Economics Notes

1. Central Problem of Economics

1. The basic economic problem
2. Resource allocation systems
3. Free market system
4. Command (planned) economy system
5. Mixed economies
6. Production possibility curve (PPC)

2. Demand and Supply

1. Demand
2. Factors affecting demand
3. Supply
4. Factors affecting supply
5. Market equilibrium
6. Interrelationships between markets
7. Consumer surplus and producer surplus

3. Elasticities

1. Price Elasticity of Demand (PED)
2. PED and total revenue (TR)
3. Factors affecting PED
4. How firms use PED
5. Income Elasticity of Demand (YED)
6. How firms use YED
7. Cross Elasticity of Demand (XED)
8. How firms use XED
9. Price Elasticity of Supply (PES)
10. Factors affecting PES

4. Government Intervention in Free Markets

1. Price floor
2. Price ceiling
3. Indirect tax
4. Specific subsidy

5. Production and Cost

1. Short-run theory of production
2. Short-run theory: Law of Diminishing Marginal Returns
3. Short-run average costs and marginal costs curves
4. Long-run theory: Returns to scale
5. Long-run average cost curve (LRAC)
6. Constructing the LRAC curve
7. Long-run theory: Internal economies/diseconomies of scale
8. Long-run theory: External economies/diseconomies of scale
9. Factors influencing size of firm
10. Methods of growth for a firm

6. Perfect Competition

1. Characteristics
2. Demand and revenue
3. Equilibrium output
4. Short-run profits
5. Short-run shut-down condition
6. Long-run shut-down condition
7. Long-run equilibrium
8. Evaluation

7. Monopolistic Competition

1. Characteristics
2. How firms compete
3. Short-run equilibrium
4. Long-run equilibrium
5. Evaluation

8. Monopoly

1. Characteristics
2. Demand curve of a monopoly
3. Short-run equilibrium
4. Long-run equilibrium
5. Evaluation
6. Price discrimination
7. Regulating a monopoly
8. Regulating a natural monopoly

9. Oligopoly

1. Characteristics
2. When oligopolistic firms collude
3. When oligopolistic firms compete
4. Evaluation

10. Labour Market

1. Wage determination
2. Elasticities of demand and supply for labour
3. Wage determination in a non-competitive labour market
4. The marginal productivity theory of wage determination
5. Wage differentials (economic reasons)
6. Wage differentials (non-economic reasons)

11. Market Failure

1. Introduction
2. Price mechanism
3. Sources of market failure
4. Correcting market failure
5. Cost-benefit analysis

1. National Income and Accounting

1. The circular flow of income
2. National income statistics
3. Uses of national income statistics
4. Concept of Standard of Living
5. Problems of using national income to measure standard of living
6. Problems of using national income to measure standard of living between countries

2. Aggregate Demand and Supply

1. Aggregate Supply (AS)
2. Aggregate Demand (AD)
3. Economic Growth – Definition and Measurement
4. Potential Growth
5. Actual Growth
6. Benefits of Economic Growth
7. Costs of Economic Growth

3. Theory of Income and Employment

1. Aggregate Expenditure
2. Consumption
3. Investment
4. Government Expenditure
5. Net Exports
6. Injections
7. Withdrawals
8. Savings
9. Taxation
10. Import Expenditure
11. Equilibrium National Income
12. Income-expenditure approach
13. Withdrawal-Injection Approach
14. Changes in Equilibrium Level of National Income
15. The Multiplier Effect
16. Effect of a Change in MPC and MPW on Equilibrium National Income
17. Deflationary & Inflationary Gaps

4. Money and CPI

1. Functions of Money
2. Sources of Money
3. Measuring Changes to the Value of Money
4. Uses of CPI
5. Problems in Measuring CPI

5. Interest Rate Determination

1. Interest Rate
2. Liquidity Preference Theory of Interest
3. Factors Affecting Interest Rates
4. Limitations of the Liquidity Preference Theory
5. Other Determinants of Interest Rates

6. Inflation

1. Definition and Measurement of Inflation
2. Inflation Type 1: Demand-pull Inflation
3. Inflation Type 2: Cost-push Inflation
4. Effects of Anticipated Inflation
5. Effects of Unanticipated Inflation
6. The Dangers of Deflation
7. Policies to Tackle Inflation

7. International Trade

1. Introduction
2. Principle of Absolute Advantage
3. Principle of Comparative Advantage
4. Other theories to explain trade
5. Advantages of specialisation and trade
6. Disadvantages of specialisation and trade
7. Protectionism
8. Arguments for protectionism
9. Economic Integration
10. Advantages of economic integration
11. Disadvantages of economic integration
12. Globalisation
13. Benefits of globalisation
14. Challenges of globalisation

8. Foreign Exchange

1. Introduction
2. Exchange rate determination in a free market
3. Factors affecting the exchange rate
4. Flexible exchange rate system
5. Fixed exchange rate system
6. Managed float exchange rate system
7. Advantages of flexible over fixed exchange rate system
8. Disadvantages of flexible over fixed exchange rate system
9. Internal economic impact of a change in exchange rate
10. External economic impact of a change in exchange rate

9. Balance of Payment

1. Introduction
2. Structure of BOP
3. Causes of BOP deficit (current account)
4. Causes of BOP deficit (capital and financial account)
5. Consequences of a BOP disequilibrium
6. Policies to correct a BOP disequilibrium
7. Relationship between inflation and BOP

10. Macroeconomic Problems & Policies

1. Macroeconomic Objectives
2. Relationships between macroeconomic problems
3. Fiscal policy
4. Monetary policy
5. Exchange rate policy
6. Supply side policies
7. Possible policy conflicts
8. Singapore’s macroeconomic policies

11. Unemployment

1. Introduction
2. Costs of unemployment
3. Disequilibrium unemployment
4. Equilibrium unemployment
5. Seasonal unemployment
6. Relationship between inflation and unemployment