Syllabus Points without Answers (Table of Contents)

Microeconomics
1.1 Competitive markets: Demand and supply

1.2 Elasticity

1.3 Government Intervention

1.4 Market Failure

Macroeconomics
2.1 The level of overall economic activity

2.2 Aggregate Demand and Supply

2.3 Macroeconomic Objectives

2.4 Fiscal Policy

2.5 Monetary Policy

2.6 Supply-side Policies

International Economics
3.1 International Trade

3.2 Exchange Rates

3.3 The balance of payments

3.4 Economic Integration

Development Economics
4.1 Economic Development

4.2 Measuring Development

4.3 The Role of Domestic Factors

4.4 The Role of International Trade

4.5 The Role of International Trade

4.6 The roles of foreign aid and multilateral development assistance

4.7 The role of international debt

4.8 The balance between markets and intervention

Microeconomics
1.1 Competitive markets: Demand and supply

A) Markets
1) Outline the meaning of the term market.

B) Demand and Supply

Law of Demand

2) Explain the negative causal relationship between price and quantity demanded (3)

3) Describe the relationship between an individual consumer’s demand and market

demand. (2)

The Demand Curve

4) Explain that a demand curve represents the relationship between the price and the
quantity demanded of a product, ceteris paribus.

The non-price determinants of demand (factors that change demand or shift the
demand curve)

5) State and explain the six factors other than price that affect demand

Movements along and shifts of the demand curve

6) Distinguish between movements along the demand curve and shifts of the demand
curve.

7) Draw diagrams to show the difference between movements along the demand curve
and shifts of the demand curve.

The law of supply

8) Explain the positive causal relationship between price and quantity supplied. (2)

9) Describe the relationship between an individual producer’s supply and market

supply. (2)
The supply curve

10) Explain that a supply curve represents the relationship between the price and the
quantity supplied of a product, ceteris paribus.

The non-price determinants of supply (factors that change supply or shift the supply
curve)

11) State and Explain the 9 factors that affect supply

Movements along and shifts of the supply curve

12) Distinguish between movements along the supply curve and shifts of the supply
curve.

13) Draw diagrams to show the difference between movements along the supply curve
and shifts of the supply curve.

C) Market Equilibrium
Equilibrium and changes to equilibrium

14) Explain, using diagrams, how demand and supply interact to produce market
equilibrium.*

15) Analyse, using diagrams and with reference to excess demand or excess supply, how
changes in the determinants of demand and/or supply result in a new market
equilibrium.*

D) The role of the price mechanism

Resource allocation

16) Explain why scarcity necessitates choices that answer the “What to produce?”
question.

17) Explain why choice results in an opportunity cost.

18) Explain, using diagrams, that price has a signalling function and an incentive
function, which result in a reallocation of resources when prices change as a result of a
change in demand or supply conditions.

E) Market Efficiency
Consumer Surplus

19) Explain the concept of consumer surplus. (2)

20) Identify consumer surplus on a demand and supply diagram.

Producer Surplus

21. Explain the concept of producer surplus. (1)

22. Identify producer surplus on a demand and supply diagram

Allocative Efficiency

23. Evaluate the view that the best allocation of resources from society’s point of view is
at competitive market equilibrium, where social (community) surplus (consumer
surplus and producer surplus) is maximized (marginal benefit = marginal cost). (6)
1.2 Elasticity

A) Price Elasticity of Demand (PED)

Price elasticity of demand and its determinants

1. Explain the concept of price elasticity of demand

2. State the formula for PED

3. Know that the PED value is treated as if it were positive although its mathematical
value is usually negative.

4. Explain, using diagrams and PED values, the concepts of price elastic demand, price
inelastic demand, unit elastic demand, perfectly elastic demand and perfectly inelastic
demand.

