Key term
Eduqas A-Level Economics A520QS
Scarcity, Choice and the Economic Problem
Topic overviewScarcity, choice and the basic economic problemThe factors of production and their rewardsOpportunity cost for individuals, firms and governmentEconomic goods, free goods and the three fundamental questionsThe production possibility frontier and its shapeMovements along and shifts in the frontierEfficiency, unemployed resources and the frontierSpecialisation, the division of labour and exchangeProductivity and how it is raised
Demand, Supply and Market Equilibrium
Topic overviewProduct markets and the objectives of economic agentsMarginal utility and the derivation of demandThe demand curve and why it slopes downwardThe conditions of demand and shifts in the demand curveSupply and why the supply curve slopes upwardThe conditions of supply and shifts in the supply curveEquilibrium price and output in a competitive marketShifts in demand and supply and the new equilibriumConsumer surplus, producer surplus and market welfare
Elasticities of Demand and Supply
Topic overviewPrice elasticity of demand and its calculationWhat determines price elasticity of demandPrice elasticity of demand and total revenueElasticity along a straight-line demand curveIncome elasticity of demand, normal and inferior goodsCross price elasticity of demand, substitutes and complementsPrice elasticity of supply and its determinantsElasticity and the incidence of taxes and subsidiesElasticity in decision-making by firms and government
The Labour Market
Topic overviewThe demand for labour and what shifts itThe supply of labour and what shifts itWage determination in a competitive labour marketThe elasticity of demand and supply of labourWage differentials and their causesLabour market flexibility and trade union powerWelfare payments, income tax and labour market performanceThe national minimum wageMigration and the labour market
Costs, Revenues, Profits and the Growth of Firms
Topic overviewPrices, profit and the allocation of resourcesThe short run, the long run and diminishing returnsTotal, average and marginal productFixed and variable costs in the short runAverage and marginal cost curves and their shapesTotal, average and marginal revenueEconomies and diseconomies of scale and the long run average cost curveProfit maximisation and the MC = MR ruleNormal profit, abnormal profit and economic profitInternal and external growth and types of integrationProductive, allocative, dynamic and Pareto efficiency
Market Structures
Topic overviewMarket structure, contestability and barriers to entryBusiness objectives and satisficingPerfect competition and its assumptionsShort run and long run equilibrium in perfect competitionThe efficiency of perfect competitionMonopolistic competition and its assumptionsShort run and long run equilibrium in monopolistic competitionThe efficiency of monopolistic competitionMonopoly and its assumptionsMonopoly compared with perfect competitionThe costs and benefits of monopolyOligopoly, interdependence and concentration ratiosPrice and non-price competition, collusion and price leadershipGame theory and the Nash equilibrium
Competition Policy and Privatisation
Topic overviewWhy governments are concerned about monopoly powerMerger control and market investigationsCartels, restrictive practices and abuse of dominanceCompetition authorities and how they workRegulating natural monopolies and the utilitiesContestable markets and barriers to entryThe limits of competition as a policy goalPrivatisation and the forms it takesEvaluating privatisation and the case for renationalisation
Market Failure and Government Intervention
Topic overviewMarket failure and economic efficiencyExternalities, welfare loss and the socially efficient outputPublic goods, free riding and property rightsMerit goods, demerit goods and information failureMonopoly power, factor immobility and volatile pricesTaxation, subsidies and tradable pollution permitsRegulation, state provision and information provisionMaximum and minimum prices in agriculture, housing and labourGovernment failure and distortions in marketsIncome inequality as a market failure
The Circular Flow and Aggregate Demand
Topic overviewThe circular flow of incomeInjections, withdrawals and equilibrium national incomeThe multiplierThe acceleratorAggregate demand and its componentsConsumption and savingInvestment and its determinantsGovernment spending and net tradeThe AD function: why it slopes down and what shifts it
Aggregate Supply and the Phillips Curve
Topic overviewAggregate supply and the AD/AS frameworkThe short run aggregate supply curveShifts in short run aggregate supplyThe Neo-Classical long run aggregate supply curveThe Keynesian long run aggregate supply curveShifts in long run aggregate supplyMacroeconomic equilibrium and adjustment to the long runThe short run Phillips curveExpectations, the long run Phillips curve and the NAIRUShifts in the long run Phillips curve
Economic Growth
Topic overviewMacroeconomic policy objectives and the conflicts between themMeasuring economic growthActual growth and potential growthIllustrating growth on the PPF and in AD/AS analysisOutput gapsThe business cycle and recessionThe causes of economic growthPolicy instruments used to create growthThe benefits and costs of economic growth
