IAL Economics Scheme of Work FINAL

INTERNATIONAL ADVANCED LEVEL
ECONOMICS
SCHEME OF WORK
Pearson Edexcel International Advanced Subsidiary in Economics
(XEC11) Pearson Edexcel International Advanced Level in Economics
(YEC11)
First teaching September 2018
First examination from January 2019
First certification from August 2019 (International Advanced Subsidiary)
and August 2020 (International Advanced Level)
Pearson Edexcel International Advanced Level Economics – Scheme of Work
IAS/ IAL Economics: Scheme of Work
Introduction
This document provides a sample scheme of work for International Advanced Level Economics which can be adapted by centres to fit
their ordering of topics and teaching approaches. It is meant as an example only and it is not intended to be prescriptive. It assumes
the course is co-taught with the IAS. If a more integrated approach is adopted then this scheme can be adapted to fit.
The ordering of the topics, suggested activities/resources and teaching points to note reflect the preferences of the writer and are not
intended to be prescriptive or fully comprehensive. The specification must be referred to as the authoritative source of information.
The suggested resources at times have been specific, but are intended to demonstrate the type of resources which can be found on the
internet. References have not been made to particular textbooks and a separate suggested resources list is provided on the subject
pages of the Pearson Edexcel website. More recent topical events can be incorporated into the scheme of work and used as examples
to illustrate the core principles in economics as appropriate.
The sample assessment materials can be used for question practice to enable students to build up the confidence and skills as part of
their revision and exam practice.
© Pearson Education Ltd 2018. 1

Unit 1: Year 12 Term 1
Week Topic Content Some suggested activities/resources Teaching points to note

1 1.3.1 Introductory 1 The nature of economics
concepts a) Thinking like an economist: the There are some interesting resources on the In any examples used, relate to contexts
process of developing models in Economic and Social Research Council website, which students will be familiar with.
economics, including the need to make such as an animated clip that explains the social
assumptions science method.
b) The use of the ceteris paribus
assumption in building models Introduce a topical issue, e.g. ‘Free primary
c) The inability in economics to make schooling is essential for a developing economy
scientific experiments to increase its economic growth rate.’ Students
could then brainstorm the assumptions which
might underlie this economic argument. Further
discussion can then take place on the
importance of ceteris paribus and therefore what
other factors might influence a country’s
economic growth rate.
2 Positive and normative economic
statements
a) Distinction between positive and Many textbooks and Tutor2u have examples of Stress that Economics appears in both
value judgements on economic issues positive and normative statements for students international news, national news and
b) The role of value judgements in to classify. local news stories; it is therefore vital to
influencing economic decision making Value judgements: TV news clips often contain start keeping up-to-date with current
and policy politicians making value judgements about the issues!
economy.
The desert island scenario raises many useful Students need to understand that
economic concepts. opportunity cost arises because resources
After introducing factors of production are limited but wants are infinite.
(resources) students can be split into pairs to
discuss factors of production relating to different Highlight that approaching decisions using
scenarios. They can then feedback to the rest of the concept of opportunity cost helps
the class, e.g. factors of production required to decision makers assess options. They
provide air transport services. Use examples should pick the option that has the lowest
relating to health care, the car industry, a opportunity cost
school, etc.
3 Scarcity
a) The problem of unlimited wants and Scarcity: A homework task might be to find
finite resources. examples from recent news stories. For


b) The distinction between renewable example: a lack of water resulting from drought;
and non-renewable resources. the story of a drug being unavailable for a
c) The link between scarcity and patient. Refer to media and newspaper websites.
opportunity cost.
d) The distinction between free goods Split students into groups to come up with a
and economic goods. range of opportunity cost statements relating to
consumers, producers and government.
Discuss the opportunity cost of going to

university/higher education.
4 Production possibility frontiers

(Introduction) Examples of each may be provided and students An understanding of the difference
c) The distinction between capital could be asked to divide them into 2 categories. between capital and consumer goods is
goods and consumer goods. useful before introducing PPFs
a) The use of production possibility Students could be asked to construct a straight Students need to be clear on the
frontiers to depict: line PPF in a situation where a given collection of definition of a PPF (underlying
• the maximum productive potential resources (factors of production) can produce a assumptions).
of an economy maximum of 5 tractors or 300 tables. Students They must be clear that a PPF just
• efficient or inefficient allocation of could then construct a second PPF curve using presents maximum combination of
resources the following points: options available and will be achievable if
• possible and unobtainable 5 tractors, 0 tables there is productive efficiency.
production. 4 tractors, 100 tables Students need to understand that the PPF
3 tractors, 180 tables represents the production possibilities for
2 tractors, 240 tables a particular time period only, e.g. a year.
1 tractor, 280 tables The economy will have built up a stock of
0 tractor, 300 tables capital goods before, which can then be
Students can then discuss why the PPF is likely used, with other resources, to produce
to be concave in practice rather than a straight more capital goods and/or consumer
line. goods. Some students might appreciate
that a certain production of capital goods
is needed to just balance the ones which
get broken!


2 1.3.1 Introductory 4 Production possibility frontiers
concepts (Continued)
a) The use of production possibility With all examples they can be extended to Students need to be clear why a
frontiers to depict: discuss why the PPF may shift outwards or movement along a PPF must involve an
• opportunity cost (using marginal inwards and why the combination produced opportunity cost. Decisions to increase
analysis) might end up being inside the PPF. the production of an extra, marginal, unit
• economic growth and decline. of one good leads to a decrease in the
Tutor2u has a range of short answer questions production of another good.
and multiple-choice questions on this topic. A range of examples should be set so
students can practice drawing graphs and
b) The distinction between movements Examples can be extended to discuss why the working out the opportunity cost of
along, and shifts in, production PPF may shift outwards or inwards and why the producing one extra unit of a good. For
possibility frontiers, and their possible combination produced might end up being inside example, the opportunity cost of
causes. the PPF. producing the second tractor is 40 tables
An example of a PPF with consumer and capital whereas the opportunity cost of producing
goods on the axis will be useful for economic the third tractor is 60 tables.
growth discussions.
d) The significance of capital goods for If there is time, could consider actual growth A quick overview of causes of economic
versus potential growth and look at growth growth can be discussed.
productivity and economic growth.
figures in an economy.
Students could consider growth rates in different

countries https://www.imf.org/en/Data
3 1.3.1 Introductory 5 Specialisation and the role of
concepts money and financial markets
a) The advantages and disadvantages Tutor2u has a video on specialisation across the
of specialisation and the division of ages using examples of Model T Ford and
labour in organising production; Adam Mercedes-Benz. Watch this and get students to
Smith’s views on the division of labour. identify key benefits and disadvantages to firms
and employees of the division of labour.
b) The function of money as a medium Get students to brainstorm ideas. Students need to understand how money
of exchange, a measure and store of Give the scenario where a barter economy exists facilitates specialisation.
value, and a method of deferred without money. You might want to give them
payment; the significance of these images of products they have grown and then
functions for specialisation. get them to exchange them as in a barter
economy. Key is that they need to understand
the problems a barter economy will bring and
how many helps solve the problem.
c) The role of financial markets: Students are required to have a basic

• to facilitate saving The Bank of England has some useful videos e.g. understanding only of the role of financial


• to make funds available to https://www.youtube.com/watch? markets.
businesses and individuals v=dI0MVV5UjKc&list=PLslyOrpjJ0z2H8B-
• to facilitate the exchange of goods ZjGgFjNCZHcHqASmr
and services
• to provide forward markets in https://www.bing.com/videos/search?
commodities and currencies q=role+of+financial+markets+video&&
• to provide a market for equities.
6 Free market, mixed and

command economies
a) The distinction between free market,
mixed and command economies. It might be worth looking on YouTube for an
(Other aspects of this topic may be introductory video on this topic e.g.
summarised at the end of the unit.) https://www.bing.com/videos/search?
q=economic+systems&&view=detail&mid=D9B2
4CA3504C7976CBE9D9B24CA3504C7976CBE9&
FORM=VRDGAR


1.3.2 Consumer 1 Rational decision making
behaviour and demand a) The assumption of rationality in The Open University has a video clip – 60 Emphasise that it is the failure to forecast
decision making: consumers aim to seconds adventure in economics – to illustrate future feelings correctly which results in
maximise utility by making rational Rational Choice Theory. consumers not maximising utility.
choices; firms aim to maximise profits.
b) Reasons why consumers may not Students could find articles from the media to The influence of celebrity endorsement of
aim to maximise utility: find ‘dangerous food product’ stories or ‘wonder products could be considered.
• the influence of other people’s food’ stories. Bring to next lesson to suggest
behaviour (herding) how individuals spending patterns may change in Consumers tend to underestimate the
• habitual behaviour reaction to these stories – is it always rational? – addictive nature of some consumption
• inertia people exaggerate very small probabilities in decision and consumers tend to
• poor computational skills their reaction. overestimate impact of a present
• the need to feel valued consumption decision.
• framing and bias. Discuss why consumers choose to smoke even The framing effect shows how people
though they are aware of health risks in future. react to a particular choice in different
Discuss why consumers keep wanting the next ways depending on how it is presented.
updated iPhone.
Useful videos include:
You Tube: What is Behavioural Economics?
https://www.youtube.com/watch?v=Fa-
mIosWOK8
There are many videos on the IKEA Effect one of
which is: https://www.bing.com/videos/search?
q=The+IKEA+effect+&&view=detail&mid=1FF35
6A222DC1DBE51BD1FF356A222DC1DBE51BD&F
ORM=VRDGAR