5. Explain the 5 determinants of PED

6. Explain why PED varies along a straight line demand curve and is not represented by
the slope of the demand curve.

Applications of price elasticity of demand

8. Examine the role of PED for firms in making decisions regarding price changes and
their effect on total revenue.

9. Explain why the PED for many primary commodities is relatively low and the PED
for manufactured products is relatively high. (6)

10. Examine the significance of PED for government in relation to indirect taxes (2p+g)

B) Cross Elasticity of Demand (XED)

Cross price elasticity of demand and its determinants

11. Explain the concept of cross price elasticity of demand

12. XED formula

13. Positive/negative value of XED significance to type of good

14. Significance of magnitude of XED in relation to goods

Applications of cross price elasticity of demand

15. Examine the implications of XED for businesses if prices of substitutes or
complements change/Why should businesses care about XED. (5)

C) Income Elasticity of Demand (YED)

Income elasticity of demand and its determinants

16. Explain the concept of income elasticity of demand.

17. YED Formula

18.YED negative/positive value significance

19. Distinguish, with reference to YED, between necessity goods and luxury goods.

Applications of income elasticity of demand

20. Examine the implications for producers and for the economy of a relatively low YED
for primary products, a relatively higher YED for manufactured products and an even
higher YED for services.

D) Price Elasticity of Supply (PES)

Price elasticity of supply and its determinants

21. Explain the concept of price elasticity of supply

22. PES formula

23.Explain, using diagrams and PES values, the concepts of elastic supply, inelastic
supply, unit elastic supply, perfectly elastic supply and perfectly inelastic supply.

24. Explain the 4 determinants of PES

Applications of price elasticity of supply

25. Explain why the PES for primary commodities is relatively low and the PES for
manufactured products is relatively high.
1.3 Government Intervention

A) Indirect Taxes

1. Explain why governments impose indirect (excise) taxes. (4p)

2. Distinguish between specific and ad valorem taxes.

3. Draw diagrams to show specific and ad valorem taxes, and analyse their impacts on
market outcomes.

4. Discuss the consequences of imposing an indirect tax on the stakeholders in a market,

including consumers, producers and the government. (5p)

B) Subsidies

5. Explain why governments provide subsidies, and describe examples of subsidies. (6)

6. Draw a diagram to show a subsidy, and analyse the impacts of a subsidy on market
outcomes

7. Discuss the consequences of providing a subsidy on the stakeholders in a market,

including consumers, producers and the government. (6p)

C) Price Controls

Price Ceilings

8. Explain why governments impose price ceilings, and describe examples of price
ceilings, including food price controls and rent controls.

9. Draw a diagram to show a price ceiling, and analyse the impacts of a price ceiling on
market outcomes.

10. Examine the possible consequences of a price ceiling on the economy (5p)

11. Discuss the consequences of imposing a price ceiling on the stakeholders in a market,
including consumers, producers and the government.

Price Floors
12. Price floor definition and Explain why governments impose price floors (3)

13. Draw a diagram of a price floor, and analyse the impacts of a price floor on market
outcomes.

14. Examine the possible consequences of a price floor on economy (5)

15. Discuss the consequences of imposing a price floor on the stakeholders in a market,
including consumers, producers and the government. (5)
1.4 Market Failure

The meaning of market failure

Market failure as a failure to allocate resources efficiently

1. Examine the concept of market failure

Types of market failure

The meaning of externalities

2. Explain the concepts of marginal private benefits (MPB), marginal social benefits
(MSB), marginal private costs (MPC) and marginal social costs (MSC).

3. Describe the meaning of externalities as the failure of the market to achieve a social
optimum where MSB = MSC.

Negative externalities of production and consumption

4. Explain, using diagrams and examples, the concepts of negative externalities of

production and consumption, and the welfare loss associated with the production or
consumption of a good or service.

5. Define demerit goods

6. Evaluate, using diagrams, the use of policy responses, including market-based policies
(taxation and tradable permits), and government regulations, to the problem of negative
externalities of production and consumption

Positive externalities of production and consumption

7. Explain, using diagrams and examples, the concepts of positive externalities of

production and consumption, and the welfare loss associated with the production or
consumption of a good or service.

8. Define merit goods

9. Evaluate, using diagrams, the use of government responses, including subsidies,
legislation, advertising to influence behaviour, and direct provision of goods and
services.