Unemployment
Topic overviewThe labour force, economic activity and inactivityMeasuring unemploymentProblems in measuring unemployment accuratelyThe economic and social costs of unemploymentCyclical unemployment and demand side causesFrictional, structural and seasonal unemploymentReal wage unemployment and incentives to workThe natural rate of unemploymentDemand side solutions to unemploymentSupply side solutions to unemploymentChoosing between demand side and supply side approaches
Inflation and Deflation
Topic overviewInflation, deflation and disinflation definedPrice indices, the basket and weightingCalculating index numbers and the inflation rateThe main measures of inflation comparedDemand-pull inflationCost-push inflationThe quantity theory of money and inflation expectationsThe costs of inflationPolicies to control inflationDeflation and the deflationary spiral
The Balance of Payments
Topic overviewThe balance of payments accountsThe current account and its four componentsThe capital and financial accountsWhy the balance of payments sums to zeroCauses of current account imbalancesThe terms of trade and the current accountThe consequences of a deficit or a surplusPolicies to correct a current account deficit
Control of the National Debt
Topic overviewDeficits, surpluses and the national debtMeasurement of the deficit and the debtStructural and cyclical deficitsDiscretionary policy and automatic stabilisersThe cost of servicing debt and credit ratingsRefinancing, confidence and market disciplineCrowding out and the effect of debt on growthAusterity in a downturn and whether debt is always bad
Fiscal Policy
Topic overviewThe budget and the fiscal stanceGovernment spending and where it goesTaxation and the sources of government revenueDirect and indirect taxesFiscal policy, aggregate demand and AD/AS analysisThe Keynesian case for demand side fiscal policyCriticisms of demand side fiscal policyThe Laffer curve and tax ratesSupply side fiscal policy
Monetary Policy and Financial Stability
Topic overviewThe Bank of England and monetary stabilityThe inflation target and the Bank of England remitThe Monetary Policy Committee and how Bank Rate is setThe transmission mechanism of monetary policyInterest rates, aggregate demand and inflationInterest rates and the exchange rateEvaluating interest rates as a policy toolQuantitative easing and how it worksThe risks of quantitative easing and its unwindingDirect intervention in bank lendingThe financial sector and the real economyAsset bubbles and the financial crisis of 2007-08Systemic risk, moral hazard and the lender of last resortRegulating the financial systemUK economic turning points since 1990
Exchange Rates and Supply Side Policies
Topic overviewExchange rate determination in a free marketFactors that cause a currency to appreciate or depreciateThe exchange rate index and effects on households and firmsExchange rates, aggregate demand and the macroeconomic objectivesManaged floats, fixed rates and central bank interventionThe terms of trade and the Marshall-Lerner conditionSupply side policies and long-run aggregate supplyMarket-based and interventionist supply side policiesEvaluating supply side policies
International Trade and Protectionism
Topic overviewWhy countries tradeAbsolute and comparative advantageCalculating comparative advantageThe gains from trade and the terms of tradeLimits and criticisms of comparative advantageThe case for free tradeThe case against free tradeTariffs and their effectsQuotas, subsidies and other methods of protectionThe arguments for and against protectionism
Globalisation and the UK in the World Economy
Topic overviewWhat globalisation is and what drives itThe benefits of globalisationThe costs of globalisationThe United Kingdom in the world economyThe World Trade OrganisationEconomic problems of developed, developing and emerging economiesThe European Union and the single marketThe advantages and disadvantages of membershipEnlargement of the European UnionEconomic and monetary union and the euroOptimal currency areas and the European Central Bank
Economic Development
Topic overviewWhat economic development meansNational income as a measure of developmentPurchasing power parity and comparing countriesThe Human Development IndexOther indicators of developmentEconomic structure and developmentObstacles: health, education and populationObstacles: capital, infrastructure and institutionsObstacles: trade, resources and external conditionsSolutions: liberalisation and foreign investmentSolutions: aid and debt reliefSolutions: industrialisation strategies
Economic Growth
- 9 subtopics
- 27 things to know
- All three components
What Economic Growth covers
Economic Growth is examined in Macroeconomics — assessed across all three components. It covers macroeconomic policy objectives and the conflicts between them, measuring economic growth, actual growth and potential growth, Illustrating growth on the PPF and in AD/AS analysis, output gaps, the business cycle and recession, the causes of economic growth, policy instruments used to create growth and the benefits and costs of economic growth.