4 1.3.2 Consumer 2 The demand curve
behaviour and demand a) The concept of demand Students should get plenty of practice. There are Students can find this topic confusing to
b) The distinction between movements likely to be exercises in textbooks. Tutor2u has begin with. It is important to stress that a
along a demand curve and shifts of a worksheets in this area e.g. demand curve shows how much of a good
demand curve https://www.tutor2u.net/economics/blog/unit-1- would be demanded over a given time
c) The concept of diminishing marginal micro-exercise-on-market-demand period for a full range of possible prices,
utility and its significance for the shape In relation to diminishing marginal utility it might assuming anything else affecting demand
of the individual demand curve be useful to set up the following type of is fixed – precise use of terminology can
d) Factors that may cause a shift in the examples, e.g. then be reinforced once basics are
demand curve Pints of beer TU grasped.
• changes in the price of substitute 1 10
or complementary goods 2 19 Make sure students begin to use
• changes in real income 3 27 terminology precisely, i.e. if economists
• changes in tastes 4 34 say there has been an increase in demand
• changes in the size and age 5 37 they mean the demand curve has shifted
distribution of population 6 35 to the right. (This is slightly different from
• advertising 7 30 saying there is an increase in quantity
demanded which can be caused by an
Students should then add a column for MU. It increase in supply – they will discover this
would also be useful to plot both TU and MU the following week). This helps to
against pints of beer. reinforce the relationship between total
and marginal concepts later on in the
Once the law of diminishing marginal utility is course.
understood this can be linked to explain why the More able students could be directed
demand curve is downward sloping. towards utility theory and the equilibrium
position to extend the analysis.
1.3.3 Supply 1 The supply curve

a) The distinction between movements Exercises are available on this topic e.g. Mnemonics quite useful in this area and
along a supply curve and shifts of a https://www.tutor2u.net/economics/blog/unit-1- throughout the course.
supply curve micro-exercise-on-market-supply For example, for supply: PINTS WC
b) The factors that may cause a shift in P productivity
the supply curve (the conditions of I indirect tax
supply) N number of firms
T Technology
S subsidies
W weather
C costs of production
Note: students often confuse production

with productivity.


5 1.3.4 Price 1 Determination of market
determination equilibrium
a) Equilibrium price and quantity and It might be useful to play an auction game. Emphasise that a change in demand does
how they are determined not cause a change in supply and vice
b) The use of supply and demand Students should complete plenty of examples; versa. Stress the precise use of
diagrams to depict excess supply and textbooks are likely to have examples to use as terminology throughout this section.
excess demand well as worksheets on Tutor2u.
c) The operation of market forces to It is important to stress cause and effect
eliminate excess demand and excess when going through some examples. This
supply is an area where students get confused.
d) The use of supply and demand For example, a successful advertising
diagrams to show how shifts in demand campaign will cause an increase in
and supply curves cause the demand which in turn causes an increase
equilibrium price and quantity to in price. The new equilibrium shows a
change in real-world situations higher price co-existing with a higher
quantity demanded. Students will then try
and argue that a higher price will cause a
fall in demand! Hence it is always
important to stress what is causing the
changes.
3 Functions of the price mechanism
a) The rationing, incentive and The Open University has a video clip – 60 These functions should be related to
signalling functions of the price seconds adventure in economics – to illustrate particular contexts so that students learn
mechanism for allocating scarce the invisible hand: how to apply them.
resources https://www.bing.com/videos/search?
b) The price mechanism in the context q=open+university+-
of different types of markets, including +invisible+hand+&&view=detail&mid=1D6059E
local, national and global markets 43445AB9AED7C1D6059E43445AB9AED7C&FOR
M=VRDGAR
1.3.2 Consumer 3 Price, income and cross

behaviour and demand elasticities of demand
a) The concepts of ‘price’, ‘income’ and Calculations are needed for this topic. Teachers will have to go through how to
‘cross-elasticities of demand’. For price elasticity of demand there are some on work out % changes clearly since
b) How to use formulae to calculate the following link: students often struggle in this area.
price, income and cross-elasticities of http://economicsonline.co.uk/Questions/PED.ht
demand. ml


6 1.3.2 Consumer 3 Price, income and cross
behaviour and demand elasticities of demand (continued)
c) Interpretation of numerical values of When teaching this relate to real-life examples, Avoid students making statements such
price elasticity of demand: e.g. university fees and elasticity of demand. as ‘in this case consumers react a lot to a
• perfectly price elastic demand Tutor2u may have good links, e.g. an article price change’.
• price elastic demand appeared on the BBC website on the effect of
• unitary price elastic demand higher university fees on demand for higher
• price inelastic demand education. Good for discussion on how PED will
• perfectly price inelastic demand. differ with respect to different types of
consumers as well as XED with overseas
d) The factors influencing price universities.
elasticity of demand:
• availability of substitutes Give each student a card with a good/service
• branding written on it. Get students to move to different
• percentage of total expenditure zones if they think:
• addictiveness of product  demand for their product is price
• durability of product. elastic/inelastic
 demand for their product is income
elastic/inelastic
Note: ask students to justify their decision.
Then get students to group with other
goods/services if they think they have a
substitute or complementary relationship. Do
they think it is weak or strong?
e) How to calculate total revenue. In worksheets try to relate questions to It is useful to clarify that total revenue is
f) How price elasticity of demand varies particular contexts in the real world, e.g. how a not the same as profit. Also stress that
along a straight line demand curve. private dentist practice could make use of YED with movements along a demand curve,
(Note: the significance of elasticities of data for private dental implants for low income price and quantity demanded always
demand to firms and the government, earners, medium income earner and above move in opposite directions. What we are
in terms of the imposition of indirect average income earners. looking at here is total revenue; not
taxes and subsidies, could be taught quantity demanded!
following 1.3.4.4)
g) The relationship between price Get students to work out from price and quantity
elasticity of demand and total revenue. demanded data what the relationship is.
h) Interpretation of numerical values of
income elasticity of demand:
• perfectly income elastic demand
• income elastic demand
• income inelastic demand
• perfectly income inelastic demand
• the distinction between normal
goods and inferior goods.


i) Interpretation of numerical values of
cross elasticity of demand. Significance
for the degree to which goods are:
• substitutes
• complements
• unrelated.
j) The significance of price, income and
cross-elasticities of demand for firms,
consumers and the government.
7 1.3.3 Supply 2 Price elasticity of supply
a) The concept of ‘price elasticity of Plenty of examples will be needed for this topic.
supply’. It is best to relate to real-world markets, e.g. a
b) Calculation and interpretation of farmer. Tutor2u has some good slide
numerical values of price elasticity of presentations.
supply:
• perfectly elastic supply
• elastic supply
• unitary elastic supply
• inelastic supply
• perfectly inelastic supply.
c) Factors that influence price elasticity A teacher worksheet can be prepared here to Students often confuse factors influencing
of supply: consolidate the work already covered. price elasticity of supply with those
• the time period influencing price elasticity of demand so it
• availability of stock/perishability is important to emphasise the difference.
• mobility of factors of production
• legal constraints
• capacity.
d) The distinction between the short
run and long run in economics and its
significance for price elasticity of
supply.
1.3.4 Price 1 Determination of market

determination equilibrium
Return to this topic (started in week 5). Give plenty of examples to ensure
Highlight how equilibrium price and students grasp the main principles.
quantity changes will depend upon
both:
• how much a demand or supply
curve shifts in a given situation
• the PED or PES on the curve in
which there is a movement along


8 2 Consumer and producer surplus
a) The distinction between consumer Use examples so students can see how the PED
and producer surplus. and PES affects the size of the consumer and
b) How changes in demand or supply producer surplus.
might affect consumer and producer
surplus.
4 Indirect taxes and subsidies

It might be useful to make up a hypothetical
a) The impact of indirect taxes on
example which students plot on graph paper.
consumers, producers and the
Make sure students can understand the
government.
Make up figures for price, Qd, Qs. Students plot mathematical calculations required.
b) The incidence of indirect taxes on
the initial graph. Then introduce a specific tax of
consumers and producers.
so many pounds per unit. See if students can
c) The impact of subsidies on
work out how to plot the new supply curve.
consumers, producers and the
Mathematical computation required. Use
government.
examples like this in worksheet exercises.
d) The incidence of subsidies on
consumers and producers.
1.3.2 Consumer 3 Price, income and cross

behaviour and demand elasticities of demand Look at data on how much revenue is raised by
j) The significance of price, the government from cigarette and alcohol
income and cross-elasticities of duties. Why are these goods taxed? Quick
demand for firms, consumers and discussion.
the government.


