Economics
Student Induction Pack
Intermediate 2/Higher
6031
Autumn 1999
HIGHER STILL
Economics
Student Induction Pack
Intermediate 2/Higher
Support Materials
PREFACE
This pack has been developed by a teacher in the City of Aberdeen council whose
support is gratefully acknowledged. The work was undertaken with the advice and
assistance of the Higher Still Development Unit.
The pack is designed to be given directly to students of both the Intermediate 2 and
Higher Economics courses. It will enable them to understand the main components
the course, monitor their understanding and development and help them to prepare for
both the internal and external assessments.
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1. INTRODUCTION
The aim of this pack is to provide information, which will help you during your
Economics course at Intermediate 2 or Higher level.
Rationale
All societies, organisations and individuals face the economic problem of allocating
scarce resources among competing uses. Economics is the social science which
provides the knowledge and skills required to make decisions about the production
and consumption of goods and services. This course is concerned with the ways in
which such decisions are made and the implications which these decisions have for
individuals, organisations and society. The course will help you to build up a
knowledge of economic principles. You will develop skills in interpreting and
analysing economic information as well as evaluating the costs and benefits of
decisions.
This economics course looks at both the world of business and the economic
environment in which business is set. It will benefit anyone thinking of a career in
central or local government, commerce or industry.
Course aims
The course aims to develop:
• a knowledge and understanding of the basic economic problem of allocating scarce
resources among alternative uses
• an understanding of economic roles and responsibilities of the individual as a
consumer, employee, producer and citizen
• an understanding of the economic roles and responsibilities of firms and
governments in the use of resources
• an understanding of the environmental and social costs involved in economic
decisions
• an understanding of the economic relationships between countries
• an ability to explain and analyse economic problems and to suggest possible
solutions
• an ability to communicate economic ideas in a logical and effective manner.
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2. COURSE DETAILS
The course is made up of two units:
Microeconomics
The Economy
1 credit
2 credits
Each unit is divided into five topics. It will help you to organise your notes if you
have a ring binder for each unit with a separate section for each topic. The topics are:
Microeconomics
1. The Basic Economic Problem
2. Demand
3. Supply
4. Operation of the Market
5. Types of Market
The Economy
6. National Income
7. Inflation and Employment
8. International Trade and Payments
9. Role of Government in the Economy and Government Economic Policies
10. International Economic Environment
3. METHODS OF TEACHING AND LEARNING
Different methods of teaching and learning will be used during your course but
emphasis will be placed on examining, explaining and analysing current economic
events and issues in the UK, European and World economies. You will be using
articles from newspapers, magazines and journals and programmes recorded from TV
or radio. You will also use computer simulations of the economy and economic
statistics drawn from a variety of sources. It is important that you keep up with
economic events and you should regularly listen to or watch news bulletins. You will
also find it useful to scan radio/TV listings to look for and record relevant
programmes. Reading a newspaper and compiling a file of articles will also be of
great benefit to you.
4. HOMEWORK
Your teacher will give you homework. This may consist of written exercises,
completing work started in class or researching information. Study is also important
and you should spend time as soon as possible after each lesson reading and learning
your notes and textbook. It is important that you identify any problems of
understanding as soon as possible and ask your teacher for help. Do not let problems
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drift - they will not go away by themselves. Keeping up with events as outlined in 3.
Methods of Teaching and Learning should also be considered as part of your
homework. It follows that planning, setting deadlines and sticking to them is vital for
homework and study. This will contribute greatly to your success.
5. ABSENCE
If you know in advance that you are going to be absent, inform your teacher and ask
for any work which will be covered in your absence.
In the case of sickness or other unavoidable absence, ensure that you obtain a copy of
all notes, homework etc before the next class. It is your responsibility to catch up on
the work that you have missed.
Because part of your assessment is continuous, it is important that your attendance is
good. Poor attendance, together with a failure to cover any work which has been
missed, will inevitably result in lack of success.
6. ASSESSMENT
You will be assessed on your performance in two main ways - internal assessment and
external assessment.
Internal assessment
During each unit of your course there will be a number of assessments. Each of these
assessments will take place soon after you have completed a topic. Your teacher will
assess these and if you pass you will be given a grade A-C.
At Intermediate 2 level there will be two types of internal assessment - restricted
response and data response. At Higher level the two types will be extended response
and data response.
Restricted response means that your answers will consist of a few sentences.
Extended response expects you to write answers in paragraphs. Data response means
that you will given information in the form of a table, graph or article which will be
followed by a number of short questions.
External Assessment
At the end of the course you will sit an examination. This assessment will be set and
marked by the Scottish Qualifications Authority. If you pass you will awarded a
grade A-C.
You must pass all the internal assessments and the final examination to pass the
course.
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Intermediate 2
The examination will be a written paper and you will be allowed 1 hour 45 minutes.
Part 1
Two data response items
40 marks
Part 2
One question from a choice of five.
20 marks
Each question will be normally divided up into three
sections. You will have to write extended answers.
TOTAL
60 marks
Higher
The examination will be a written paper and you will be allowed 2 hours 30 minutes.