Where it is assessed
All three components
Macroeconomics, assessed across Components 1, 2 and 3.
Check the Eduqas specification ↗The 9 subtopics
Each one has its own page.
- Macroeconomic policy objectives and the conflicts between themFour main macroeconomic policy objectives, growth objective usually and two further macroeconomic objectives a government may pursue.Open →
- Measuring economic growthGross domestic product, real GDP per capita and why is it used and quarterly growth rate.Open →
- Actual growth and potential growthActual economic growth, potential economic growth and economists generally.Open →
- Illustrating growth on the PPF and in AD/AS analysisThe same event drawn two ways: a shift of the frontier and a shift of long run aggregate supply, and what each diagram shows that the other does not.Open →
- Output gapsNegative and positive gaps, how they are estimated, why the estimate is revised so often, and what each implies for inflation and unemployment.Open →
- The business cycle and recessionBoom, downturn, recession and recovery, the technical definition of a recession, and why the trend line the cycle moves around is itself only an estimate.Open →
- The causes of economic growthMain causes of economic growth, efficiency of use of factors of production and capital stock.Open →
- Policy instruments used to create growthOne criticism of using income tax cuts to raise growth and opportunity cost of a government growth strategy.Open →
- The benefits and costs of economic growthOpportunity cost of growth, sustainable growth and claim that growth is not the same as development.Open →
What you need to know
Answer each one before you reveal it.
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What does AD/AS analysis add to what a production possibility frontier already shows?
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Name the four main macroeconomic policy objectives.
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Define gross domestic product.
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Define an output gap.
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What is the business cycle?
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Name the main causes of economic growth.
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Which broad types of policy can a government use to raise growth?
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How does economic growth benefit households?
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Why do governments attempt to achieve low inflation?
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Distinguish between nominal and real gross domestic product.
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Define actual economic growth.
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How is potential growth shown on a production possibility frontier?
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What is a negative output gap?
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Name the four phases of the business cycle.
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How does an increase in the quantity of labour raise growth?
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How can government spending on infrastructure raise growth?
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How does economic growth benefit firms?
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Why do governments attempt to achieve low unemployment?
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How is the rate of economic growth calculated from real GDP?
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Define potential economic growth.
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How is actual growth shown on a production possibility frontier?
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What is a positive output gap?
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Define a recession.
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How does investment in physical capital raise growth?
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How can education policy raise the growth rate?
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How does economic growth benefit the government?
Take Economic Growth further
The same content, four other ways.
Questions from this topic
Each one with the model answer underneath.
- 1
Name the four main macroeconomic policy objectives.
Model answer
Governments aim for low and stable inflation, low unemployment and sustainable economic growth. Equilibrium in the current account of the balance of payments is the fourth objective.
- 2
Why do governments attempt to achieve low inflation?
Model answer
Low inflation protects the real value of savings and of fixed incomes. Stable prices also allow firms to plan investment with more confidence.
- 3
Why do governments attempt to achieve low unemployment?
Model answer
Low unemployment raises national output and reduces spending on welfare benefits. Widespread joblessness also carries social costs that governments wish to avoid.
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What does the growth objective usually mean in practice?
Model answer
The growth objective means a steady rise in real gross domestic product over time. Sustainable growth avoids the inflation and external problems that very rapid growth brings.
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Why does a government attempt to achieve equilibrium in the current account?
Model answer
A persistent current account deficit must be financed by borrowing from abroad or by selling assets. Equilibrium avoids the build-up of external liabilities.
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Name two further macroeconomic objectives a government may pursue.
Model answer
Many governments also pursue sound public finances and a fairer distribution of income. The two aims sit alongside the four traditional targets.
What is inside Levo
Six ways to work the same material.
Economic Growth revision questions
- What does Economic Growth cover in Eduqas A-Level Economics?
- 9 subtopics: macroeconomic policy objectives and the conflicts between them, measuring economic growth, actual growth and potential growth, illustrating growth on the ppf and in ad/as analysis, output gaps, the business cycle and recession, the causes of economic growth, policy instruments used to create growth and the benefits and costs of economic growth. Each one has its own page with questions and model answers.
- How is Economic Growth organised?
- By the Eduqas A520QS specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Economic Growth, on a schedule.
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