9 1.3.5 Market failure 1 Sources of market failure
a) Why market failure occurs: too much Provide some real world examples from Use this section to introduce the concept
or too little of a good is produced internet/media sources illustrating examples of of market failure and to identify types of
and/or consumed compared to the where the market fails to allocate resources market failure.
socially optimal level of output. efficiently. Tutor2 have an introductory video:
b) Sources of market failure: https://www.bing.com/videos/search?q=types
• externalities %20of%20market%20failure
• the free-rider problem; non- %20economics&qs=n&form=QBVR&sp=-
provision of public goods 1&pq=types%20of%20market%20failure
• imperfect market information %20economics&sc=2-
• moral hazard 33&sk=&cvid=F2987A20C4BD4E22A66476C60E
• speculation and market bubbles. DFA159
2 Positive and negative

externalities
a) The distinction between private Could make up hypothetical example for It is useful to point out to students that
benefits, external benefits and social students to plot graph. Could integrate some the efficient level of pollution is not zero.
benefits. discussion on how a money value could be Most pollutants of production are
b) The distinction between private placed on an external cost and the difficulties producing something useful (e.g. steel)
costs, external costs and social costs. with this. and pollution is a by-product of this
c) The distinction between: production, unless cleaner technology can
• external benefits of production Education is a good example: video clips useful be developed over time. At present, some
• external benefits of consumption to introduce BBC video clips on benefits of pollution is inevitable since the benefits of
• external costs of production university – get students to research benefits for steel to society justify it. Hence the
• external costs of consumption. a student of going to university and benefits for optimum output of steel will not eliminate
society in general. It is vital that students can pollution; it will just reduce it.
d) The use of diagrams, using marginal differentiate between private benefits and Although students need to understand the
analysis, to illustrate: external benefits of consuming education. four types of externality, diagrams are
• the external benefits from Healthcare, public libraries, local sports facilities only required for the external benefits of
consumption are also good examples to discuss. consumption and the external costs of
• the external costs from production production.
• the distinction between the market It may be helpful to integrate methods of
and social optimum positions; correcting market failure as you go along
identification of the welfare loss or – meaning weeks 9, 10 and 11 are
gain areas. integrated.
e) The impact of externalities in various

contexts:
• transport
• health
• education
• environment
• financial.


10 1.3.5 Market failure 3 Non-provision of public goods
a) The distinction between public and Discuss whether there is such a thing as a public Only private goods and public goods need
private goods: good. Do this by giving students a selection of to be considered.
• private goods: rival and excludable goods/services and get them to say whether
• public goods: non-rival and non- they are private goods or public goods. Are they
excludable. non-rivalrous or non-excludable or do they only
b) Why public goods may not be contain elements of both
provided by the private sector making  a playground
reference to the free-rider problem.  broadcasting
 a firework display
 police protection
4 Imperfect market information

a) The distinction between symmetric Give students scenarios to discuss to feedback to
and asymmetric information. class – who knows more and what will be the
With information gaps, it is fairly quick to
b) The significance of information gaps. effect?
link methods to correct this type of
c) How imperfect market information  a private dentist tells you that you need a
market failure.
may lead to a misallocation of filling
resources in various contexts:  a second-hand car salesman tells me the car
• healthcare is a good runner
• education  the seller of a pension scheme who says the
• pensions future will be well provided for
• insurance.  the cigarette manufacturer who does not
inform potential consumers of the true
health risk from smoking
Education could be used again in context of

individuals misunderstanding the true benefits
for themselves. Similarly, students could be
asked to consider why it is hard to decide how
much healthcare insurance you need; how much
should be saved for a pension.
5 Moral hazard
a) How moral hazard can occur. Relate to the experience of the 2008 financial
b) The impact of moral hazard on crisis and bank bailouts.
Moral hazard occurs when one party takes
consumers, producers, workers and
more risks knowing that another party will
governments in:
bear the cost of those risks.
• insurance
• banking.


6 Speculation and market bubbles
a) How market bubbles may arise. For example, the US subprime mortgage market
b) The impact of market bubbles on was based on speculation that US house prices
consumers, producers, workers and would continue to rise. Similarly, these concepts
governments in various contexts: can be related to bull markets on the stock
• housing exchange.
• stocks and shares.
11 1.3.6 Government 1 Purpose and methods of
intervention in government intervention
markets a) The purpose of government Possible examples to use include: Stress that government intervention is to
intervention, including reference to  resources on the internet relating to carbon try and move the market equilibrium to
market failure. tax, etc. the optimum level.
b) Methods of intervention:  subsidies for firms in the green sector
• indirect taxation (ad valorem and  Scotland’s attempts to introduce a minimum
specific) price for alcohol
• subsidies
• maximum and minimum Discuss relative advantages and disadvantages
(guaranteed) prices. of a carbon tax compared with using pollution
• tradeable pollution permits permits.
• extension of property rights
• state provision
• regulation
• provision of information.
c) Contexts in which governments may Review news websites on themes such as

intervene: ‘Industry warns carbon tax could cause huge job
• health losses’ and research EU Emissions Trading
• housing Scheme.
• education
• transport
• environment
• energy
• agriculture
• commodities.


12 2 Government failure
a) ‘Government failure’ as intervention
that results in a net welfare loss.
b) Causes of government failure: Discuss theory and then get students to research
• information gaps some key examples which illustrate government
• lack of incentives failure – see examples of markets from content
• unintended consequences guidance booklet.
• excessive administrative costs
• moral hazard.
1.3.1 Introductory 6 Free market economies, mixed

concepts economy and command economy
This provides an opportunity to Students could be put into groups to work on a Having considered markets and market
consider/revise different economic poster display – some allocated free market failure, it should be easy for students to
systems economies and some allocated command identify the advantages and
a) The distinction between free market, economies. Give them a sheet to clarify what disadvantages of different economics
mixed and command economies sorts of things they must include. Students to systems.
b) The advantages and disadvantages present poster to class. A summary sheet could
of free market and command be provided of the key points after the
economies presentations.
c) The role of the state in a mixed
economy
13 Revision Practice exam-style questions from Unit Refer to Paper 1 Introduction to markets and
1 content market failure in the sample assessment
Consolidate work from autumn term. materials.

Unit 2: Year 12 Terms 2/3

1 Quantitative methods Review quantitative skills Many past exam questions will include examples of The quantitative skills are detailed in
Develop an understanding of index graphs/tables/data which can be cut and pasted to Appendix 7 of the specification (page
numbers in different contexts (e.g. provide a resource sheet. 69).
production, productivity, unit labour cost,
etc.)
Include CPI data as this will help to Find data on CPI and nominal GDP and show Many quantitative skills may be
explain real and nominal GDP in 2.1.1 students how to work out real GDP (at constant tested in multiple choice questions
and 2.1.2 prices). and short answer questions. Students
could practise using macroeconomic
data and charts to interpret and
calculate.


2 2.3.1 Measures of 1 Economic growth
economic performance a) The rate of change of real Gross Provide students with data sheets which show The objective is to introduce the
Domestic Product (GDP) as a measure of measures of economic performance of an economy measures of performance indicators.
economic growth and living standards. over the last 10–15 years. Data may be obtained This means parts of future lessons
b) Gross National Income (GNI) as an from World Bank, IMF or OECD. For example: can be spent building up a simple
alternative measure of national income. http://www.principalglobalindicators.org/? understanding of macroeconomics by
c) The distinction between the following sk=E30FAADE-77D0-4F8E-953C-C48DD9D14735 discussing items in the news –
measures of GDP/GNI: suggest 10 minutes at the end of
• real and nominal https://data.worldbank.org/indicator some lessons. The rest of topic 2.1
• total and per capita has been integrated later on in the
• value and volume. term once tools of analysis have been
d) Comparison of GDP/GNI rates of Students can research data from 2 or more covered.
growth between countries and over time. contrasting countries and compare their
f) The distinction between positive performance in terms of GDP.
economic growth rates and negative
economic growth rates.
g) The concept of ‘recession’ as two It should be possible to introduce the concept of
consecutive quarters of negative recession having looked at data from a few
economic growth. countries.
2 Inflation
a) The concepts of inflation, deflation and Provide students with examples so that they Make sure students can identify both
disinflation. understand how a weighted index is calculated. advantages and disadvantages of
b) Calculating inflation using a consumer inflation.
price index (CPI), including role of
weighted basket of goods and services.
c) Limitations of the CPI as a measure of
the rate of inflation.
d) The producer (wholesale) price index Students could be asked to identify the relationship
as an indicator of future trends in the between the producer price index and CPI over a
rate of inflation. period of time.
3 Employment and unemployment

a) How unemployment is measured, Students could watch the ONS Video Summary, Make sure students can recognise
using the International Labour ‘Latest on the Labour Market’. some positive effects of
Organization (ILO) definition. unemployment. For example,
structural unemployment enables
d) The distinction between Discuss with students how under-employment resources to move into more
unemployment and underemployment. became a feature in the aftermath of the 2008 productive areas.
e) The significance of changes in rates of Global Financial Crisis.
employment, unemployment and
economic inactivity.


3 2.3.2 Aggregate 4 Balance of payments
demand (AD) a) Components of the balance of Get students to look at data. The IMF, World Bank,
payments, with particular reference to and OECD are good sources.
the current account. Ask students to identify key industries for a
b) The distinction between deficits and country’s exports – this can be linked to
surpluses in the trade in goods and comparative advantage in Unit 4.
services balance.
c) The distinction between balance of At this stage it is useful to get an overview of the
payments deficits and surpluses on the current account deficits/surpluses for an economy
current account. over the last 10–15 years.
1 The characteristics of AD
a) The concept of AD. This should be relatively
b) Components of aggregate demand: straightforward after the Unit 1.
• C + I + G + (X−M) =
• the AD curve.
c) The distinction between a movement
along, and a shift of, the AD curve.
4 2 Consumption (C)
a) Influences on consumption: Get students to think about their own consumption Students should be able to explain
• disposable income behaviour as well as their families. Get them to the wealth effect of changes in house
• interest rates discuss what they think are the main factors which and share prices.
• consumer confidence determine how much someone spends (a month for
• level of welfare payments example).
• wealth effects
• availability of credit.
b) The relationship between savings and Ask students to consider what might make people
consumption. save more or less. Then they should be asked to
c) The definition of the ‘savings ratio’. explain the link between consumption and savings.
d) Causes and effects of changes in the
savings ratio. It would also be useful to look at articles relating to
changes in house price rise articles and then to
discuss how this may impact on consumption of
households.


