

Policy conflicts

When policies used to control the economy conflict with one another

  • Spiritual
  • Moral
  • Social
  • Cultural
Develop the individual:

Understand how various government policies can impact the economy.

Create a supportive community:

Group work and individual study develops team working and independent working.