Covers what economics is and the ideas everything else rests on: scarcity and opportunity cost, the production possibility frontier, the gains from specialisation and the functions of money, and the three ways an economy can be organised.

• Economics as a social science14
• Positive and normative economic statements13
• The economic problem13
• What a production possibility frontier shows12
• Shifts in the PPF, and capital against consumer goods15
• The division of labour and its advantages13
• Specialisation for trade between countries9
• The four functions of money17
• Free market, command and mixed economies11
• The advantages and disadvantages of the free market8
• Command and mixed economies assessed14

Covers the machinery of supply and demand: what shifts each curve, the four elasticities and what they are used for, how equilibrium is reached, and what an indirect tax or a subsidy does to price and quantity.

• Rational decision making9
• Demand15
• Price, income and cross elasticity: formulae and values18
• Interpreting income and cross elasticity of demand13
• What determines the elasticity of demand8
• Using elasticities: taxes, subsidies and business planning10
• Elasticity and total revenue12
• Supply14
• Price elasticity of supply and its values16
• What determines elasticity of supply, and the short and long run12
• Price determination21
• Price mechanism15
• Consumer and producer surplus18
• Indirect taxes and the incidence of a tax18
• Subsidies and how their benefit is shared14
• Alternative views of consumer behaviour11

Covers the situations in which markets misallocate resources: externalities and the gap between private and social cost, public goods that no firm will supply, and information gaps that leave buyers unable to judge what they are buying.

• What market failure is, and social costs and benefits12
• Externality diagrams and welfare loss15
• Correcting externalities, and who they affect17
• Public goods15
• Information gaps10

Covers what a government can do about market failure and what goes wrong when it tries: taxes, subsidies and price controls, tradable permits, state provision and regulation, and the ways intervention makes things worse.

• Indirect taxes and subsidies as interventions18
• Maximum and minimum prices, and tradable pollution permits15
• State provision, regulation and government failure12
• Government failure20

Covers the four numbers by which an economy is judged: growth, inflation, unemployment and the current account, how each is measured, what the measures miss, and what causes and follows from each.

• Measuring growth: real GDP, GDP per capita and GNI17
• Purchasing power parity and the limitations of GDP15
• National wellbeing and the Easterlin paradox10
• Inflation, deflation and how the CPI measures them10
• The limitations of the CPI, and the RPI8
• Demand-pull, cost-push and monetary causes of inflation9
• The effects of inflation12
• Measuring employment, unemployment and inactivity18
• The causes of unemployment, migration and skills19
• The effects of unemployment18
• The components of the current account15
• Current account deficits, surpluses and global imbalances13

Covers total spending in the economy: the four components of aggregate demand, why the curve slopes downward and what shifts it, and the influences on consumption, investment, government spending and net trade.

• The components of aggregate demand12
• The AD curve: why it slopes down and what shifts it17
• Consumption (C)19
• Investment (I)20
• Government expenditure (G)17
• Net trade (X-M)19

Covers the productive side of the economy: what the aggregate supply curve shows, what moves it in the short run, and the disagreement between Keynesian and classical economists about its long-run shape.

• The characteristics of AS20
• Short-run AS16
• Keynesian and classical views of the LRAS curve8
• What shifts long-run aggregate supply18

Covers how income circulates and what determines its level: the circular flow, injections and withdrawals, macroeconomic equilibrium on an AD/AS diagram, and the multiplier that amplifies any change in spending.

• The circular flow of income16
• The distinction between income and wealth8
• Injections, withdrawals and the equilibrium condition12
• What counts as an injection and a withdrawal15
• Macroeconomic equilibrium and shifts in AD and AS16
• The shape of AS, demand-pull inflation and stagflation11
• The multiplier process9
• Marginal propensities to consume, save, tax and import14
• Calculating the multiplier and why its size matters11

Covers why economies grow and why growth is uneven: the causes of actual and potential growth, output gaps, the four phases of the trade cycle, and the costs that come with rising output.

• What causes economic growth14
• Actual against potential growth, and export-led growth17
• Trend growth and positive and negative output gaps15
• Identifying an output gap on an AD/AS diagram9
• The four phases of the trade cycle, and the boom12
• Recession, recovery and the output gap11
• The impact of economic growth20

Covers what governments are trying to achieve and the instruments they use: monetary and fiscal policy on the demand side, supply-side measures, and the conflicts that make it impossible to hit every objective at once.

• Possible macroeconomic objectives14
• Monetary policy: interest rates and quantitative easing10
• Fiscal policy: spending, taxation and the budget12
• Demand-side policy on an AD/AS diagram8
• The Bank of England, and policy in the 1930s and 200813
• The strengths and weaknesses of demand-side policy11
• Market-based and interventionist supply-side policies14
• Labour market, skills and infrastructure policies10
• The strengths and weaknesses of supply-side policy14
• Conflicts between growth, inflation and the current account11
• The Phillips curve and the trade-offs in a policy mix14

Covers why firms are the size they are: the reasons some stay small, the ways businesses grow and the risks each route carries, the principal-agent problem, and why firms sometimes break themselves up.

• Why firms stay small and why they grow11
• The principal-agent problem and types of organisation13
• Organic growth and the types of integration12
• Vertical and horizontal integration assessed16
• Conglomerate integration and the constraints on growth15
• Demergers20

Covers what a firm is actually trying to do: profit, revenue and sales maximisation and satisficing, where each sits on a cost and revenue diagram, and why managers may not pursue what owners want.