3 Investment (I)
a) The distinction between gross If time allows, link to PPF. Clarify
investment and net investment. when the PPF would shift outwards.
b) Influences on investment:
• the rate of economic growth Make sure students understand the
• interest rates term investment in an economic
• business confidence and expectations sense.
• availability of credit
• tax on company profits. The policies provide a link to material
to be covered in Unit 4.
c) Government policy to promote
investment:
• tax relief
• subsidies
• reductions on the rate of corporation
tax.
4 Government expenditure (G)

a) Influences on government Integrate quick discussion on justifying each of
expenditure: these public spending components.
• fiscal policy Look at government expenditure for a country over
• the level of economic activity period of time. Explain why it might increase during
• correction of market failures a recession and why governments have tried to
• political priorities. reduce government expenditure when tx revenue
has been lower.
5 Net trade balance (X-M)
a) The impact on the net trade balance of Try to use real world examples when teaching this.
changes in: For example, get students to find out how a slower
• real income rate of economic growth in China affected the
• exchange rates export sales of other countries.
• state of the world economy
• degree of protectionism Outline the meaning of protectionism. Ask students
• non-price factors. to find examples of protectionism by countries.


5 2.3.3 Aggregate 1 The characteristics of AS
supply (AS) a) The concept of AS. This should be relatively
b) The AS curve. straightforward after the micro
c) The distinction between a movement course.
along and a shift of the AS curve.
2 Short-run AS (SRAS)
a) Factors influencing SRAS. Changes in: At the end of teaching short-run AS curves it would Many students will shift the SRAS
• costs of raw materials and energy be useful to create a worksheet with different curve the wrong way: this is an area
• exchange rates economic events over the last 10 years. Ask of confusion. For example, they will
• tax rates. students to decide whether the SRAS or AD curve shift the supply curve to the right for
will shift and which way the shift will occur. Note a rise in costs!
that some events could cause both curves to shift.
For some events, they should sketch the diagram.
3 Long-run AS
a) Different shapes of AS curve: It is worth drawing a range of AD, AS curves
• Keynesian without labelling and get students to label them
• classical. appropriately
b) Factors influencing LRAS. Changes in:

• the state of technology This should be kept fairly general since specific Make sure students appreciate that
• productivity examples of supply-side polices are covered later. the factors causing changes in LRAS
• education and skills are same as those which cause a PPF
• government regulations and tax to shift.
• demography and net migration
• competition policy


6 2.3.4 National income 1 National income
a) The circular flow of income The following resource is useful not only for
b) The distinction between income and introducing the circular flow but also for injections
wealth and withdrawals as well as inflation.
https://www.slideshare.net/ajmccarthynz/31-intro-
to-macro-and-measuring-gdp
2 Injections and withdrawals

a) The distinction between injections and Give several scenarios to see if more or less money
withdrawals. will flow in the circular flow of income. For example,
b) Injections: a consumer in UK buying a German car, the
• investment Government spending money on building a new
• government expenditure road, the Government charging a new tax on sugar.
• exports.
c) Withdrawals:
• savings
• taxation
• imports.
d) The impact of net injections into, and
net withdrawals from, the circular flow of
income.
3 Equilibrium level of real national

output
a) The concept of equilibrium level of real Prepare a worksheet which integrates what has Stress that one person’s spending is
national output. happened in an economy over the last 10 years. another person’s income!
b) Causes of changes in equilibrium real Get students to analyse the expected impact on the
national output, as a result of shifts in AD economy of different events or policy changes, Highlight that withdrawals are taking
and/or AS curves. using AD/AS diagrams to show the predicted money out of the system each time.
outcome. This helps to introduce real world
application and builds up real world knowledge.


4 The multiplier
a) The multiplier and multiplier process. To explain the multiplier it is a good idea to Ensure students are clear that the
b) Marginal propensities and their effects hypothetically hand one of the students some higher the MPC, the higher the
on the multiplier: money. They then spend some, but the rest has to multiplier and the higher the amount
• the marginal propensity to consume be put back into a bucket. The next person then leaking out, the lower the multiplier.
(MPC) continues the process. Money is passing round the This can be demonstrated with the
• the marginal propensity to save economy over a course of a year. At each stage class activity.
(MPS) clarify the effect of this injection on the income
• the marginal propensity to tax (MPT) being created.
• the marginal propensity to import
(MPM). Practise these calculations with examples. See the
c) Calculations of the multiplier using sample assessment materials for a guide as to the
the formula 1/(1-MPC) and 1/MPW, types of questions which may be asked.
where MPW = MPS + MPT + MPM.
d) The significance of the multiplier for
shifts in AD and the level of economic
activity.
7 2.3.1 Measures of 2 Inflation

economic performance e) Causes of inflation: It is useful to highlight years where the cause of AD/AS diagrams should be used to
• demand-pull inflation has been predominately cost push or illustrate the causes of
• cost-push demand pull. inflation/deflation.
• excessive growth of money supply.
f) Causes of deflation: The following is a brief video on the effects of
• falling aggregate demand (AD) inflation.
• increase in aggregate supply (AS) https://www.bing.com/videos/search?
• fall in the money supply. q=effecs+of+inflation&&view=detail&mid=8D8DA0
g) Effects of inflation and deflation on: E8400C9BE3C0D58D8DA0E8400C9BE3C0D5&FORM
• consumers =VRDGAR
• the government
• firms The following video look at the effects of deflation:
• workers https://www.tutor2u.net/economics/reference/cons
• income distribution equences-of-deflation
• investment
• competitiveness
• the current account of the balance of
payments.


8 3 Employment and unemployment
b) The causes of unemployment: Link occupational immobility to structural Highlight the relative negative effects
• frictional unemployment. This concept will be revisited in Unit of some types of unemployment. For
• seasonal 3 in the section on labour markets. Students could example, structural unemployment is
• structural be shown shipbuilding decline video clips for likely to have long-term detrimental
• demand deficiency example. effects compared to frictional.
• real wage inflexibility.
The contrasting view between Keynesians and
c) The effects of unemployment on: classical economists might be mentioned with
• consumers cyclical unemployment. Use AD/AS diagrams to
• firms demonstrate.
• workers
• public finances Get students to brainstorm their ideas. It is a good
• resource utilisation and production idea to discuss the effects in a relevant context e.g.
possibility frontier increased use of robots. Students could look at the
• society. following video:
f) The significance of net migration for https://www.bing.com/videos/search?
employment and unemployment. q=effects+of+unemployment+on+an+economy&&v
iew=detail&mid=586BB612DE777AC1E237586BB61
2DE777AC1E237&FORM=VRDGAR.
Students could also examine the effects of the rise
in long term unemployment and/or youth
unemployment by looking at newspaper websites.
Students could also research the effect of the high
unemployment during the Great Depression.
Students could research the positive impact on the
UK economy of immigration from the EU.
1 Economic growth
Recap spec point d) from week 2 Compare rates of growth from data - causes of
e) The concept of Purchasing Power growth will follow later.
Parities (PPPs) in making international
comparisons of real GDP/GNI. Make up a simple example (perhaps between two
fictional countries) so that students can grasp the
concept. Then look at PPP adjusted data and make
sure students are clear how to interpret it.


9 2.3.5 Economic growth 1 Causes of growth
a) The distinction between actual and Link back to work on PPF and work done on shifting Link to the dangers of over-reliance
potential growth. AD and AS to the right. on consumption; particularly if fuelled
b) Actual growth caused by an increase by consumer debt, as happened in
in the components of AD. A good link would be China’s export-led growth. The the UK prior to the crash.
c) The importance of international trade BBC News website would be useful to look at for
for export-led growth. this.
d) Causes of potential growth:
• domestic investment and foreign
direct investment (FDI)
• innovation
• growth in size of labour force,
including net migration
• the degree of competition.
e) The importance of productivity for the
rate of economic growth.
2 Benefits of growth
a) Possible benefits of growth: Remember to point out that in the
• higher living standards real world the characteristics may not
• lower unemployment seem to tally. For example, in 2008,
• increased profits for firms UK inflation was relatively high – time
• higher levels of investment lag effect.
• increased tax revenues
• improved public services.
3 Costs of growth
a) Possible costs of growth:
• opportunity costs
• environmental costs
• balance of trade deficits
• increased inequality
• inflation.
4 Output gaps
a) The difference between actual growth The following Tutor2u video explains the output gap
rate and long-term trends in growth. in a UK context.
b) The distinction between positive and https://www.bing.com/videos/search?
negative output gaps. q=output+gap&&view=detail&mid=DD10E68D1E0B
c) Characteristics of positive and 5531C30FDD10E68D1E0B5531C30F&FORM=VRDGA
negative output gaps. R
d) Difficulties of measuring output gaps.


10 2.3.1 Measures of 1 Economic growth
economic performance h) The limitations of using GDP/GNI to From data, get students to write a report to Clarify some of the main problems of
compare living standards between compare the living standards between two countries using GDP to compare living
countries and over time. of their choice using a range of data. standards over time and between
i) National happiness and wellbeing: countries.
• indicators of national happiness and Students could look at the Economic and Social
wellbeing Research Council website and the resources on the It is important to stress that there is
• the relationship between real Social Science for Schools website – a good a feeling amongst economists that
incomes and subjective happiness factsheet on money and happiness is available. there are a new set of indicators to
debate.
A good starting point might be to get students to
design a questionnaire which could be used to help Stress that there is some move
identify the main factors which contribute to towards happiness as a guide to
happiness/unhappiness for a person in the 16–18 public policy, rather than using GDP.
age group. In the next lesson, ask them to justify
why certain types of questions were asked. See if
there is common agreement about range of factors
which affect whether a typical person will be
happy/unhappy.
Students could also look at:

 The UN World Happiness Report:
http://worldhappiness.report/ed/2017/
 Newspaper articles, for example The
Telegraph: Denmark ‘the world’s happiest
country’.
 Happiness by R Layard is an accessible
book.
The Economist: ‘No longer the dismal science’ is a

good introductory article.


