Your journey to excellence in
Economics
By Revision Genie
Let's master Economics together!Economics as a social science
Economic models and assumptions
Ceteris paribus
Limits of experiments in economics
Positive and normative statements
Positive vs normative
Value judgements
The economic problem
Scarcity and choice
Renewable vs non-renewable resources
Opportunity cost
Production possibility frontiers
Opportunity cost and marginal analysis
Efficient vs inefficient allocation
Economic growth or decline (removal)
Capital vs consumer goods
Specialisation, division of labour and money
Adam Smith and division of labour
Benefits and costs of specialisation
Specialisation for trade
Functions of money
Economic systems
Free market, mixed and command economies
Advantages and disadvantages (free market vs command)
Role of the state in a mixed economy
Rational decision making
Utility maximisation
Profit maximisation
Demand
Movements vs shifts (demand)
Conditions of demand
Diminishing marginal utility
Price, income and cross elasticities of demand
PED, YED, XED calculations
Interpreting elasticity values
Determinants of elasticities
Uses of elasticity (firms and government)
PED and total revenue
Supply
Movements vs shifts (supply)
Conditions of supply
Price elasticity of supply
PES calculation and interpretation
Determinants of PES
Short run vs long run (PES)
Price determination
Equilibrium price and quantity
Excess demand and excess supply
Market adjustment to equilibrium
Shifts in supply and demand (applications)
The price mechanism
Rationing
Incentives
Signalling
Price mechanism in local, national and global markets
Consumer and producer surplus
Consumer surplus
Producer surplus
Surplus changes from shifts
Indirect taxes and subsidies
Indirect taxes: impact and incidence
Subsidies: impacts and welfare areas
Role of elasticities in tax/subsidy outcomes
Alternative views of consumer behaviour
Social influences
Habit formation
Bounded rationality (computation limits)
Types of market failure
Externalities
Under-provision of public goods
Information gaps
Externalities
Private vs external vs social costs
Private vs external vs social benefits
Negative production externalities (welfare loss)
Positive consumption externalities (welfare gain)
Impacts on economic agents
Public goods
Public vs private goods
Non-rivalry and non-excludability
Free rider problem
Information gaps
Symmetric vs asymmetric information
Resource misallocation from imperfect info
Government intervention in markets
Indirect taxation (specific and ad valorem)
Subsidies
Maximum and minimum prices
Tradable pollution permits
State provision of public goods
Provision of information
Regulation
Government failure
Distorted price signals
Unintended consequences
Administrative costs
Information gaps
Economic growth measures
Real GDP growth
Real vs nominal
Total vs per capita
Value vs volume
Gross national income (GNI)
International comparisons and PPPs
Limits of GDP for living standards
National wellbeing and happiness
Inflation
Inflation, deflation and disinflation
CPI calculation
CPI limitations
RPI as alternative
Causes of inflation (demand-pull, cost-push, money supply)
Effects of inflation
Employment and unemployment
Claimant count vs ILO measures
Unemployment vs under-employment
Employment, unemployment and inactivity rates
Causes of unemployment (structural, frictional, seasonal, cyclical, wage inflexibility)
Migration, skills and labour market outcomes
Effects of unemployment
Balance of payments (UK context)
Current account and trade in goods/services
Current account deficits and surpluses
Links to macroeconomic objectives
Interdependence through trade
Aggregate demand (AD)
AD components (C+I+G+(X−M))
AD curve and shifts vs movements
Consumption (C)
Disposable income
Saving vs consumption relationship
Interest rates, confidence and wealth effects
Investment (I)
Gross vs net investment
Growth, expectations and animal spirits
Exports, interest rates and credit conditions
Government and regulation impacts
Government expenditure (G)
Trade cycle effects
Fiscal policy drivers
Net trade (X−M)
Real income effects
Exchange rates
World economy
Protectionism
Non-price competitiveness factors
Aggregate supply (AS)
AS curve and shifts vs movements