Lack of public goods

10. Distinguish between public goods (non-rivalrous and nonexcludable) and private
goods (rivalrous and excludable).

11. Explain, with reference to the free rider problem, how the lack of public goods
indicates market failure.

12. Discuss the implications of the direct provision of public goods by government.

Common access resources and the threat to sustainability

13. Explain, using examples, common access resources.

14. Apply the concept of sustainability to the problem of common access resources.

15. Examine the consequences of the lack of a pricing mechanism for common access
resources in terms of goods being overused/ depleted/degraded as a result of activities of
producers and consumers who do not pay for the resources that they use, and that this
poses a threat to sustainability.

16. Discuss, using negative externalities diagrams, the view that economic activity
requiring the use of fossil fuels to satisfy demand poses a threat to sustainability.

17. Discuss the view that the existence of poverty in economically less developed
countries creates negative externalities through overexploitation of land for agriculture,
and that this poses a threat to sustainability.

18. Evaluate, using diagrams, possible government responses to threats to sustainability,

including legislation, carbon taxes, cap and trade schemes, and funding for clean
technologies.

19. Explain, using examples, that government responses to threats to sustainability are
limited by the global nature of the problems and the lack of ownership of common
access resources, and that effective responses require international cooperation.
Macroeconomics
2.1 The level of overall economic activity

The circular flow of income model

1. Explain, using a diagram, the circular flow of income between households and firms
in a closed economy with no government.

2. Identify the four factors of production and their respective payments (rent, wages,
interest and profit) and explain that these constitute the income flow in the model.

3. Outline that the income flow is numerically equivalent to the expenditure flow and
the value of output flow.

4. Explain, using a diagram, the circular flow of income in an open economy with
government and financial markets, referring to leakages/ withdrawals (savings, taxes
and import expenditure) and injections (investment, government expenditure and
export revenue).

5. Explain how the size of the circular flow will change depending on the relative size of
injections and leakages

Measures of economic activity: gross domestic product (GDP),

and gross national product (GNP) or gross national income (GNI)

6. Distinguish between GDP and GNP/GNI as measures of economic activity.

7. Distinguish between the nominal value of GDP and GNP/GNI and the real value of
GDP and GNP/GNI. (3p)

8. Distinguish between total GDP and GNP/GNI and per capita GDP and GNP/GNI. (3)

9. Examine the output approach, the income approach and the expenditure approach
when measuring national income.

10. Evaluate the use of national income statistics, including their use for making
comparisons over time, their use for making comparisons between countries and their
use for making conclusions about standards of living.

11. Explain the meaning and significance of “green GDP”, a measure of GDP that
accounts for environmental destruction.
Business Cycle

12. Explain, using a business cycle diagram, that economies typically tend to go through
a cyclical pattern characterized by the phases of the business cycle.

13. Explain the long-term growth trend in the business cycle diagram as the potential
output of the economy.

14. Distinguish between a decrease in GDP and a decrease in GDP growth.

2.2 Aggregate Demand and Supply

Aggregate Demand

1. Distinguish between the microeconomic concept of demand for a product and the
macroeconomic concept of aggregate demand.

2. Construct an aggregate demand curve.

3. Explain why the AD curve has a negative slope. (3)

4. Describe consumption, investment, government spending and net exports as the

components of aggregate demand.

5. Explain how the AD curve can be shifted by changes in consumption (5)

6. Explain how the AD curve can be shifted by changes in investment due to factors (5)

7. Explain how the AD curve can be shifted by changes in government spending due to
factors (2)

8. Explain how the AD curve can be shifted by changes in net exports due to factors

Aggregate Supply

9. Define the term aggregate supply.

10. Explain, using a diagram, why the short-run aggregate supply curve (SRAS curve) is
upward sloping.

11. Explain, using a diagram, how the AS curve in the short run (SRAS) can shift due to
factors (5)

12. Explain, using a diagram, that the monetarist/new classical model of the longrun
aggregate supply curve (LRAS) is vertical at the level of potential output (full
employment output)

13. Explain, using a diagram, that the Keynesian model of the aggregate supply curve
has three sections.
14. Compare and contrast, using the two models above, the ways that factors can shift
the aggregate supply curve over the long term. (6)

Equilibrium

15. Explain, using a diagram, the determination of short-run equilibrium, using the
SRAS curve.

16. Examine, using diagrams, the impacts of changes in shortrun equilibrium.

17. Explain, using a diagram, the determination of long-run equilibrium, indicating that
long-run equilibrium occurs at the full employment level of output.

