Papers 3 & 4

Below are notes for material examined in Paper 3 and Paper 4 for CIE Economics.

Basic Economic Ideas and Resource Allocation

a) Efficient resource allocation
b) Externalities and market failure
c) Social costs and benefits, cost-benefit analysis

Price System and the Microeconomy

a) Law of diminishing marginal utility
b) Indifference curves and budget lines
c) Types of cost, revenue and profit, short-run and long-run production
d) Different market structures
e) Growth and survival of firms
f) Differing objectives of a firm

Government Microeconomic Intervention

a) Policies to achieve efficient resource allocation and correct market failure
b) Equity and policies towards income and wealth redistribution
c) Labour market forces and government intervention
d) Government failure in microeconomic intervention

The Macroeconomy

a) Economic growth, economic development and sustainability
b) National Income statistics
c) Classification of countries
d) Employment and unemployment
e) The circular flow of income
f) Money supply (theory)
g) Keynesian and Monetarist schools
h) The demand for money and interest rate determination
i) Policies towards developing economies, policies of trade and aid

Government Macroeconomic Intervention

a) Government macro policy aims
b) Inter-connectedness of problems
c) Effectiveness of policy options to meet all macroeconomic objectives