2.3.6 Macroeconomic 4 Macroeconomic demand-side
objectives and policies policies
Link policies to how macroeconomic Given what has been covered already, students Link to injections/withdrawals and to
objectives can be achieved could be asked to identify the main objectives of the impact on AD.
a) Demand-side policies: government policy.
• the distinction between fiscal and
monetary policy
• the distinction between reflationary
and deflationary policies.
b) Fiscal policy instruments: The following websites are useful:

• government spending and taxation. Economic and Social Research Council
Social Science For Schools – useful factsheet on
‘The Budget’.
11 4 Macroeconomic demand-side
policies
Link policies to how macroeconomic BBC Learning Zone Class Clip: ‘What is money and
objectives can be achieved how does the Bank of England manage it’ provides
c) Monetary policy instruments: a good three-minute introduction to monetary
• interest rates policy.
• asset purchases to increase money
supply (quantitative easing) Students find quantitative easing
The Bank of England video on quantitative easing is
• changes in lending criteria quite difficult to follow. It is useful to
useful:
• reserve asset (liquidity) integrate visual resources to help
https://www.bing.com/videos/search?
requirements. their understanding.
q=quantitative+easing+youtube&&view=detail&mid
=CF0417A7DF415630DB81CF0417A7DF415630DB8
d) The role of central banks in the 1&FORM=VRDGAR
conduct of monetary policy:
• implementation of monetary policy Students need to be aware of the role
Strengths and weaknesses can be analysed partly
• achieving an inflation target of fiscal and monetary policy in
by the trade-offs they incur with other
• as banker to the government managing an economy. In particular
macroeconomic objectives. The concept of
• as banker to the banks – lender of they need to know what aspects of
undershooting or overshooting can be illustrated
last resort. these policies may have made the
with AD/AS diagrams. Link to output gaps and
situation worse and which are
discuss how overshooting will cause accelerating
e) Strengths and weaknesses of different considered to have been broadly
inflation.
demand-side policies. effective. An overview is required.
Links can also be made to Theme 1, government
failure.


12 3 Macroeconomic supply-side
policies
Link policies to how macro objectives can Use recent policies as much as possible as
be achieved examples.
a) Supply-side policies designed to
increase productivity, competition and It would be useful to link to some issues which are
incentives. of currently topical in the country in which you
reside. It is important to distinguish between
b) Free market policies: free market and interventionist
• deregulation of product and labour policies. This distinction will be
markets revisited in Unit 4 when considering
• privatisation measures to promote growth and
• reduction in taxation development.
• changing the levels of welfare
payments
• cutting the costs of bureaucracy for
firms.
c) Interventionist policies:
• investment in education, training and
skills
• incentives to encourage investment:
tax incentive or subsidies
• infrastructure investment
• finance for business start-ups
• regional policy.
13 3 Macroeconomic supply-side
policies In discussing the likely strengths and
d) Strengths and weaknesses of different weaknesses of supply-side policies,
supply-side policies students should make sure they link
their analysis to the achievement of
2 Possible conflicts between the stated aim of the policy.
macroeconomic objectives
a) Inflation and unemployment, including Use data from a country(s) to determine whether There are many potential conflicts
the short-run Phillips curve. such conflicts exist. between macroeconomic objectives
b) Economic growth and protection of the and students should be confident in
environment. using AD/AS analysis to explain,
c) Inflation and equilibrium on the illustrate and evaluate these.
current account of the balance of
payments.
d) Economic growth and income equality.


14 Revision and AS level Revision and exam practice for AS level
exam preparation examinations and/or mock examinations
for Unit 1 and Unit 2.
For many centres, there will still be some weeks left once students have returned from the examination period in any AS exams they are sitting or after internal school exams.
If this is the case, it is important to start the scheme of work from Year 13. This will allow scope for more consolidation of concepts covered and more revision time at the end
of the course.

Unit 3: Year 13 Term 1

1 3.3.1 Types and size 1 Types of businesses
of businesses a) Types of businesses: Examples from the locality/nation should be used to The distinction between public
• private sector organisations illustrate the different types of businesses. (state) enterprises and private
• state-owned enterprises (public sector) enterprises must be made clear
• for-profit and not-for-profit
organisations
• co-operatives
• joint ventures.
2 Size of businesses
a) The size of businesses: Students should brainstorm their ideas.
• SMEs (small- and medium-size
enterprises)
• large corporations.
b) How businesses grow: Students could then be grouped and asked to prepare a Examples should be used to
• organic growth poster or handout integrating types of growth with support understanding of how
• merger/takeover: specific companies. They should consider the advantages businesses grow.
• forward vertical integration of different types of growth for these companies.
• backward vertical integration Disadvantages or potential disadvantages could then be Students need to consider the
• horizontal integration discussed. advantages and disadvantages
• conglomerate integration. of each method of growth.
c) Advantages and disadvantages of each

type of merger/takeover.
d) Constraints on business growth:

• size of market
• access to finance
• owner objectives
• government regulation and
bureaucracy.
e) Reasons some firms tend to remain small The following website looks at why some firms remain
and others grow. small:
https://www.economicshelp.org/blog/737/economics/ben
efits-of-small-firms/
f) Impact of growth of firms on businesses,
workers and consumers.


g) Demergers:
• reasons for demergers The reasons for demergers should be discussed. It is
• impact of demergers on businesses, useful to consider real cases - Tutor2u, media websites
workers and consumers. are likely to have examples. See for example:
https://www.bing.com/videos/search?
q=demergers&&view=detail&mid=
B113742287DA074CBC41B113742287DA074CBC41&FORM=VRD
GAR
2 3.3.2 Revenue, 1 Revenue
costs and profits a) Formulae to calculate and understand the Students will already know from Unit 1 the price and TR
relationship between: movement patterns depending on whether PED is elastic
• total revenue or inelastic. Set up data showing price (AR) against
• average revenue output and then get students to work out TR at different
• marginal revenue output levels as well as MR as output increases. Plot AR,
b) Price elasticity of demand and its TR and MR against output. Make sure students can
relationship to revenue concepts including understand the relationship between the three. From
calculations. their knowledge, students should be able to work out
how PED varies along a downward sloping demand curve.
2 Costs
c) Formulae to calculate and understand the Plenty of examples need to be provided. It would be
relationship between: useful to set up ‘fill in the gaps’ tables so that students
• total cost can clearly work out a range of cost data from some
• total fixed cost being provided (for example working out MC if they know
• total variable cost the total cost against output).
• average (total) cost
• average fixed cost
• average variable cost
• marginal cost
a) Derivation of short-run cost curves from
the assumption of diminishing marginal
productivity
b) The law of diminishing returns For a fun and physical activity play ‘The Tennis Ball Make sure students grasp the
d) The relationship between: Game’. Details are on bized and The Economics Network relationship between law of
• marginal product and marginal costs websites. This activity is designed to give students a diminishing returns and MC.
• average products and average cost practical understanding of short-run production functions
• total product and total cost and the law of diminishing returns. It can easily be Students find it hard to grasp
• short-run and long-run costs. extended to demonstrate the relationship between why the long-run AC curve does
c) Relationship between short-run and long- production and costs, revenue and profit. It is a simple not pass through the lowest
run average cost curves way of illustrating total, average and marginal concepts. point on each short-run AC
curve. This needs careful
explanation.


3 3 Economies and diseconomies of scale
a) The relationship between long-run cost Good introductory video on BBC Bitesize GCSE Business Emphasise that economies and
curves and economies/diseconomies of Studies: ‘Economies and diseconomies of scale’. diseconomies of scale relate to
scale. the long-run when all factors of
b) Minimum efficient scale. It is a good idea to relate examples to context of real production are variable (unlike
c) Distinction between internal/external firms. diminishing returns which relate
economies of scale. to the short-run when there is
d) Sources of internal economies of scale: Use matching exercises so that students have to identify at least one fixed factor).
• financial the economy of scale from the description/example
• technical provided.
• managerial
• marketing
• purchasing
• risk bearing.
Ensure that students understand
e) Sources of external economies of scale: Case studies would be helpful to illustrate both internal the distinction between internal
• availability of skilled labour and external economies of scale. and external economies of scale.
• access to transport links
• sharing knowledge.
f) Sources of diseconomies of scale:

• communication problems
• coordination problems
• X-inefficiency.
4 Profits and losses Make sure students grasp that a

a) The distinction between normal profit, Set up tables with output, MR and MC data and get firm is making decisions about
supernormal profit and losses. students to work out the addition to profit/loss by how much to produce at the
b) Short-run and long-run shutdown points. producing an extra unit of output. They can also work margin, i.e. is it worth
out the total profit at each level of output. Further producing (and then selling) an
columns could be added such as TR, TC, AR. Get extra unit of output.
students to plot.
It would also be useful to provide data on output against

TR and TC. Then get students to fill in profit, AR, MR, AC,
MC and supernormal profit/loss per unit. Get students to
plot these on a graph and mark profit maximising level of
output.