18. Examine why, in the monetarist/new classical approach, while there may be
short-term fluctuations in output, the economy will always return to the full
employment level of output in the long run.

19. Examine, using diagrams, the impacts of changes in the long-run equilibrium.
2.3 Macroeconomic Objectives
Low Unemployment

1. Define the term unemployment.

2. Explain how the unemployment rate is calculated.

3. Explain the difficulties in measuring unemployment, including the existence of hidden

unemployment, the existence of underemployment, and the fact that it is an average and
therefore ignores regional, ethnic, age and gender disparities.

4. Discuss possible economic consequences of unemployment, including a loss of GDP,

loss of tax revenue, increased cost of unemployment benefits, loss of income for
individuals, and greater disparities in the distribution of income.

5. Discuss possible personal and social consequences of unemployment, including

increased crime rates, increased stress levels, increased indebtedness, homelessness and
family breakdown

6. Describe, using examples, the meaning of frictional, structural, seasonal and cyclical
(demand-deficient) unemployment.

7. Distinguish between the causes of frictional, structural, seasonal and cyclical

(demand-deficient) unemployment.

8. Explain, using a diagram, that cyclical unemployment is caused by a fall in aggregate

demand.

9. Explain, using a diagram, that structural unemployment is caused by changes in the

demand for particular labour skills, changes in the geographical location of industries,
and labour market rigidities.

10. Evaluate government policies to deal with the different types of unemployment

Low and Stable Rate of Inflation

11. Distinguish between inflation, disinflation and deflation.

12. Explain that inflation and deflation are typically measured by calculating a
consumer price index (CPI), which measures the change in prices of a basket of goods
and services consumed by the average household.

13. Explain that different income earners may experience a different rate of inflation
when their pattern of consumption is not accurately reflected by the CPI.

14. Explain that inflation figures may not accurately reflect changes in consumption
patterns and the quality of the products purchased.

15. Explain that economists measure a core/underlying rate of inflation to eliminate the
effect of sudden swings in the prices of food and oil, for example.

16. Explain that a producer price index measuring changes in the prices of factors of
production may be useful in predicting future inflation.

17. Discuss the possible consequences of a high inflation rate, including greater
uncertainty, redistributive effects, less saving, and the damage to export
competitiveness.

18. Discuss the possible consequences of deflation, including high levels of cyclical
unemployment and bankruptcies.

19. Explain, using a diagram, that demand-pull inflation is caused by changes in the
determinants of AD, resulting in an increase in AD.

20. Explain, using a diagram, that cost-push inflation is caused by an increase in the
costs of factors of production, resulting in a decrease in SRAS.

21. Evaluate government policies to deal with the different types of inflation.

Economic Growth

22. Define economic growth

23. Explain, using a production possibilities curve (PPC) diagram, economic growth as
an increase in actual output resulting from factors such as the utilization of unemployed
resources and increases in productive efficiency, leading to a movement of a point inside
the PPC to a point closer to the PPC.
24. Explain, using a PPC diagram, economic growth as an increase in production
possibilities caused by factors including increases in the quantity and quality of
resources, leading to outward PPC shifts.

25. Explain, using an LRAS diagram, economic growth as an increase in potential

output caused by factors including increases in the quantity and quality of resources,
leading to a rightward shift of the LRAS curve.

26. Evaluate the view that increased investment is essential to achieve economic growth.

27. Evaluate the view that improved productivity is essential to achieve economic
growth.

28. Discuss the possible consequences of economic growth, including the possible
impacts on living standards, unemployment, inflation, the distribution of income, the
current account of the balance of payments, and sustainability.

