3.1 Globalisation. The term ‘globalisation’ describes a range of economic developments that enhance the ability of nations and firms to trade within a rules-based system. Topics: Growing Economies, Trade and Growth, Trading Blocs, Trade policy and trade negotiations, Exchange Rates
3.2 Economic factors in business expansion. Firms need to be able to assess the relative merits of competing potential locations for market growth and production. Topics: Conditions that prompt trade, assessing the potential of different economies
3.3 Impact of globalisation on global companies. Firms need to understand the differences between consumers in different countries and cultures. Topics: Responding to global demand, demand-side factors in global markets
EOU assessment, AS papers biweekly to refresh theme 1 and theme 2
A reorganisation in the scale of a firm’s operations in order to increase efficiency
Prices that have not been adjusted for inflation
Prices that have been adjusted for inflation.
An index measures changes in a representative group of data.
Occurs when economic units such as individuals, businesses, regions or countries concentrate on producing specific goods or services
Specialised use of workers within an organisation
Investment made by a business or other entity from one country into the production capacity of a business or other entity from another country e.g. factories.
Governments of a group of countries agree to trade together freely i.e. normally with no trade barriers
When a country takes action to protect its own industries by restricting trade with other countries
The difference between the price a consumer is willing to pay for a product and the price that they actually pay.
The difference between the price a producer is willing to supply a product at and the price actually received for the product.
A total ban on imported products
The International Monetary Fund (IMF) is comprised of 189 member countries that looks to promote monetary cooperation e.g. exchange rates and international payments and to facilitate trade globally
Factors that force a business to leave the market in which they currently operate to look for new income streams in the future
Markets where nearly all potential customers already have the product that a business sells, or a close substitute of it
Factors that attract a business to a global market
A business that relocates production to another country
When a business contracts out production to another business.
Total income an individual has available to spend after paying income taxes and any other statutory payments.
A framework that can used to look at marketing approaches used by global firms
A marketing approach is where the promotion of the product is undertaken based on a global or worldly point of view.
A marketing approach is where the promotion of the product is undertaken based on the beliefs of the nation in which the business is operating.
A multinational corporation is a business that, although operated from one country, has facilities and assets in more than one country
Individuals will be able to develop an understanding of trade between countries and discuss the impacts
Through group work and discussions students will be able to form their own idea of what makes good economic policy
3.4 Impact of globalisation on local and national economies. Large firms can wield significant market power and can have both positive and negative effects in the countries in which they operate. Topics: The impact of multinational corporations (MNCs), ethical issues, controlling MNCs
3.5 Global labour markets. Globalisation has opened up labour markets, giving firms access to a greater number of potential employees. Production has sometimes moved to where labour is cheaper and this has had an impact on both pay and job opportunities. Topics Covered: Employment patterns, wage rates, minimum wage legislation
3.6 Inequality and re-distribution globalisation has helped to reduce the number of people living in absolute poverty and has had an impact on inequality between and within nations. Topics Covered: Poverty and inequality, reducing poverty, the impact of inequality on economics agents, re-distribution of income and wealth
EOU assessment, AS papers biweekly to refresh theme 1 and theme 2
Individuals will be able to develop an understanding of trade between countries and discuss the impacts
Through group work and discussions students will be able to form their own idea of what makes good economic policy
4.1 Competition and market power. Firms operate in markets with varying degrees of competition and this affects their decisions and the way in which resources are used. Topics: Spectrum of competition, barriers to entry, oligopoly, business objectives and pricing decisions, productive and allocative efficiency.
4.2 Market power and market failure. Firms do not always behave in a way that benefits all economic agents and governments may intervene to regulate the power these firms have. Topics: Market failure, business regulation, arguments for and against regulation.
4.3 Market failure across the economy. Markets may not produce outcomes that are always considered socially desirable. This may prompt governments to intervene in an attempt to change the outcomes. Topics: Market failure in society externalities, policies to deal with market failure
EOU online assessment
Financial rewards for a worker supplying their labour to a firm
Non-financial rewards for a worker supplying their labour to a firm
Difficulty for labour to be put to alternative uses due to lack of skills or experience
The addition to revenue of selling an additional unit of output
The change in total revenue from the employment of an extra unit of labour
A measurement of what is required to achieve a minimum acceptable standard of living
How affordable a basket of goods and services is in order for individuals to have an acceptable standard of living in their own country
The percentage of the population below the poverty line
A non-governmental organisation (NGO) is one that is not-for-profit and is independent of government
Any mechanism that stops those on low incomes from getting out of poverty
Also known as a flat tax. A tax with a constant marginal rate
A progressive tax means that a higher rate of tax is paid as incomes increase.
A regressive tax is one where a lower rate of tax is paid as incomes increase.
Students will be able to develop arguments dealing with poverty and legislation to help them form evaluations in context
Through group work and independent research students will be able to discuss the different legislation in place to govern the economy and formulate their own views on the impact on poverty
4.1 Competition and market power. Firms operate in markets with varying degrees of competition and this affects their decisions and the way in which resources are used. Topics: Spectrum of competition, barriers to entry, oligopoly, business objectives and pricing decisions, productive and allocative efficiency.
4.2 Market power and market failure. Firms do not always behave in a way that benefits all economic agents and governments may intervene to regulate the power these firms have. Topics: Market failure, business regulation, arguments for and against regulation.