4 3.3.1 Types and size 3 Business objectives
of businesses a) Different business objectives: Tutor2u often has an activity that tests a student’s
• profit maximisation understanding of working out fixed, variable, average
• revenue maximisation and marginal costs and then total, average and marginal
• sales volume maximisation. revenue. Using a 'Smartwatch' case study as the
• behavioural theories: satisficing. backdrop, the activity asks students to calculate costs
and revenues and then work out the profit maximisation
and sales maximisation points. This sort of exercise is
very useful and this link is:
https://www.tutor2u.net/economics/blog/costing-
revenue-activity-to-set-in-class-or-for-homework
Another link is:

https://www.tutor2u.net/economics/reference/profit-
maximisation
b) The significance of the divorce of Stress principal-agent problem
ownership from control for business creates divergent aims.
objectives: the principal-agent problem.
c) Formulae for different business
objectives:
• profit maximisation
• revenue maximisation
• sales volume maximisation.
3.3.3 Market
1 Efficiency
structures and Make sure efficiency concepts
a) The concepts of:
contestability are brought into the discussion
• allocative efficiency
• productive efficiency for each market structure. If
• dynamic efficiency desired, these could be first
• X-inefficiency introduced after considering
• efficiency/inefficiency in different perfect competition.
market structures.


5 3.3.3 Market 3 Perfect competition
structures and a) Assumptions of perfect competition. Set up a numerical example to highlight the relationship Stress the assumptions of
contestability b) Profit maximising equilibrium in the short between AR and MR when a firm is a price taker. This perfect competition and which of
run and long run. helps to reinforce understanding as to why AR=MR. those are necessary to conclude
c) The short-run shutdown point. that firms will be price takers.
d) Productive and allocative efficiency in the Get students to explain why the demand curve will be
short run and long run. downward sloping and not perfectly elastic.
Lots of practice drawing diagrams is important. Get

students to explain each step of drawing the diagrams.
4 Monopolistic competition Stress the only assumption

a) Assumptions of monopolistic competition. Again, give your students plenty of practice in drawing which is different from perfect
b) Types of product differentiation: the relevant diagrams. competition. Make sure students
• physical – product features understand the similarities and
• marketing – advertising, packaging differences between perfect
• distribution – shop, online, telephone. competition and monopolistic
c) Profit-maximising equilibrium in the short competition.
run and long run.
d) Productive and allocative efficiency in the
short run and long run.


6 3.3.3 Market 2 Concentration ratio
structures and a) Calculation of n-firm concentration ratios. Give contrasting examples so that students can calculate
contestability b) The significance of concentration ratios. concentration ratios and then consider the significance
for how firms might behave.
5 Oligopoly
a) Assumptions of oligopoly. Get students to research the main examples of barriers Stress the key assumptions:
b) Barriers to entry and exit: to entry. They should also find examples which link to interdependence and players
• economies of scale different types of industries. Alternatively give groups adopt a risk adverse strategy.
• limit pricing different types of industries which come under the
• patents umbrella of oligopoly and get them to come up with the
• branding main types of barriers to entry in these industries.
• sunk costs
• legal.
c) Interdependence of firms: Students like the prisoner’s dilemma game. Go through Only simple game theory is
• simple game theory – two firm/two this carefully. A useful resource from The Economics required, as indicated in the
outcome model Network is: specification. However, students
• reasons for collusive and non-collusive https://www.economicsnetwork.ac.uk/showcase/vazquez should be able to relate it to
behaviour _prisoners contexts provided in questions.
• cartels Then move onto a pricing behaviour game (high price,
• price leadership low price) which can show why firms end up pricing low
• price wars. despite both being better off by pricing high. This then
demonstrates attractiveness of collusion but also why
these agreements often break down – the incentive to
cheat.
d) Costs and benefits of collusion to There are plenty of resources on Tutor2u if students Limit pricing is designed to deter
producers, consumers, workers and want to do some independent research on games theory the entry of new firms into an
governments. as extension work. industry whereas predatory
e) Price competition: pricing is used by to eliminate
• price wars Students should find real world examples of price wars, competitors from the market.
• predatory pricing cartels, collusion and price leadership in this market.
• limit pricing.
f) Non-price competition: Using examples of different products, ask students to

• advertising and branding explain why they might prefer one brand of a product
• quality rather than another (apart from price).
• endorsement
• product placement
• after-sales service.
g) Costs and benefits of price and non-price
competition to firms, consumers, employees
and suppliers.


7 3.3.3 Market 6 Monopoly
structures and a) Assumptions of monopoly. Try to find real world examples. For example: ‘Monopoly Try to find real world examples.
contestability b) Barriers to entry and exit. power at the station car park’ video clip on Tutor2u
c) Profit maximising equilibrium. highlights price discrimination as well as monopoly power Throughout market structures
d) Costs and benefits of monopoly to firms issues. make sure diagrams are clearly
and consumers. labelled.
e) The concept of ‘natural monopoly’ and its Further examples of monopoly power may be found in
implications. the following presentation:
f) Conditions necessary for third-degree https://www.bing.com/videos/search?q=Monopoly+power++examples
price discrimination.
g) Costs and benefits of price discrimination Students could research price discrimination in the EU
to firms and consumers. vehicle hire market.
h) Productive, allocative and dynamic Assign firms, consumers, employees and suppliers to
efficiency. different groups. Get students to quickly research
costs/benefits of monopoly to a particular stakeholder.
They should then present their ideas to the class.
8 8 Contestability
a) Characteristics of contestable markets. Find examples of industries with low sunk costs versus
b) Implications of contestable markets for examples with high sunk costs.
behaviour of firms on:
• profitability
• pricing decisions (limit pricing).
c) Costs and benefits of contestability for

firms and consumers.
d) The significance of sunk costs for
contestability.
7 Monopsony
a) Assumptions and conditions for a A wide range of contexts can be found to illustrate
monopsony to operate. monopsony power. Show students: ‘Supermarkets
b) Costs and benefits of a monopsony to hurting suppliers’ BBC video clip.
firms, consumers and employees. Students could also think about Amazon’s monopsony
power in the book publishing market for example.


9 3.3.5 Government 1 Government intervention in product
intervention markets
a) The case for government intervention. A good approach generally in this section is to look at In each case it is important to
b) Measures to control monopolies and case studies/examples where Competition and Markets consider what action has been
mergers: Authority or regulators have acted. Plenty of examples taken and why the action is
• price regulation are available on Tutor2u and newspaper websites. needed.
• profit regulation
• quality standards Difficulties of setting price caps, performance targets,
• performance targets etc. are useful to raise here. Again, give real world
• referral to regulatory authorities examples, for example rail.
• legislation to control mergers and
takeovers.
c) Measures to promote competition and Some of these measures will

contestability: have been covered in Unit 2.
• tax incentives and grants to promote
small businesses and FDI
• deregulation
• privatisation
• competitive tendering for public sector
contracts
• trade liberalisation.
10 1 Government intervention in product
markets (continued)
d) Measures to protect suppliers and Look at real world examples.
employees:
• local sourcing of raw materials and
components
• employment legislation to protect
workers from exploitation
• barriers to entry of foreign firms
• restrictions on the monopsony power of
firms
• nationalisation.
e) The impact of each measure on:

• price
• profit
• efficiency
• quality
• choice.


Could link to Stockholm Syndrome: regulatory capture is Make sure students recap
f) Limits to government intervention: a similar phenomenon! Also link to government failure. knowledge from 1.3.6.2
• regulatory capture Asymmetric information/information gaps will have been government failure.
• asymmetric information/information covered in Unit 1.
gaps
• inadequate resources
• lack of regulatory power.
11 3.3.4 Labour 1 Demand for labour
markets a) Factors that influence the demand for Use real examples to illustrate the reasons for the MRP theory is not explicitly in
labour to a particular occupation: difference in wage rates in different occupations. the specification but it may be
• demand for the final product (labour as taught to increase
a derived demand) understanding.
• productivity of labour
• price of the product When constructing diagrams, it
• wage rate relative to price of capital. is worth emphasising the need
to refer to wages and not price
b) Factors that influence the elasticity of on the y axis.
demand for labour
It is also worth highlighting that
2 Supply of labour in product markets households
a) Factors that influence the supply of Once students understand the term ‘supply’ in this are consumers and firms
labour to a particular occupation: context, pick different occupations and get students to suppliers but in the labour
• size of population identify the different factors. market firms demand labour
• net migration and households supply labour.
• income tax rates Make the link to structural unemployment.
• level of welfare benefits
• government regulations
• trade unions.
b) Factors that influence the elasticity of

supply of labour.


12 3 The determination of wage rates in
competitive and non-competitive markets
a) Labour market equilibrium. Teacher structured worksheets can help to focus This is an opportunity to revise
b) Causes of changes in the equilibrium wage students. supply and demand analysis (from
rate and quantity of labour as a result of shifts Unit 1) – this time in the context
in demand curves and supply curves. Link to different types of occupations to illustrate of the labour market.
c) Wage setting in the public sector/state- why wage differentials arise between occupations.
owned enterprises.
4 Market failure in the labour market

a) Causes and consequences of the Use websites to highlight current labour market This is an application of market
geographical immobility of labour. issues, for example, youth unemployment, under- failure (from Unit 1) so provides
b) Causes and consequences of the employment, zero-hours contracts and impact of an opportunity to revise this
occupational immobility of labour. immigration on labour market. concept.
Link public sector wage setting to other policy

targets, e.g. deficit targets, size of public sector.
Use labour market diagrams and apply to different

occupations.
2 Government intervention in labour
markets
3.3.5 Government a) The case for government intervention. This may be related back to the causes of Again, this part of the specification
intervention b) Types of government intervention in labour unemployment which was covered in Unit 2. provides the opportunity to revise
markets and their effects: maximum and minimum prices
• maximum wage controls Devise worksheets for students to examine the which were first introduced in Unit
• minimum wage controls impact of each type of government intervention – 1.
• direct taxes e.g. national insurance some of this should be revision from work covered
contributions; corporation tax in Unit 1 but in a labour market context.
• measures to reduce geographical and
occupational immobility of labour
• measures to reduce discrimination and
exploitation.
13 Unit 4: Developments Start Unit 4 in this week
in the Global
economy 1 Characteristics of globalisation
a) Increase in trade as a proportion of GDP. Set up the main issues and then get real world Make sure students are aware of
4.3.1 Causes and b) Increase in importance of transnational examples. advantages and disadvantages.
effects of companies (TNCs) and foreign direct
globalisation investment (FDI). Plenty of articles on the issues are available from
c) Increase in migration. newspapers or the BBC website.


