Specification points

Cambridge Cambridge International AS & A Level Economics 9708

317 points in 11 topics, with Cambridge's codes and titles.

Grade boundaries·Cambridge command words

Codes and titles are read by a script from Cambridge's published specification and have not been checked by a person. What each point covers is in the specification itself: Cambridge’s specification.

1 Basic economic ideas and resource allocation (AS Level)

1.1 Scarcity, choice and opportunity cost
1.1.1 fundamental economic problem of scarcity
1.1.2 need to make choices at all levels (individuals, firms, governments)
1.1.3 nature and definition of opportunity cost, arising from choices
1.1.4 basic questions of resource allocation
1.2 Economic methodology
1.2.1 economics as a social science
1.2.2 positive and normative statements (the distinction between facts and value judgements)
1.2.3 meaning of the term ceteris paribus
1.2.4 importance of the time period (short run, long run, very long run)
1.3 Factors of production
1.3.1 nature and definition of factors of production: land, labour, capital and enterprise
1.3.2 difference between human capital and physical capital
1.3.3 rewards to the factors of production
1.3.4 division of labour and specialisation
1.3.5 Role of the entrepreneur
1.4 Resource allocation in different economic systems
1.4.1 decision-making in market, planned and mixed economies
1.4.2 resource allocation in these economic systems
1.5 Production possibility curves
1.5.1 nature and meaning of a production possibility curve (PPC)
1.5.2 shape of the PPC: constant and increasing opportunity costs
1.5.3 causes and consequences of shifts in a PPC
1.5.4 significance of a position within a PPC
1.6 Classification of goods and services
1.6.1 nature and definition of free goods and private goods (economic goods)
1.6.2 nature and definition of public goods
1.6.3 Merit goods
1.6.4 Demerit goods

2 The price system and the microeconomy (AS Level)

2.1 Demand and supply curves
2.1.1 effective demand
2.1.2 individual and market demand and supply
2.1.3 determinants of demand
2.1.4 determinants of supply
2.1.5 causes of a shift in the demand curve (D)
2.1.6 causes of a shift in the supply curve (S)
2.1.7 Shifts versus movements along curves
2.2 Price elasticity, income elasticity and cross elasticity of demand
2.2.1 Definitions of PED, YED and XED
2.2.2 Calculating demand elasticities
2.2.3 Interpreting elasticity coefficients
2.2.4 Descriptions of elasticity values
2.2.5 PED along a straight-line demand curve
2.2.6 Factors affecting PED, YED and XED
2.2.7 relationship between price elasticity of demand and total expenditure on a product
2.2.8 Elasticities and decision-making
2.3 Price elasticity of supply
2.3.1 definition of price elasticity of supply (PES)
2.3.2 formula for and calculation of price elasticity of supply
2.3.3 Interpreting price elasticity of supply
2.3.4 factors affecting price elasticity of supply
2.3.5 Supply elasticity and firms' responses
2.4 The interaction of demand and supply
2.4.1 definition of market equilibrium and disequilibrium
2.4.2 Shifts and equilibrium price and quantity
2.4.3 relationships between different markets
2.4.4 Functions of price in resource allocation
2.5 Consumer and producer surplus
2.5.1 meaning and significance of consumer surplus
2.5.2 meaning and significance of producer surplus
2.5.3 causes of changes in consumer and producer surplus
2.5.4 Elasticity and the size of price changes

3 Government microeconomy intervention (AS Level)

3.1 Reasons for government intervention in markets
3.1.1 addressing the non-provision of public goods
3.1.2 addressing the over-consumption of demerit goods and the under-consumption of merit goods
3.1.3 controlling prices in markets
3.2 Methods and effects of government intervention in markets
3.2.1 impact and incidence of specific indirect taxes
3.2.2 impact and incidence of subsidies
3.2.3 direct provision of goods and services
3.2.4 maximum and minimum prices
3.2.5 buffer stock schemes
3.2.6 provision of information
3.3 Addressing income and wealth inequality
3.3.1 Income versus wealth
3.3.2 measuring income and wealth inequality
3.3.3 economic reasons for inequality of income and wealth
3.3.4 policies to redistribute income and wealth

4 The Macroeconomy (AS Level)

4.1 National income statistics
4.1.1 meaning of national income
4.1.2 measurement of national income
4.1.3 adjustment of measures from market prices to basic prices
4.1.4 adjustment of measures from gross values to net values
4.2 Introduction to the circular flow of income
4.2.1 Circular flow of income
4.2.2 injections and leakages (multiplier not required)
4.2.3 equilibrium and disequilibrium (marginal and average propensities not required)
4.3 Aggregate Demand and Aggregate Supply analysis
4.3.1 definition of Aggregate Demand (AD)
4.3.2 Components of aggregate demand
4.3.3 Determinants of aggregate demand
4.3.4 shape of the AD curve (downward sloping)
4.3.5 causes of a shift in the AD curve
4.3.6 definition of Aggregate Supply (AS)
4.3.7 determinants of AS
4.3.8 Short-run and long-run aggregate supply curves
4.3.9 Causes of shifts in aggregate supply
4.3.10 distinction between a movement along and a shift in AD and AS
4.3.11 Equilibrium in the AD/AS model
4.3.12 Effects of AD and AS shifts
4.4 Economic growth
4.4.1 meaning of economic growth
4.4.2 measurement of economic growth
4.4.3 distinction between growth in nominal GDP and real GDP
4.4.4 causes of economic growth
4.4.5 consequences of economic growth
4.5 Unemployment
4.5.1 meaning of unemployment
4.5.2 measures of unemployment, with reference to possible difficulties in measurement
4.5.3 causes and types of unemployment: frictional, structural, cyclical, seasonal and technological
4.5.4 consequences of unemployment
4.6 Price stability
4.6.1 definition of inflation, deflation and disinflation
4.6.2 measurement of changes in the price level
4.6.3 distinction between money values (nominal) and real data
4.6.4 causes of inflation: cost-push and demand-pull inflation
4.6.5 consequences of inflation