Section A
Two data response items
50 marks
Section B
Two questions from a choice of six.
50 marks
Each question will require you to write extended
answers.
TOTAL
100 marks
Prelim Examination
You will also be given an examination in the spring which will be of the same type as
your final examination. The prelim exam is to give you practice and may be used for
an appeal if you fail to reach the grade your school expects. This exam is not part of
your assessment for the course.
7. OUTCOMES
This section provides you with a checklist for revision purposes. You should tick
each learning outcome when you have revised it in preparation for (1) an internal
assessment (2) your prelim exam (3) your final exam. You will also find it useful to
compare your performance in internal assessments and in your prelim exam with
these learning outcomes.
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MICROECONOMICS
1.
The Basic Economic Problem
For Intermediate 2 and Higher, you should be able to:
explain the basic economic problem.
explain the meaning of scarcity.
explain with examples the meaning of opportunity cost as it is faced
by individuals, firms and governments.
describe the choices (what, how, for whom) faced by different
economic systems.
describe resource allocation in different types of economic system.
classify resources/factors of production and describe their
characteristics.
explain the meaning of economic efficiency and why countries seek
to achieve it.
explain the meaning of substitution of resources.
explain the meaning of geographical and occupational mobility of
resources.
and in addition for Higher, you should be able to:
describe measures to increase the substitution and mobility of
resources.
explain how substitution of resources and mobility of resources may
contribute to improved economic efficiency.
explain the term potential output.
draw production possibility curves.
explain the factors which may shift a production possibility curve.
explain the term equity.
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MICROECONOMICS
2.
Demand
For Intermediate 2 and Higher, you should be able to:
define the term effective demand.
explain a demand schedule.
distinguish between individual and market demand.
distinguish between total and marginal utility.
draw a demand curve and explain its shape.
describe factors which influence demand and explain the
effects of changes in these factors on demand.
distinguish between movements along and shifts of demand
curves.
and in addition for Higher, you should be able to:
outline the economic objectives of consumers in terms of
utility and rationality.
explain the shape of the demand curve using the marginal
utility approach.
describe price elasticity of demand in words and in graph
form.
calculate price elasticity of demand.
describe the effects of price changes on revenue for different
price elasticities.
explain the factors which may influence price elasticity of
demand.
describe income elasticity of demand.
explain the significance of positive and negative income
elasticity.
outline the significance of price and income elasticities of
demand for firms and governments.
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MICROECONOMICS
3.
Supply
For Intermediate 2 and Higher, you should be able to:
explain a supply schedule and draw a supply curve.
explain the factors which influence supply.
describe the effects on supply of changes in these influencing
factors.
distinguish between movements along and shifts of supply
curves.
and in addition for Higher, you should be able to:
explain elasticity of supply.
analyse the importance of time in influencing elasticity of
supply.
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MICROECONOMICS
3.
Supply - Cost, Revenue and Profit
For Intermediate 2 and Higher, you should be able to:
explain the meanings of specialisation and division of labour
by product and by process.
describe the advantages and disadvantages of specialisation to
employees, employers and consumers.
distinguish between the short and the long run period of time.
explain why varying a factor of production eventually leads to
diminishing returns.
define fixed and variable costs of production.
calculate total, average costs and marginal costs from a given
set of figures.
draw fully labelled graphs of total, average and marginal costs
as they vary with output in the short run.
explain the shape of the short run average cost curve in terms
of increasing and diminishing returns.
define optimum output.
define economies of scale; internal and external.
describe the different internal economies of scale.
explain diseconomies of scale.
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MICROECONOMICS
3 (contd).
Supply - Cost, Revenue and Profit
For Intermediate 2 and Higher, you should be able to:
explain the relationship between long run output (returns to
scale) and average cost.
draw a fully labelled graph showing the behaviour of average
cost in the long run.
define optimum size.
define and calculate total, average and marginal revenue.
define and calculate profit.
describe the role of profit for a firm.
and in addition at Higher, you should be able to:
explain the law of diminishing marginal and average returns.
explain the shape of the supply curve in terms of the marginal
cost curve.
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4.
Operation of the Market
For Intermediate 2 and Higher, you should be able to:
define what a market is, and give examples of markets for
goods and services.
describe and explain, both in diagrams and in words, how
equilibrium or market clearing price is arrived at in a free
competitive market.
describe and explain the effects on equilibrium price and
output of changes in demand and supply.
define what is meant by market intervention and describe the
types of such intervention.
explain why intervention in free markets may take place.
and in addition for Higher, you should be able to:
explain the meaning of ceteris paribus.
show on a diagram the effects of intervention such as
maximum price, minimum price, tax, subsidy.
explain the consequences of intervention.
analyse data, in textual, numerical or graphical form, of given
market situations.
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MICROECONOMICS
5.
Types of Markets
This is for Higher level only, and you should be able to:
distinguish between a perfect and an imperfect market.
describe and analyse the different types of competition in
markets ie competitive, oligopolistic, monopolistic and
monopsonistic in terms of the number and size of firms in the
market.
describe how firms may differentiate their products.
outline the possible barriers to entry to a market and the
effects of such barriers.
explain and analyse how prices are determined in perfect and
imperfect markets.