Equity in the Distribution of Income

29. Explain the difference between equity in the distribution of income and equality in
the distribution of income.

30. Explain that due to unequal ownership of factors of production, the market system
may not result in an equitable distribution of income.

31. Analyse data on relative income shares of given percentages of the population,
including deciles and quintiles.

32. Draw a Lorenz curve and explain its significance.

33. Explain how the Gini coefficient is derived and interpreted.

34. Distinguish between absolute poverty and relative poverty.

35. Explain possible causes of poverty, including low incomes, unemployment and lack
of human capital.

36. Explain possible consequences of poverty, including low living standards, and lack of
access to health care and education.

37. Distinguish between direct and indirect taxes, providing examples of each, and
explain that direct taxes may be used as a mechanism to redistribute income.
38. Distinguish between progressive, regressive and proportional taxation, providing
examples of each.

39. Explain that governments undertake expenditures to provide directly, or to

subsidize, a variety of socially desirable goods and services (including health care
services, education, and infrastructure that includes sanitation and clean water
supplies), thereby making them available to those on low incomes.

40. Explain the term transfer payments, and provide examples, including old age
pensions, unemployment benefits and child allowances.

41. Evaluate government policies to promote equity (taxation, government expenditure

and transfer payments) in terms of their potential positive or negative effects on
efficiency in the allocation of resources.
2.4 Fiscal Policy
The government budget

1. Explain that government spending can be classified into current expenditures, capital
expenditures and transfer payments, providing examples of each.

2. Distinguish between a budget deficit, a budget surplus and a balanced budget.

3. Explain the relationship between budget deficits/ surpluses and the public
(government) debt.

The role of fiscal policy

4. Explain how changes in the level of government expenditure and/or taxes can
influence the level of aggregate demand in an economy.

5. Explain the mechanism through which expansionary fiscal policy can help an
economy close a deflationary (recessionary) gap.

6. Construct a diagram to show the potential effects of expansionary fiscal policy,

outlining the importance of the shape of the aggregate supply curve.

7. Explain the mechanism through which contractionary fiscal policy can help an
economy close an inflationary gap. Construct a diagram to show the potential effects of
contractionary fiscal policy, outlining the importance of the shape of the aggregate
supply curve.

8. Explain automatic stabilizers

9. Evaluate the view that fiscal policy can be used to promote long-term economic
growth (increases in potential output) indirectly by creating an economic environment
that is favourable to private investment, and directly through government spending on
physical capital goods and human capital formation, as well as provision of incentives
for firms to invest

10. Evaluate the effectiveness of fiscal policy through consideration of factors including
the ability to target sectors of the economy, the direct impact on aggregate demand, the
effectiveness of promoting economic activity in a recession, time lags, political
constraints, crowding out, and the inability to deal with supply-side causes of instability.
2.5 Monetary Policy
Interest rates

1. Describe the role of central banks as regulators of commercial banks and bankers to
governments.

2. Explain that central banks are usually made responsible for interest rates and
exchange rates in order to achieve macroeconomic objectives.

3. Explain, using a demand and supply of money diagram, how equilibrium interest
rates are determined, outlining the role of the central bank in influencing the supply of
money.

The role of monetary policy

4. Explain how changes in interest rates can influence the level of aggregate demand in
an economy.

5. Explain the mechanism through which easy (expansionary) monetary policy can help
an economy close a deflationary (recessionary) gap.

6. Construct a diagram to show the potential effects of easy (expansionary) monetary

policy, outlining the importance of the shape of the aggregate supply curve.

7. Explain the mechanism through which tight (contractionary) monetary policy can
help an economy close an inflationary gap.

8. Construct a diagram to show the potential effects of tight (contractionary) monetary

policy, outlining the importance of the shape of the aggregate supply curve

9. Explain that central banks of certain countries, rather than focusing on the
maintenance of both full employment and a low rate of inflation, are guided in their
monetary policy by the objective to achieve an explicit or implicit inflation rate target.