Short-run vs long-run AS
Short-run AS factors
Raw material and energy costs
Exchange rates
Tax rates
Long-run AS
Keynesian vs classical LRAS
Technology
Productivity
Education and skills
Regulation
Demographics and migration
Competition policy
National income
Circular flow of income
Income vs wealth
Injections and withdrawals
Effects on circular flow
Equilibrium real national output
Equilibrium output concept
AD/AS shifts and equilibrium changes
The multiplier
Multiplier ratio and process
Marginal propensities (MPC, MPS, MPT, MPM)
Multiplier calculations (1/(1−MPC), 1/MPW)
Multiplier and shifts in AD
Causes of economic growth
Growth drivers
Actual vs potential growth
Export-led growth
Output gaps
Trend growth vs actual growth
Positive vs negative output gaps
Output gap diagrams (AD/AS)
Trade (business) cycle
Boom characteristics
Recession characteristics
Impacts of economic growth
Benefits and costs for consumers, firms and government
Living standards (current and future)
Macroeconomic objectives
Economic growth
Low unemployment
Low and stable inflation
Current account balance
Balanced government budget
Environmental protection
Greater income equality
Demand-side policies
Monetary vs fiscal policy
Interest rates
Quantitative easing
Government spending and taxation
Budget deficit vs surplus
Direct vs indirect taxation
AD/AS policy diagrams
Bank of England and MPC
Great Depression and 2008 crisis policy responses
Strengths and weaknesses of demand-side policies
Supply-side policies
Market-based vs interventionist approaches
Incentives
Competition
Labour market reforms
Skills and training
Infrastructure
AD/AS policy diagrams
Strengths and weaknesses of supply-side policies
Conflicts and trade-offs
Objective conflicts
Short-run Phillips curve
Policy trade-offs
Sizes and types of firms
Reasons firms stay small or grow
Principal–agent problem
Public vs private sector organisations
Profit vs not-for-profit organisations
Business growth
Organic growth
Vertical integration (forward/backward)
Horizontal integration
Conglomerate integration
Benefits and costs of growth methods
Constraints on growth (market size, finance, objectives, regulation)
Demergers
Reasons for demergers
Impacts on firms, workers and consumers
Business objectives
Profit maximisation
Revenue maximisation
Sales maximisation
Satisficing
Objectives diagrams and formulae
Revenue
Total, average and marginal revenue
PED and revenue (calculations)
Costs
Fixed vs variable costs
Total, average and marginal cost
Short-run cost curves and diminishing marginal productivity
SRAC vs LRAC
Economies and diseconomies of scale
Types of economies of scale
Types of diseconomies of scale
Minimum efficient scale
Internal vs external economies
Profits and losses
Profit maximisation condition
Normal profit
Supernormal profit
Losses
Short-run vs long-run shut-down points
Efficiency
Allocative efficiency
Productive efficiency
Dynamic efficiency
X-inefficiency
Efficiency across market structures
Perfect competition
Characteristics
Short-run equilibrium
Long-run equilibrium
Monopolistic competition
Characteristics
Short-run equilibrium
Long-run equilibrium
Oligopoly
Key characteristics (concentration, interdependence, barriers, differentiation)
Concentration ratios (n-firm)
Collusive vs non-collusive behaviour
Cartels and price leadership
Game theory (prisoner’s dilemma)
Price competition (wars, predatory, limit)
Non-price competition
Monopoly
Characteristics
Profit maximising equilibrium
Third-degree price discrimination
Monopoly costs and benefits (stakeholders)
Monopsony
Conditions for monopsony
Costs and benefits (stakeholders)
Contestable markets
Characteristics
Barriers to entry and exit
Sunk costs and contestability
Behavioural implications
Demand for labour
Determinants of labour demand
Derived demand
Supply of labour
Determinants of labour supply
Labour market immobility (geographical and occupational)
Wage determination
Competitive labour markets (equilibrium)
Non-competitive labour markets
Current labour market issues
Labour market intervention (min/max wages, public pay, mobility policies)
Elasticities of labour demand and supply
Government intervention (product markets)
Merger control
Monopoly regulation (price, profit, quality, targets)