5 Government macroeconomic intervention (AS Level)

5.1 Government macroeconomic policy objectives
5.1.1 Government macroeconomic objectives
5.2 Fiscal policy
5.2.1 meaning of government budget
5.2.2 distinction between a government budget deficit and a government budget surplus
5.2.3 meaning and significance of the national debt
5.2.4 taxation
5.2.5 government spending
5.2.6 distinction between expansionary and contractionary fiscal policy
5.2.7 AD/AS analysis of fiscal policy
5.3 Monetary policy
5.3.1 definition of monetary policy
5.3.2 tools of monetary policy: interest rates, money supply and credit regulations
5.3.3 distinction between expansionary and contractionary monetary policy
5.3.4 AD/AS analysis of monetary policy
5.4 Supply-side policy
5.4.1 meaning of supply-side policy, in terms of its effect on LRAS curves
5.4.2 objectives of supply-side policy: increasing productivity and productive capacity
5.4.3 tools of supply-side policy
5.4.4 AD/AS analysis of supply-side policy

6 International economic issues (AS Level)

6.1 The reasons for international trade
6.1.1 distinction between absolute and comparative advantage
6.1.2 Benefits of specialisation and free trade
6.1.3 exports, imports and the terms of trade
6.1.4 limitations of the theories of absolute and comparative advantage
6.2 Protectionism
6.2.1 meaning of protectionism in the context of international trade
6.2.2 different tools of protection and their impact
6.2.3 arguments for and against protectionism
6.3 Current account of the balance of payments
6.3.1 components of the current account of the balance of payments
6.3.2 Balance of trade and current account calculations
6.3.3 causes of imbalances in the current account of the balance of payments
6.3.4 Consequences of current account imbalances
6.4 Exchange rates
6.4.1 definition of exchange rate
6.4.2 determination of a floating exchange rate
6.4.3 distinction between depreciation and appreciation of a floating exchange rate
6.4.4 Causes of floating exchange rate changes
6.4.5 AD/AS analysis of exchange rate changes
6.5 Policies to correct current account imbalances
6.5.1 government policy objective of stability of the current account
6.5.2 effect of fiscal, monetary, supply-side and protectionist policies on the current account

7 The price system and the microeconomy (A Level)

7.1 Utility
7.1.1 definition and calculation of total utility and marginal utility
7.1.2 diminishing marginal utility
7.1.3 equi-marginal principle
7.1.4 derivation of an individual demand curve
7.1.5 limitations of marginal utility theory and its assumptions of rational behaviour
7.2 Indifference curves and budget lines
7.2.1 meaning of an indifference curve and a budget line
7.2.2 causes of a shift in the budget line
7.2.3 income, substitution and price effects for normal, inferior and Giffen goods
7.2.4 limitations of the model of indifference curves
7.3 Efficiency and market failure
7.3.1 definitions of productive efficiency and allocative efficiency
7.3.2 conditions for productive efficiency and allocative efficiency
7.3.3 Pareto optimality
7.3.4 definition of dynamic efficiency
7.3.5 definition of market failure
7.3.6 reasons for market failure
7.4 Private costs and benefits, externalities and social costs and benefits
7.4.1 Social, private and external costs
7.4.2 Social, private and external benefits
7.4.3 definition of positive externality and negative externality
7.4.4 positive and negative externalities of both consumption and production
7.4.5 deadweight welfare losses arising from positive and negative externalities
7.4.6 asymmetric information and moral hazard
7.4.7 Cost-benefit analysis
7.5 Types of cost, revenue and profit, short-run and long-run production
7.5.1 short-run production function
7.5.2 short-run cost function
7.5.3 long-run production function
7.5.4 long-run cost function
7.5.5 relationship between economies of scale and decreasing average costs
7.5.6 internal and external economies of scale
7.5.7 internal and external diseconomies of scale
7.5.8 Total, average and marginal revenue
7.5.9 definition of normal, subnormal and supernormal profit
7.5.10 calculation of supernormal and subnormal profit
7.6 Different market structures
7.6.1 perfect competition and imperfect competition: monopoly, monopolistic competition, oligopoly, natural monopoly
7.6.2 Structure of market types
7.6.3 barriers to entry and exit
7.6.4 performance of firms in different market structures
7.6.5 definition and calculation of the concentration ratio
7.7 Growth and survival of firms
7.7.1 reasons for different sizes of firms
7.7.2 internal growth of firms: organic growth and diversification
7.7.3 external growth of firms – integration (mergers and takeovers)
7.7.4 cartels
7.7.5 principal–agent problem arising from differing objectives of shareholders/owners and managers
7.8 Differing objectives and policies of firms
7.8.1 traditional profit-maximising objective of firms
7.8.2 an understanding of other objectives of firms
7.8.3 price discrimination – first, second and third degree
7.8.4 other pricing policies
7.8.5 relationship between price elasticity of demand and a firm’s revenue