4.3 Market failure across the economy. Markets may not produce outcomes that are always considered socially desirable. This may prompt governments to intervene in an attempt to change the outcomes. Topics: Market failure in society externalities, policies to deal with market failure
EOU online assessments
Monopoly occurs when one firm dominates the market
The concentration ratio (CR) tells us the number of firms that dominate the market
Oligopoly occurs when a few firms dominate the market.
Monopolistic competition occurs when there are many firms in the market but there is some form of product differentiation
Non-price competition occurs when a firm distinguishes or differentiates its product from that of its competitors
Start-up costs or sunk costs are costs that the firm cannot recover if it were to exit the market
The n-firm concentration ratio (CR) is a measurement of the market share of the n firms that dominate the market
Tacit agreement can occur in oligopolies where firms agree to manipulate the market in some form e.g. pricing strategies or geographically sharing out the market in order to create higher profits.
Non-collusive oligopoly occurs when firms do not collude when undertaking decision-making
Fixed cost (FC) or Total fixed cost (TFC) does not vary with output. This might include rent, capital goods such as factories and machinery, or marketing costs.
Variable cost (VC) varies with output. As output increases so does variable cost and vice versa.
Marginal cost (MC) is the cost of producing an additional unit of output.
Average cost (AC) or average total Cost (ATC) is the average cost of producing a unit of output: total cost/output.
Average total cost (ATC) is total cost divided by output.
Collusion occurs when firms in an oligopolistic market agree to act as one firm in order to benefit from elements of monopoly.
A cartel is a formal agreement between firms to collude in the operation of the market
Monopsony occurs when there is only one buyer in the market.
Privatisation is the transference of assets from the government to privately owned businesses.
Externalities are the costs and benefits to a third party created by economic agents when undertaking their activities
A demerit good is one that is deemed to be bad for society but is over provided by the market.
Marginal private benefit (MPB) is the additional amount of satisfaction that a consumer gains from an additional unit of a good or service
Marginal private cost (MPC) is the cost to a producer of producing an additional unit
Marginal social benefits (MSB) are those benefits of consuming or producing an additional unit of goods or services that are received by society.
Marginal social costs (MSC) are those costs of consuming or producing an additional unit of goods or services that are paid for by society.
An ad valorem tax is a percentage of the price of the good or service
Students will develop analytical and evaluative skills through looking at market failures and demand for goods and services
Through group work students will be able to debate the reasons for market failures allowing them to develop their own point of view with evidence and therefore support their ability to analyse and evaluate a piece of work
4.5 Risk and the financial sector. Firms and individuals require access to credit to meet their respective needs. The financial sector provides a system that facilitates growth and development; economic policies regulate that system in the hope of ensuring stability. Topics: Risks and uncertainty, the role of the financial sector, the role of the central bank, the global financial crisis.
Revision for all themes, Paper 1,2 and 3 preparation on pre-release material.
EOU and Mock exams
Real national output is the output of the economy taking into account inflation.
The manipulation of government spending, taxation and government borrowing to influence the level of economic activity.
The manipulation of the rate of interest, the money supply and exchange rates to influence the level of economic activity.
A negative output gap occurs when actual output is below the trend rate.
A positive output gap occurs when actual output is above the trend rate.
Policies that seek to improve the long run productive potential of the economy.
Marginal tax is the percentage of tax paid on an additional £1 of earnings
Opening markets to freer competition and removing barriers to entry should help to drive productivity gains and boost supply
Minimisation of state control which can often be inefficient
Demand Side Policies are attempts to increase or decrease aggregate demand to affect output, employment, and inflation.
Classical economists believed in a laissez faire approach to the economy with little government involvement
Neo-classical economists believe that the focus of economic policy should be based on demand and supply, with both individuals and firms behaving rationally to maximise utility and profits
Keynesian economists believe that in the long run the economy can operate below full employment
A supply-side shock will impact on the provision of a good or service and will effect price
A demand-side shock will impact on the consumption of a good or service and will effect price
A forward market is one that allows economic agents to set the price of an asset today for delivery in the future
A financial market is a one where buyers and sellers exchange financial assets (securities) such as shares (equities), currency or bonds
These are known as high street or retail banks e.g. Barclays, HSBC & NatWest
Unlike commercial banks they do not directly serve households
Working capital is the finance used for the day-to-day running of the business.
A business requires liquidity e.g. cash to survive and this is enabled by the financial sector.
The PRA was created as a part of the Bank of England by the Financial Services Act 2012 and is responsible for the prudential regulation and supervision of around 1,700 banks, building societies, credit unions, insurers and major investment firms
The FPC is charged with a primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system
The FCA is a body which aims to improve the workings of financial markets and ensure consumers get a fair deal. In essence, to act as a consumer champion
Liquidity ratios measure a company’s liquid assets against its short-term liabilities and as such are a gauge of a banks ability to meet its short-term liabilities
Capital in a financial sense is best thought of as the difference between a banks assets and its liabilities, in other words its net worth to shareholders who have a stake in the bank
Mortgages that have been sold to individuals with poor credit records
Any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly
Typically means that the price of an asset, usually property, stocks or gold, has deviated significantly from its intrinsic value and prices rise very quickly in the short term.
Speculation is the act of trading in an asset, or conducting a financial transaction, that has a significant risk of losing most or all of the initial outlay.
Lending and other financial activities conducted by unregulated institutions or under unregulated conditions
Students will be able to work out Micro and Macro economic impacts on individuals and use this to develop analytical and evaluative skills
Through group work and independent research students will be able to form their own ideas of what are the impact of decisions on individuals and groups
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