Syllabus overview
1 Basic economic ideas and resource allocation
Scarcity, choice and opportunity cost
- Positive and normative statements
- Factors of production
- Resource allocation in different economic systems and issues of
transition
- Production possibility curves
- Money
- Classification of goods and services
2 The price system and the micro economy
Demand and supply curves
- Price elasticity, income elasticity and cross-elasticities of
demand
- Price elasticity of supply
- Interaction of demand and supply
- Market equilibrium and disequilibrium
- Consumer and producer surplus
3 Government microeconomic intervention
Maximum and minimum prices
- Taxes (direct and indirect)
- Subsidies
- Transfer payments
- Direct provision of goods and services
- Nationalisation and privatisation
4 The macro economy
Aggregate Demand and Aggregate Supply analysis
- Inflation
- Balance of payments
- Exchange rates
- The terms of trade
- Principles of absolute and comparative advantage
- Protectionism
5 Government macro intervention
Types of policy: fiscal, monetary and supply side policy
- Policies to correct balance of payments disequilibrium
- Policies to correct inflation and deflation
Key
concepts
Scarcity and choice
The fundamental problem in economics is that resources are scarce
and wants are unlimited, so there is always a choice required between competing uses for the resources.
- The margin and change.
Decision-making by individuals, firms and governments is based on
choices at the margin; that is, once behaviour has been optimised, any change will be detrimental
as long as conditions remain the same.
- Equilibrium and efficiency. Prices are set by markets, are always moving in to and out of equilibrium,
and can be both efficient and inefficient in different ways and over different time periods.
- Regulation and equity. There is a trade-off between, on the one hand, freedom for firms
and individuals in unregulated markets and, on the other hand, greater social equality and equity
through the government regulation of individuals and markets.
- Progress and development.
Economics studies how societies can progress in measurable money
terms and develop in a wider more normative
sense.