2 Causes of globalisation
a) Factors contributing to increased Students could develop case studies of particular
globalisation in the last 50 years: countries to identify the factors contributing to
• trade liberalisation globalisation.
• increased number and size of trading
blocs
• political change (breakdown of the Soviet
system and opening up of China)
• reduced cost of transport and
communications
• increased significance of TNCs.
b) FDI by TNCs:
• reasons for FDI
• the impact of FDI on recipient countries.
3 Effects of globalisation
a) Possible benefits of globalisation: Students could investigate a country where firms Remind students that the impact
• increased economic growth have relocated to another country and consider the of FDI is similar to that of
• increased tax revenue costs and benefits to each country. domestic investment. However,
• economies of scale they should also understand the
• lower prices and higher consumer surplus implications for the balance of
• more choice payments. This may be taught as
• higher living standards. part of section 4.3.3.1.
b)
Possible costs of globalisation:
• displaced workers
• exploitation of workers
• environmental impact of increased trade
• loss of tax revenue from transfer pricing
• increased income inequality within
countries
• the influence of TNCs on domestic
economic policy.
14 Revision and exam Revision of Unit 3

preparation

Theme 4: Year 13 Terms 2/3
Week Topic Content Suggested teaching activities/resources Teaching points to note

1 4.3.2 Trade and the Continuation of Unit 4 from the previous term
global economy
1 Specialisation and comparative
advantage
a) Benefits and costs of specialisation and Students could watch The Open University video It is important to ensure that
trade in the international context. clip: ‘60 seconds adventure in economics: The students understand the difference
b) The theory of comparative advantage: Principle of Comparative Advantage’. between absolute and comparative
• the distinction between absolute and And/or students could play the International Trade advantage.
comparative advantage Game:
• assumptions underlying the theory of https://www.economicsnetwork.ac.uk/showcase/sl Make sure students are clear on
comparative advantage oman_game the assumptions which underlie the
• limitations of the theory of comparative law of comparative advantage.
advantage. Produce a teacher structured worksheet with
numerical examples which demonstrate absolute
and comparative advantage. Use of PPFs to
illustrate. It can be extended to numerically show
how total output can be higher after specialisation
compared to self-sufficiency.
2 Patterns and volume of world trade

a) Factors influencing patterns of trade Look out for interactive quizzes on BBC website, Students should be encouraged to
between countries and causes of changes in for example: ‘What’s the deal with trade’. look at how patterns have changed
these patterns: Discuss the wider potential advantages and and the reasons for these changing
• impact of emerging economies disadvantages of trade. This provides opportunities patterns, particularly with
• changes in comparative advantage to recap concepts covered in Units 1 and 3. reference to growing importance of
• growth in trading blocs and bilateral trading blocs and the growth of
trading agreements Highlight the main trends and find examples of emerging economies.
• changes in relative exchange rates data to support it.
• changes in protectionism between
countries. The You Tube video ‘How patterns of trade have
changed’ provides a useful summary of the issues.
b) Changes in trade flows between countries,
and the reasons for these changes. The ONS has some very useful data on UK trade
with EU member states and non-EU countries.


2 4.3.2 Trade and the 3 Terms of trade
global economy a) Understanding and calculation of the terms Tutor2u is likely to have recent examples, e.g. Ensure students understand that
of trade. according to The Economist, the great commodity the terms of trade relates to the
b) Factors influencing a country’s terms of boom caused by the industrialisation of China and prices of imports relative to the
trade, changes in: India provided an unprecedented boost to prices of exports.
• relative inflation rates the terms of trade for some developing countries.
• relative productivity rates Useful to make particular reference to the impact
• relative labour costs of changes in a country’s terms of trade, for
• the exchange rate developing countries.
• the prices of imports and exports.
c) The impact of changes in a country’s terms Get students to contrast the possible impact of a
of trade on: change in the terms of trade of a country
• export revenues exporting primary products with that of a country
• living standards importing primary products when there is a
• balance of trade. boom/slump in commodity prices.
4 Trade liberalisation and trading blocs

Good idea to refer back to
a) The role of the World Trade Organization Highlight some of the main regional trade
unrealistic assumptions made in
(WTO) in trade liberalisation. agreements.
law of comparative advantage.
b) Types of trading blocs: Students could, in pairs, investigate a trading bloc
• free-trade areas and make a presentation to the class.
• customs unions
• common markets
• economic and monetary unions.
c) Costs and benefits of membership of a The students could build on their previous
trading bloc: investigation by considering the costs and benefits
• trade creation of their chosen trading bloc.
• trade diversion
• costs and prices
• economies of scale
• transaction costs
• movement of factors of production.
d) Possible conflicts between trading blocs
and the WTO.


3 5 Restrictions on free trade
4.3.2 Trade and the
a) Reasons for restrictions on free trade: Students should brainstorm ideas – many ideas
global economy
• to protect infant and geriatric industries will stem from previous theme areas.
• to protect domestic industries and
employment
• to protect national security
• to prevent dumping
• to correct a deficit on the current account
of the balance of payments
• to raise revenue.
b) Types of restrictions on free trade: Use of diagrams useful especially for tariffs. It is
• tariffs important for students to be able to compare and
• quotas contrast the different type of protectionist
• non-tariff barriers measures.
• subsidies to domestic producers.
c) Impact of protectionist policies on: Students should research current examples of
• consumers protectionist measures used and consider the
• producers justification for their use. Resources are available
• governments on the BBC website.
• living standards
• equality.
4.3.3 Balance of
payments, exchange 1 Balance of payments
rates and (Introduction)
international a) Components of the balance of payments: Some of this is consolidation of Unit 2 content.
competitiveness • the current account Give students examples of transactions to classify
• the capital and financial accounts. where they belong on the balance of payments and
whether they represent a credit or debit.
2 Exchange rates
a) The distinction between fixed, managed For the capital and financial
and floating exchange rates. Provide examples of countries which use different accounts, the focus should
d) The distinction between revaluation and exchange rate systems. The following video especially be on the flows of FDI
appreciation of a currency. provides a useful introduction to exchange rates: between countries.
https://www.videos/search?q=exchange+rate+systems+cartoon&&view=detail&mid=
e) The distinction between devaluation and 057A365B66AD9B5CA754057A365B66AD9B5CA754&FORM=VRDGAR
depreciation of a currency.


4 2 Exchange rates
c) Factors influencing floating exchange Prepare a worksheet using real factors which have
rates: affected the value of the 2 currencies over the last
• relative interest rates 10–15 years, and then get students to explain the
• relative inflation rates (purchasing power effect this will have on the value of the pound
parity theory) (ceteris paribus). Students should sketch supply
• current account of the balance of and demand diagrams for their country’s currency.
payments
• strength of the economy Show, using a supply pound and demand pound,
• capital flight how a fixed exchange rate could be achieved
• expectations and speculation through government intervention in foreign
• global factors, e.g. falls in commodity currency transactions and the use of interest rates.
prices.
b) Government intervention in currency China’s artificial manipulation the value of the
markets through: yuan is also a good example.
• foreign currency transactions
• the use of interest rates This needs careful explaining. It would be useful to
• quantitative easing. find examples in which the value of the pound has
changed, leading to the expected change in the
current account.
f) The impact of changes in exchange rates
on: Relate impact of changes in exchange rates to cost Make sure students grasp that the
• the current account of the balance of push as well as demand pull inflation. volume of exports and imports will
payments (with reference to Marshall- move in the opposite direction to
Lerner condition and to the J-curve Get students to brainstorm causes. the price change, but the value
effect) It would be useful to use news articles to look at (price x quantity) could move in
• the capital and financial accounts of the causes for specific countries of a deficit or surplus. either direction.
balance of payments
• economic growth Pair up students. Give each pair a specific
• employment and unemployment measure. They must then discuss how it would
• rate of inflation work, what might limit its effectiveness and wider
• FDI flows. impact on other macro objectives. They can then
g) Competitive depreciations/devaluations feedback to class. Teachers can then extend each
and their consequences. point and students should take notes as the points
are raised.
1 Balance of payments
(Continued)
b) Causes of deficits and surpluses on the
current account.
c) Measures to reduce a country’s imbalance Important to stress that measures
on the current account. to reduce imbalance should be
d) The significance of global trade targeted carefully to the cause.


imbalances.


5 3 International competitiveness
a) Measures of international competitiveness:
• relative productivity rates Look at data on unit labour costs. Make sure
• relative unit labour costs students are clear what this means. Look at
• relative export prices. productivity of UK compared to international rivals.
b) Factors influencing international

competitiveness:
• productivity Students are likely to be able to brainstorm ideas.
• quality of human capital
• exchange rate Link to China’s export-led growth and consider the
• wage and non-wage costs benefits and costs of this.
• regulations
• quality of infrastructure
• non-price factors.
c) Measures to increase international

competitiveness:
• policies to improve education and training Get students to discuss ways of reducing
• investment incentives costs/increasing efficiency as well as focusing on For every measure, students need
• privatisation and deregulation measures to engineer a depreciation of the to develop their evaluation skills,
• measures to reduce the exchange rate of currency. e.g. what might limit the
the currency effectiveness of these
• trade liberalisation. This provides an opportunity to consolidate work in measures/conditions necessary for
Unit 2 on supply-side policies as well as previous them to be effective, wider
d) The significance of international work on exchange rates. implications on economy, etc.
competitiveness:
• advantages for an economy of being
internationally competitive
• problems for an economy of being
internationally uncompetitive.


