One of the first topics that we look at in the Microeconomics section of the syllabus is markets and how they function. We have already seen that there are a limited number of resources available to satisfy the unlimited wants and needs that we have. As a result we have to answer the question of …
The final topic of the HL Theory of the Firm section is Price discrimination. This is where the producer charges different consumers (or different groups of consumers) different prices for the same product (but not for reasons of cost differences). There are 3 types (or degrees) of price discrimination, the imaginatively titled 1st, 2nd and 3rd …
Game theory is an area of Economics that is increasingly used to explain many situations where strategic thinking and action is involved. It is “the formal study of decision-making where several players must make choices that potentially affect the interests of the other players” (von Stengel & Turocy). It is an area study which has led to …
We have already looked at demand-side policies, but governments also have the option to use supply-side policies. These are policies that are designed to increase the productive capacity of a country. As with demand-side policies there are two types: Interventionist policies and Market-based policies. It is important not just to understand the difference between these, …
We have already looked at one aspect of demand-side policy, fiscal policy, and it is important that we also understand the other type, monetary policy. Monetary policy is the use of the interest rate, and money supply, in order to affect the level of aggregate demand in an economy. We also need to appreciate that …
We have now looked at the 5 different macroeconomic objectives of governments (low and stable inflation, low unemployment, stable economic growth, promoting equity and a favourable balance of payments), and the next step is to look at the government policies available to try and meet these objectives. The types of policies can be split into …
One of the issues that we have come across during our study of promoting equity as a macroeconomic goal is that of poverty. This is something that we will be looking at in more detail during the development economics section of the course in Year 13. At this point it is important to be able to …
We have already looked at the macroeconomic objective of promoting equity, why we have it and how we measure it. It is also important for us to look at the different measures we can use in order to promote equity. The areas we focus upon are the use of transfer payments and differing taxation systems. We …
A further macroeconomic objective that we study is greater equity in the distribution of the income. Remember that an equitable distribution of income refers to one which is ‘fair’, but that this is a very subjective or normative issue to measure and we therefore use equality as a proxy measure.
One of the government macroeconomic objectives we have already mentioned is stable economic growth. We have already looked at the business cycle and touched on issues relating to economic growth, but it is important that you understand what causes economic growth and the impacts (both positive and negative) that it can have.