Promoting competition (small business, deregulation, tendering, privatisation)
Protecting suppliers and employees (monopsony restrictions, nationalisation)
Impacts and limits of intervention
Prices, profits, efficiency, quality, choice
Regulatory capture
Asymmetric information
Globalisation
Characteristics of globalisation
Drivers of globalisation (last 50 years)
Impacts on stakeholders and environment
Specialisation and trade
Absolute advantage
Comparative advantage (numerical and diagrammatic)
Assumptions and limits of comparative advantage
Trade benefits and costs
Pattern of trade
Comparative advantage and trade flows
Emerging economies and trade
Trading blocs and bilateral agreements
Exchange rate effects on trade
Terms of trade
Terms of trade calculations
Determinants of terms of trade
Impacts of terms of trade changes
Trading blocs and the WTO
Free trade areas
Customs unions
Common markets
Monetary unions (Eurozone conditions)
Costs and benefits of regional trade agreements
WTO role in liberalisation
Conflicts between RTAs and WTO
Restrictions on free trade
Reasons for protectionism
Tariffs
Quotas
Subsidies to domestic producers
Non-tariff barriers
Impacts of protectionism (stakeholders, living standards, equality)
Balance of payments (global)
Current account
Capital and financial accounts
Causes of current account imbalances
Policies to reduce imbalances
Global trade imbalances
Exchange rates
Floating, fixed and managed systems
Appreciation vs revaluation
Depreciation vs devaluation
Determinants of floating exchange rates
Currency market intervention (FX transactions, interest rates)
Competitive devaluation/depreciation
Impacts on current account (Marshall–Lerner, J-curve)
Impacts on growth, employment, inflation and FDI
International competitiveness
Relative unit labour costs
Relative export prices
Determinants of competitiveness
Benefits and costs of competitiveness
Poverty
Absolute poverty
Relative poverty
Poverty measures
Causes of poverty changes
Inequality
Income vs wealth inequality
Lorenz curve
Gini coefficient
Causes of inequality (within and between countries)
Development and inequality
Capitalism and inequality
Development measures
Human development index (dimensions and construction)
HDI strengths and limitations
Other development indicators
Factors influencing growth and development
Primary product dependency
Commodity price volatility
Savings gap (Harrod–Domar)
Foreign currency gap
Capital flight
Demographics
Debt
Access to credit and banking
Infrastructure
Education and skills
Property rights
Non-economic factors
Development strategies
Market-oriented strategies
Interventionist strategies
Other strategies (industrialisation/Lewis, tourism, primary industries, fairtrade, aid, debt relief)
International institutions and NGOs (World Bank, IMF, NGOs)
Role of financial markets
Saving facilitation
Lending to businesses and individuals
Payments and exchange of goods/services
Forward markets (currencies and commodities)
Equity markets
Market failure in the financial sector
Asymmetric information
Externalities
Moral hazard
Speculation and bubbles
Market rigging
Role of central banks
Monetary policy implementation
Banker to government
Lender of last resort
Banking regulation role
Public expenditure
Capital vs current spending vs transfer payments
Changing size and composition of public spending
Spending/GDP impacts (growth, living standards, crowding out, taxation, equality)
Taxation
Progressive, proportional and regressive taxes
Incentives to work
Laffer curve and tax revenues
Income distribution effects
Output and employment effects
Price level effects
Trade balance effects
FDI flow effects
Public sector finances
Automatic stabilisers vs discretionary fiscal policy
Fiscal deficit vs national debt
Structural vs cyclical deficits
Determinants of deficits and debts
Significance of deficit and debt levels
Macroeconomic policies in a global context
Policy mix across countries (fiscal, monetary, exchange rate, supply-side, controls)
Reducing deficits and debts
Tackling poverty and inequality
Interest rates and money supply changes
Raising international competitiveness
Responding to external shocks
Regulating transnational companies (transfer pricing, limits to control)
Policy challenges (info, risk, external shocks)