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THE ECONOMY
6.
National Income
For Intermediate 2 and Higher, you should be able to:
explain the term National Income.
identify the components of National Income.
describe the relationship between National Output, Income
and Expenditure.
describe what National Income statistics are used for.
identify the problems of measuring National Income.
describe the circular flow of income.
explain equilibrium in National Income.
explain the meaning of injections and withdrawals and their
effects on output, employment and income.
and in addition for Higher, you should be able to:
distinguish between GDP, GNP and National Income.
explain the difference between nominal and real
measurement.
describe the difficulties in using national income statistics for
making comparisons over time, or between countries.
describe aggregate demand and its components.
describe aggregate supply (including potential/full
employment supply).
explain how equilibrium national income occurs.
explain reasons for change in equilibrium national income.
describe and explain, using the circular flow of income
diagram, how the multiplier process works.
calculate the multiplier and its effect on national income.
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THE ECONOMY
7.
Inflation and Employment
For Intermediate 2 and Higher, you should be able to:
define inflation in terms of purchasing power of money.
explain how the rate of inflation is measured in terms of the
Retail Price Index.
list and describe the factors which can cause inflation.
explain the difference between measuring prices and incomes
in money terms and in real terms.
explain the effects of inflation on individuals, firms,
government and the economy.
and in addition for Higher, you should be able to:
describe what is meant by money.
explain the Quantity Theory of Money and the role of money
in inflation.
describe and explain the main trends in inflation in recent
years.
For Intermediate 2 and Higher, you should be able to:
define unemployment in terms of unused resources.
explain how unemployment may be measured.
list and explain the demand side causes of unemployment.
list and explain the supply side causes of unemployment.
explain the effects of unemployment on individuals, firms,
government and the economy.
and in addition for Higher, you should be able to:
explain the term recession.
explain patterns and trends of unemployment from given
statistics.
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THE ECONOMY
8.
International Trade and Payments
For Intermediate 2 and Higher, you should be able to:
describe and explain the gains from trade in terms of absolute
advantage and comparative advantage.
describe the benefits of international trade to countries and
consumers.
analyse patterns and trends in trade from given statistics.
outline the main trends in recent years in the pattern and direction
of UK trade.
explain the barriers to free trade.
describe the purpose and structure of the Current Account of the
Balance of Payments.
explain what is meant by an exchange rate and how it is
determined.
explain the effects of changes in an exchange rate for visitors and
travellers and on prices of exports and imports.
describe the progress towards and features of European Monetary
Union.
In addition for Higher, you should be able to:
explain the reasons for governments imposing barriers to free
trade.
explain the effects of trade barriers on consumers, firms and the
economy.
describe the purpose and structure of the Capital Account of the
Balance of Payments.
explain the factors which influence the Capital Account.
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THE ECONOMY
8 (contd).
International Trade and Payments
In addition for Higher, you should be able to:
explain the relationship between exchange rates and interest rates,
and capital movements.
distinguish between fixed, floating and managed exchange rate
systems.
outline the advantages and disadvantages of fixed, floating and
managed exchange rate systems.
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THE ECONOMY
9.
The Role of Government in the Economy
For Intermediate 2 and Higher, you should be able to:
describe the economic objectives of government.
describe the main types of government expenditure in terms of
programme and type ie capital or current.
explain the reasons for government expenditure on nonmarketable goods (public and merit) and transfer payments.
describe the changes in recent years in government provision
of goods and services.
list the main sources and types of government income.
explain direct, indirect, progressive and regressive taxes.
describe the change in balance between direct and indirect
taxation in recent years.
explain the Budget and its role.
explain the effects of changes in the Budget on individuals
and the economy.
In addition for Higher, you should be able to:
distinguish between macro-economic and micro-economic
objectives.
list government macro-economic objectives and identify the
possible conflicts between them.
list government micro-economic objectives.
state the meaning of economic growth.
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THE ECONOMY
9 (contd).
The Role of Government in the Economy
In addition for Higher, you should be able to:
describe how economic growth is measured.
describe the sources of economic growth.
distinguish between private and external costs and benefits.
Government Economic Policies
This is for Higher only and, you should be able to:
explain fiscal policy and how it may be used to achieve a
government’s macro-economic objectives.
explain monetary policy and the role played by the Bank of
England in attempting to achieve a government’s macroeconomic objectives.
explain supply-side policies and their impact on workers and
firms.
explain the meaning of and give examples of market failure.
explain the reasons for market failure.
describe and explain the policies which a government may use
to address failings of the market mechanism.
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THE ECONOMY
10.
International Economic Environment
For Intermediate 2 and Higher, you should be able to:
describe the main economic features of the European Union.
describe the main characteristics of developing countries.
describe the main characteristics of newly industrialised countries.
In addition for Higher, you should be able to:
list and explain the advantages and disadvantages of Monetary Union.
explain the economic problems of developing countries.
explain the role of developed countries in promoting development.
describe the work of the World Trade Organisation and its recent
achievements.
explain the role of international trading and monetary organisations in
the world economy.
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