10. Evaluate the effectiveness of monetary policy through consideration of factors

including the independence of the central bank, the ability to adjust interest rates
incrementally, the ability to implement changes in interest rates relatively quickly, time
lags, limited effectiveness in increasing aggregate demand if the economy is in deep
recession and conflict among government economic objectives.
2.6 Supply-side Policies

The role of supply side policies

1. Explain that supply-side policies aim at positively affecting the production side of an
economy by improving the institutional framework and the capacity to produce (that is,
by changing the quantity and/or quality of factors of production). • State that
supply-side policies may be market-based or interventionist, and that in either case they
aim to shift the LRAS curve to the right, achieving growth in potential output.

Interventionist supply side policies

Investment in human capital

2. Explain how investment in education and training will raise the levels of human
capital and have a short-term impact on aggregate demand, but more importantly will
increase LRAS.

Investment in new technology

3. Explain how policies that encourage research and development will have a short-term
impact on aggregate demand, but more importantly will result in new technologies and
will increase LRAS.

Investment in infrastructure

4. Explain how increased and improved infrastructure will have a short-term impact on
aggregate demand, but more importantly will increase LRAS.

Industrial policies

5. Explain that targeting specific industries through policies including tax cuts, tax
allowances and subsidized lending promotes growth in key areas of the economy and
will have a short-term impact on aggregate demand but, more importantly, will increase
LRAS.

Market-based supply side policies

Policies to encourage competition

6. Explain how factors including deregulation, privatization, trade liberalization and
antimonopoly regulation are used to encourage competition

Labor market reforms

7. Explain how factors including reducing the power of labour unions, reducing
unemployment benefits and abolishing minimum wages are used to make the labour
market more flexible (more responsive to supply and demand).

Incentive-related policies

8. Explain how factors including personal income tax cuts are used to increase the
incentive to work, and how cuts in business tax and capital gains tax are used to
increase the incentive to invest.

Evaluation of supply-side policies

9. Evaluate the effectiveness of supply-side policies through consideration of factors

including time lags, the ability to create employment, the ability to reduce inflationary
pressure, the impact on economic growth, the impact on the government budget, the
effect on equity, and the effect on the environment.
International
Economics
3.1 International Trade

Free Trade

1. Explain the Benefits of trade

2. Describe the objectives and functions of the WTO. (3-6)

Trade Protection

3. Explain, using a tariff diagram, the effects of imposing a tariff on imported goods

4. Explain, using a diagram, the effects of setting a quota

5. Explain, using a diagram, the effects of giving a subsidy

6. Describe administrative barriers that may be used as a means of protection.

7. Evaluate the effect of different types of trade protection. - Skipped

Arguments for and Against Trade Protection

8. Discuss the arguments in favour of trade protection

9. Discuss the arguments against trade protection

3.2 Exchange Rates

Freely floating exchange rates

1. Explain that the value of an exchange rate in a floating system is determined by the
demand for, and supply of, a currency.

2. Draw a diagram to show determination of exchange rates in a floating exchange rate

system.

3. Explain the factors that lead to changes in currency demand and supply (8)

4. Distinguish between a depreciation of the currency and an appreciation of the

currency.

5. Draw diagrams to show changes in the demand for, and supply of, a currency

6. Evaluate the possible economic consequences of a change in the value of a currency

(6)

Government intervention

Fixed exchange rates

7. Describe a fixed exchange rate system involving commitment to a single fixed rate.

8. Distinguish between a devaluation of a currency and a revaluation of a currency.

9. Explain, using a diagram, how a fixed exchange rate is maintained. (mainly how to
deal with downward pressure)

10. Explain how a managed exchange rate operates, with reference to the fact that there
is a periodic government intervention to influence the value of an exchange rate.

11. Examine the possible consequences of overvalued and undervalued currencies.

Evaluation of Exchange Rate Systems

12. Compare and contrast a fixed exchange rate system with a floating exchange rate
system, with reference to factors including the degree of certainty for stakeholders, ease
of adjustment, the role of international reserves in the form of foreign currencies and
flexibility offered to policy makers.
3.3 The balance of payments
1. Outline the role of the balance of payments.