8 Government microeconomic intervention (A Level)

8.1 Government policies to achieve efficient resource allocation and correct market failure
8.1.1 application and effectiveness of measures to tackle different forms of market failure
8.1.2 government failure in microeconomic intervention
8.2 Equity and redistribution of income and wealth
8.2.1 difference between equity and equality
8.2.2 difference between equity and efficiency
8.2.3 distinction between absolute poverty and relative poverty
8.2.4 the poverty trap
8.2.5 policies towards equity and equality
8.3 Labour market forces and government intervention
8.3.1 demand for labour as a derived demand
8.3.2 factors affecting demand for labour in a firm or an occupation
8.3.3 Demand curve for labour
8.3.4 marginal revenue product (MRP) theory
8.3.5 Factors affecting labour supply
8.3.6 Supply curve of labour
8.3.7 wage determination in perfect markets
8.3.8 wage determination in imperfect markets
8.3.9 determination of wage differentials by labour market forces
8.3.10 transfer earnings and economic rent

9 The macroeconomy (A Level)

9.1 The circular flow of income
9.1.1 the multiplier process
9.1.2 components of Aggregate Demand (AD) and their determinants
9.1.3 full employment level of national income and equilibrium level of national income
9.2 Economic growth and sustainability
9.2.1 actual growth versus potential growth in national output
9.2.2 positive and negative output gaps
9.2.3 business (trade) cycle
9.2.4 policies to promote economic growth and their effectiveness
9.2.5 inclusive economic growth
9.2.6 sustainable economic growth
9.3 Employment/unemployment
9.3.1 definition of full employment
9.3.2 equilibrium and disequilibrium unemployment (including hysteresis)
9.3.3 voluntary and involuntary unemployment
9.3.4 natural rate of unemployment
9.3.5 patterns and trends in (un)employment
9.3.6 mobility of labour
9.3.7 policies to reduce unemployment and their effectiveness
9.4 Money and banking
9.4.1 definition, functions and characteristics of money
9.4.2 definition of money supply
9.4.3 quantity theory of money (MV = PT)
9.4.4 functions of commercial banks
9.4.5 causes of changes in the money supply in an open economy
9.4.6 policies to reduce inflation and their effectiveness
9.4.7 demand for money: liquidity preference theory
9.4.8 interest rate determination: loanable funds theory and Keynesian theory

10 Government macroeconomic intervention (A Level)

10.1 Government macroeconomic policy objectives
10.1.1 Government macroeconomic objectives
10.2 Links between macroeconomic problems and their interrelatedness
10.2.1 Internal and external value of money
10.2.2 relationship between the balance of payments and inflation
10.2.3 relationship between growth and inflation
10.2.4 relationship between growth and the balance of payments
10.2.5 relationship between inflation and unemployment
10.3 Effectiveness of policy options to meet all macroeconomic objectives
10.3.1 effectiveness of different policies in relation to different macroeconomic objectives
10.3.2 problems and conflicts arising from the outcome of these policies
10.3.3 existence of government failure in macroeconomic policies

11 International economic issues (A Level)

11.1 Policies to correct disequilibrium in the balance of payments
11.1.1 Components of the balance of payments
11.1.2 Policies and the balance of payments
11.1.3 difference between expenditure-switching and expenditure-reducing policies
11.2 Exchange rates
11.2.1 measurement of exchange rates
11.2.2 determination of exchange rates under fixed and managed systems
11.2.3 distinction between revaluation and devaluation of a fixed exchange rate
11.2.4 changes in the exchange rate under different exchange rate systems
11.2.5 Marshall-Lerner and J curve
11.3 Economic development
11.3.1 classification of economies in terms of their level of development
11.3.2 classification of economies in terms of their level of national income
11.3.3 indicators of living standards and economic development
11.3.4 comparison of economic growth rates and living standards
11.4 Characteristics of countries at different levels of development
11.4.1 population growth and structure
11.4.2 income distribution
11.4.3 economic structure
11.5 Relationship between countries at different levels of development
11.5.1 international aid
11.5.2 trade and investment
11.5.3 role of multinational companies (MNCs)
11.5.4 Foreign Direct Investment (FDI)
11.5.5 external debt
11.5.6 role of the International Monetary Fund (IMF)
11.5.7 role of the World Bank
11.6 Globalisation
11.6.1 meaning of globalisation and its causes and consequences
11.6.2 Free trade areas, customs unions and economic unions
11.6.3 trade creation and trade diversion