• Profit, revenue and sales maximisation, and satisficing13
• Business objectives on a cost and revenue diagram9

Covers the arithmetic behind every firm's decisions: total, average and marginal revenue and cost, why the short-run cost curve is U-shaped, economies of scale, and when a firm should shut down.

• Total, average and marginal revenue13
• Revenue, elasticity and the revenue-maximising output19
• Total, fixed, variable, average and marginal cost16
• Why short-run cost curves take their shape9
• The long-run average cost curve and returns to scale13
• Types of economies and diseconomies of scale14
• Internal and external economies of scale10
• Normal profit, supernormal profit and losses13
• The short-run and long-run shut-down points12

Covers how the number and behaviour of firms shapes price, output and efficiency: perfect competition, monopolistic competition, oligopoly, monopoly and monopsony, and how contestable a market is.

• Efficiency19
• The assumptions of perfect competition and its revenue curves16
• Perfect competition: equilibrium and efficiency15
• The characteristics of monopolistic competition12
• Monopolistic competition: short-run and long-run equilibrium12
• Excess capacity and efficiency in monopolistic competition16
• The characteristics of oligopoly and concentration ratios10
• Collusive and non-collusive behaviour21
• Game theory, price and non-price competition13
• The characteristics of monopoly and its equilibrium11
• Third degree price discrimination13
• The costs and benefits of monopoly, and natural monopoly15
• What monopsony is and where its power comes from11
• The costs and benefits of monopsony12
• Contestable markets and hit-and-run competition11
• Barriers to entry and exit11
• Sunk costs and the degree of contestability10

Covers how wages and employment are set: the demand for and supply of labour, immobility and the market failure it causes, wage determination under competition and monopsony, and the elasticity of both sides.

• Demand for labour18
• What determines the supply of labour10
• Geographical and occupational immobility of labour16
• Wage determination in competitive and monopsony markets12
• Minimum and maximum wages, and public sector pay8
• The elasticity of demand for and supply of labour12

Covers what a government does about market power: controlling mergers, regulating price, profit and quality, opening markets to competition, and the limits on what regulation can achieve.

• Controlling mergers, and price, profit and quality regulation11
• Deregulation, tendering, privatisation and nationalisation11
• The impact of government intervention19

Covers the economics of an open world: globalisation and who gains from it, comparative advantage, trading blocs and the WTO, protectionism, the balance of payments, exchange rates, and what makes a country competitive.

• What globalisation is and what has driven it12
• The winners and losers from globalisation14
• Absolute and comparative advantage10
• The assumptions and limitations of comparative advantage12
• The gains and costs of international specialisation16
• Pattern of trade17
• Terms of trade20
• Types of trading bloc and the hierarchy of integration13
• Trade creation, trade diversion and the costs of trading blocs18
• The World Trade Organisation10
• Why governments restrict trade, and the instruments used15
• The effects of protectionism12
• Balance of payments in a global context17
• Exchange rate systems, and appreciation against revaluation9
• What moves a floating rate, and how governments intervene15
• The Marshall-Lerner condition and the J-curve effect17
• Measuring competitiveness: unit labour costs and export prices11
• What determines competitiveness, and the cost of losing it16

Covers how poverty and inequality are defined and measured, why they arise, and the part the market itself plays in producing them.

• Absolute and relative poverty18
• Measuring inequality: the Lorenz curve and Gini coefficient11
• The causes of inequality, and capitalism's part in it20

Covers development beyond income alone: the Human Development Index, the barriers that hold poorer economies back, and the market-orientated and interventionist strategies used to overcome them.

• The Human Development Index and its three dimensions15
• The limits of the HDI, and other development indicators12
• Primary product dependency, the savings gap and Harrod-Domar16
• Population, debt, financial exclusion and infrastructure17
• Governance, corruption, conflict and geography14
• Market-orientated strategies: trade liberalisation and FDI14
• Interventionist strategies: human capital and protectionism11
• Infrastructure, joint ventures and buffer stock schemes12
• The Lewis model, tourism, primary industries and Fairtrade15
• Aid, debt relief, the World Bank, the IMF and NGOs19

Covers what the financial system is for and how it goes wrong: the roles of financial markets and central banks, and the asymmetric information, moral hazard and speculation that produce crises.

• Role of financial markets14
• Asymmetric information, externalities and systemic risk8
• Moral hazard, speculation, bubbles and market rigging13
• Role of central banks17

Covers public spending, taxation and the public finances, and how governments use policy in a global setting: reducing deficits, tackling poverty and inequality, responding to external shocks, and the constraints that limit what any of it can achieve.

• Capital, current and transfer spending, and what drives it12
• The effects of public expenditure, and crowding out16
• Progressive, proportional and regressive taxes13
• The Laffer curve and the effects of tax changes17
• Automatic stabilisers, deficits and the national debt15
• What drives deficits and debt, and why their size matters16
• Reducing fiscal deficits and national debt8
• Policies to reduce poverty and inequality8
• Monetary, exchange rate and supply-side policy across countries17
• Direct controls, and why policy works differently elsewhere11
• What an external shock is, and the kinds that occur8
• Fiscal, monetary and supply-side responses to a shock18
• Policy lags and the constraints on responding15
• Measures to control global companies' (transnationals') operations18
• Problems facing policymakers when applying policies19