2. Distinguish between debit items and credit items in the balance of payments.

3. Explain the components of the current account

4. Distinguish between a current account deficit and a current account surplus.

5. Explain the two components of the capital account.

6. Explain the main components of the financial account

7. Explain that the current account balance is equal to ____________

(see the appendix, “The balance of payments”).

8. Examine how the current account and the financial account are interdependent.

Current account deficits and surpluses

9 & 10. Explain why a deficit in the current account of the balance of payments may
result in downward pressure on the exchange rate of the currency
&
Explain why a surplus in the current account of the balance of payments may result in
upward pressure on the exchange rate of the currency
3.4 Economic Integration

Forms of economic integration

Preferential trade agreements

1. Explain preferential trade agreements

2. Distinguish between bilateral and multilateral and regional (WTO) trade agreements.

3. Distinguish between a free trade area, a customs union and a common market.
+ 4. Compare and contrast the different types of trading blocs

5. Explain the advantages and disadvantages of a trading bloc.

Monetary union

6. Explain a monetary union and what factors make it more likely for an optimum
currency area to be more successful

7. Discuss the possible advantages and disadvantages of a monetary union for its
members
Development
Economics
4.1 Economic Development

Economic growth and economic development

1. Distinguish between economic growth and economic development.

2. Explain the multidimensional nature of economic development (7p)

Broad definition of economic development with 5 examples, what economists used to believe
about economic development, definition & 5 examples of human development, income
poverty def., human poverty def., how income and human poverty could be reduced

3. Explain the 4 most important sources of economic growth in economically less

developed countries

4. Discuss the relationship between economic growth and economic development (3

basic important points + extra depth)

Common characteristics of economically less developed countries

5. Explain, using examples, that economically less developed countries share certain
common characteristics (noting that it is dangerous to generalize as there are many
exceptions in each case) (5 characteristics)

6. Explain that in some countries there may be communities caught in a poverty trap
(poverty cycle) where poor communities are unable to invest in physical, human and
natural capital due to low or no savings; poverty is therefore transmitted from
generation to generation, and there is a need for intervention to break out of the cycle.
P1: Definition=Explanation of poverty cycle diagram,
P2: Draw poverty cycle diagram
P3: Explain 3(+1) ways poverty is transmitted across generations
P4: An easy solution to prevent poverty cycle that is prevented from occurring naturally
P5: How to break out of the poverty cycle (2 solutions + 1 limitation and the solution to that
limitation)

Diversity among economically less developed nations

7. Explain, using examples, that economically less developed countries differ

enormously from each other in terms of a variety of factors (4)
International development goals

8. Outline the current status of international development goals, including the

Millennium Development Goals. - Skip
4.2 Measuring Development

Single indicators

1. Distinguish between GDP per capita figures and GNI per capita figures. (6p)

2. Compare and contrast the GDP per capita figures and the GNI per capita figures for
economically more developed countries and economically less developed countries. (2p)

3. Distinguish between GDP per capita figures and GDP per capita figures at
purchasing power parity (PPP) exchange rates. (3p)

4. Compare and contrast GDP per capita figures and GDP per capita figures at
purchasing power parity (PPP) exchange rates for economically more developed
countries and economically less developed countries. (3p)

5. Compare and contrast two (three) health indicators for economically more developed
countries and economically less developed countries. (8p)

6. Compare and contrast two (three) education indicators for economically more
developed countries and economically less developed countries.

Composite indicators

7. What do composite indicators include and why are they considered to be better
indicators of economic development.

8. Explain the measures that make up the Human Development Index (HDI).

9. Compare and contrast the HDI figures for economically more developed countries
and economically less developed countries and limitation of HDI

10. Explain why a country’s GDP/ GNI per capita global ranking may be lower, or
higher, than its HDI global ranking. (1 sentence)
4.3 The Role of Domestic Factors

1. State the five factors that contribute to economic development

2. With reference to a specific developing economy, and using appropriate diagrams

where relevant, examine how the following factors contribute to economic development:
a. Education and health (14p)
b. The use of appropriate technology (9p)
c. Access to credit and micro-credit (16p and 3 parts
d. The empowerment of women (4p)
e. Income distribution (4p)
4.4 The Role of International Trade
Trade problems facing many LEDCs

1. State the three barriers to development for economically less developed countries

2. With reference to specific examples, explain how the following factors are barriers to
development for economically less developed countries.
a. Over-specialization on a narrow range of products
b. Price volatility of primary products
c. Inability to access international markets

3. Evaluation of consequences of agricultural support by rich countries (Added by me)

(4)

Trade strategies for economic growth and economic development

4. State the six trade strategies to achieve economic growth and development

5. With reference to specific examples, evaluate each of the following as a means of

achieving economic growth and economic development.
a. Import substitution (8p)
b. Export promotion (7 characteristics + 6 reasons why export promotion was successful
for Asian Tigers)
c. Trade liberalization (9p)
d. The role of the WTO (11p)
e. Bilateral and regional preferential trade agreements
f. Diversification

6. Explain ‘liberalised capital flows’ as one type of market-oriented policy (Added by

me)
4.5 The Role of International Trade
The meaning of FDI and MNCs

1. Describe the nature of foreign direct investment (FDI) and multinational

corporations (MNCs).

2. Explain the 5 reasons why MNCs expand into economically less developed countries.

3. Explain the 8 characteristics (1 part has 6 points) of economically less developed

countries that attract FDI

Advantages and disadvantages of FDI for economically less developed countries

4. Evaluate the impact of foreign direct investment (FDI) for economically less
developed countries.
Potential advantages of MNCs for host developing countries (6)
Potential Disadvantages Part 1 - Why the potential advantages may not work (5)
Potential Disadvantages Part 2 - Further negative consequences (5)
4.6 The roles of foreign aid and multilateral
development assistance

Foreign Aid

Classifications and Types of Aid

1. Explain that foreign aid is, ODA, and the three ways that ODA reaches developing
countries

2. Explain what humanitarian aid is and what it consists of (2)

3. Explain what development aid is and what it consists of

4. Explain what NGOs do

5. Explain that aid might also come in the form of tied aid, and its disadvantages (4p)

6. Examine the 3 motivations of economically more developed countries giving aid.

7. Compare and contrast the ODA to two economically less developed countries. (6p)

Evaluation of Foreign Aid

8. Evaluate the effectiveness of foreign aid in contributing to economic development.

Talk about Arguments in favor of ODA (5), Factors that limit the effectiveness of
Official Development Assistance (ODA) (8), Advantages of NGO: why NGOs
are growing in importance (8), Criticisms of NGOs (4)

9. Compare and contrast the roles of aid and trade in economic development.

Multilateral Development Assistance

The roles of the IMF and World Bank

10. Examine the current roles of the IMF and the World Bank in promoting economic
development.
4.7 The role of international debt
Foreign Debt and its Consequences

1. Outline the meaning of foreign debt and explain why countries borrow from foreign
creditors.

2. Explain that in some cases countries have become heavily indebted, requiring
rescheduling of the debt payments and/or conditional assistance from international
organizations, including the IMF and the World Bank.

3. Explain why the servicing of international debt causes balance of payments problems
and has an opportunity cost in terms of foregone spending on development objectives.

4. Explain that the burden of debt has led to pressure to cancel the debt of heavily
indebted countries
4.8 The balance between markets and intervention

Strengths and Weaknesses of Market-Oriented Policies

Strengths

1. Discuss the 6 positive outcomes of market-oriented policies

Weaknesses

2. Discuss the negative outcomes of market-oriented strategies.

Strengths and Weaknesses of Interventionist Policies

Strengths

3. Discuss the strengths of interventionist policies

Weaknesses

4. Discuss the limitations of interventionist policies

Market with government intervention

5. Explain the importance of good governance in the development process.

6. Discuss the view that economic development may best be achieved through a
complementary approach, involving a balance of market oriented policies and
government intervention.