6 4.3.4 Poverty and 1 Poverty
inequality a) The distinction between absolute and It would be useful to consider how relative poverty Make sure students understand
relative poverty. might fall despite the Gini coefficient rising. median income.
b) Measures of absolute and relative poverty.
c) Causes of changes in absolute and relative
poverty: Get students to draw Lorenz curves from a data Some quantitative requirements
• economic growth set. here.
• education and training
• welfare benefits Students are likely to be able to brainstorm their
• changes in tax structure ideas.
• structural changes in the economy
• aid Give students data on global absolute poverty or
• civil wars and conflict. by region. Get them to describe the trend. Get
them to research why absolute poverty rates have
fallen over time.
Give examples of a country who has had relative

poverty rates rise and another where they have
fallen. Get them to research why the change in
relative poverty has occurred.
2 Inequality
a) The distinction between wealth inequality ‘UK Income and Wealth Inequality’ is a good video
and income inequality. on Tutor2u. It shows how both income and wealth
inequality has changed since 1950s.
b) Measurements of inequality: Look at the debate between those who argue that
• the Lorenz curve inequality is essential in a capitalist system to This section may be useful in
• the Gini coefficient. provide incentives to create conditions necessary revising free market economies
c) Causes of inequality in income and wealth for economic growth, versus those who argue that and in developing evaluation skills.
within countries and between countries. inequality itself constrains economic growth. For
d) The impact of inequality on: example, look at articles on how inequality impacts
• enterprise on barriers to social mobility. Also explore
• incentives evidence that inequality impacts negatively on
• savings economic well-being.
• education Give students data on Gini coefficient for two years
• migration or two countries and get students to draw the
• life expectancy. relevant Lorenz curves.
Get students to look at the contrasting view

e) The impact of economic change and between capitalism creating levels of inequality
development on inequality. which are unsustainable versus Kuznet’s view.


f) The significance of the free market There are likely to be many resources on Tutor2u
4.3.5 The role of the economy (capitalism) for inequality. since it is a growing topic area.
state in the It would be useful to pair students and give each
macroeconomy 4 Macroeconomic policies pair a specific measure to reduce poverty and
a) How governments use fiscal policy, inequality. Get them to explain how the measure
monetary policy, exchange rate policy, would work, to what extent it would be an effective
supply-side policies and direct controls to: measure overall and how it may conflict with other
• reduce poverty and inequality macro or policy objectives.
Tutor2u has a useful video on ‘Measuring
Inequality’ which covers and revises many of the
key issues.


7 4.3.6 Growth and 1 Measures of economic development
development in a) The three components of the Human
developing, emerging Development Index (HDI): education, health, The following link provides a brief explanation of Make sure students are clear about
and developed income; how they are measured. how the HDI is measured: the distinction between economic
economies b) Advantages and limitations of the HDI in http://hdr.undp.org/en/content/human- growth and economic development
comparing living standards between countries development-index-hdi - hence measurement will be
and over time. different.
c) Other measures of development: The World Bank has development indicator data
• the percentage of adult male labour in for individual countries over time.
agriculture Students should be able to
• access to clean water differentiate clearly between
• energy consumption per capita economic growth and economic
• access to internet per thousand of development.
population
• access to mobile phones per thousand of
population
• access to doctors per thousand of
population.
2 Constraints on growth and

development
a) The impact of economic factors in different There are plenty of resources on Tutor2u - some
countries: have video links. See for example: ‘Rwanda’s
• volatility of commodity prices journey to prosperity’.
• primary product dependency (the
Prebisch-Singer hypothesis) The World Bank also has a browse by country
• savings gap (the Harrod-Domar model) feature where, with some search, you can get a
• foreign currency gap good overview on how much developmental
• capital flight progress has been made and what constraints still
• demographic factors (size and age exist for that country.
distribution of population; migration)
• debt (household and overseas) It would be useful for students to be given
• access to credit and banking individual countries to research how development
• infrastructure is being achieved and what constraints still exist.
• education and skills. This can then be collated into a resource for
everyone.
2 Constraints on growth and

development (continued)
b) The impact of non-economic factors in Students could investigate examples of countries
different countries: whose growth and development have been limited
• corruption by non-economic factors especially wars and
• poor governance corruption.


• civil wars
• migration
• terrorism.
8 3 Measures to promote growth and
development
a) The impact of market-orientated It is useful to devise a worksheet for students Many of these strategies involve
strategies: which recaps their understanding of these policies which have already been
• trade liberalisation strategies, many of which will have been covered covered in the course, so this
• promotion of FDI in previous parts of the course. section can also be viewed as a
• removal of government subsidies way to revise/consolidate some
• privatisation other areas of the course.
• floating exchange rate systems
• microfinance schemes.
Students will not have covered buffer stocks
b) The impact of interventionist strategies:
previously.
• development of human capital
• protectionism
• managed exchange rates
• infrastructure development
• promoting joint ventures with TNCs
• buffer stock schemes.


9 3 Measures to promote growth and
development (continued) Information on tourism and development can be
c) The impact of other strategies: found at:
• industrialisation (the Lewis structural https://www.tutor2u.net/economics/reference/tour
dual-sector model) ism-and-economic-development
• development of tourism
• development of primary industries Information on overseas aid and development can
• debt relief be found at:
• aid. https://www.tutor2u.net/economics/reference/ove
rseas-aid-and-development
d) The role of international institutions: The websites of these organisations provide much Students are not expected to study
• the World Bank relevant material which outlines their role e.g. the role of international institutions
• the International Monetary Fund (IMF) http://www.worldbank.org/en/what-we-do and non-government organisations
• non-government organisations (NGOs). http://www.imf.org/en/About in depth but they should have an
awareness of their role.
1 Public expenditure You can get lots of charts in this area to display to
a) The distinction between capital the class and to aid discussion. Search for ‘images
expenditure, current expenditure and transfer for composition of public spending between
4.3.5 The role of the payments. countries’.
state in the b) Reasons for the changing size and pattern
macroeconomy of public expenditure in an international Students are likely to be able to brainstorm ideas It is important to integrate real
context: with direction. world examples where possible
• changing incomes (both UK and other countries).
• changing age distributions
• changing expectations.
c) The significance of differing levels of public The following link provides a useful summary of
expenditure as a proportion of GDP on: some of the issues:
• productivity and growth https://www.economicshelp.org/blog/2634/econo
• crowding out mics/private-sector-vs-public-sector/
• levels of taxation.


10 2 Taxation Make sure diagrams can be used
a) The distinction between, and examples of, where appropriate. Indirect taxes
direct and indirect taxes. will have been covered in Unit 1.
b) The distinction between progressive,
proportional and regressive taxes.
c) The economic effects of changes in direct For more able students a discussion of income and Make sure students can interpret
and indirect tax rates on: substitution effects could be included into the graphical data, for example charts
• incentives to work incentives to work section. on cyclically adjusted data.
• tax revenues: Laffer curve analysis Other than the Laffer curve, the economic effects
• income distribution of changes in tax rates on the macro objectives
• real output and employment could be done by a teacher-structured worksheet,
• the price level since all relevant concepts should be familiar.
• the trade balance
• FDI flows.
3 Public sector borrowing and public

sector debt The Financial Crisis of 2008 resulted in many Make sure that students
a) The distinction between: countries using fiscal policy as a Keynesian tool to understand the difference between
• fiscal deficits and fiscal surpluses stimulate the economy. Examples of how this was a fiscal deficit and the national
• automatic stabilisers and discretionary done could be highlighted. debt.
fiscal policy
• a fiscal deficit and the national debt It would be useful to discuss cyclical and structural
• structural and cyclical fiscal deficits. deficit data for UK.
b) Factors influencing the size of fiscal deficits Use examples of countries which have faced/are
and national debts. facing large fiscal deficits and national deficits to
c) The significance of the size of fiscal deficits explain why these have occurred.
and national debts:
• impact on interest rates
• debt servicing
• intergenerational equity.
4 Macroeconomic policies
a) How governments use fiscal policy, It would also be useful to discuss the Eurozone
monetary policy, exchange-rate policy, crisis in terms of why the austerity programme
supply-side policies and direct controls to: was thought necessary in many countries in the
• reduce fiscal deficits and national debts Eurozone.


11 4 Macroeconomic policies
a) How governments use fiscal policy, Students need to understand the implications of
monetary policy, exchange-rate policy, changes in interest rates and quantitative easing
supply-side policies and direct controls to: and the reasons why their impact may be limited.
• control the rate of inflation Use examples currently in the news to consider
• respond to external shocks in the global how governments respond to external shocks.
economy Make sure students can illustrate global shocks
using AD/AS diagrams – a worksheet would be
useful.
b) Use of demand-side policies in response to Relate examples to main policy tools used by
the global financial crisis of 2008. governments. It is a good idea to relate to policies
c) Measures to control TNCs: used in the financial crisis and why it was not clear
• to reduce tax avoidance to what extent they would work.
• the regulation of transfer pricing
• limits to government ability to control
TNCs.
d) The impact of policy changes on: Again, the use of current examples would be
• local economies useful.
• national economies
• the global economy.
e) Problems facing policymakers when Students could be given scenarios of, say, external
applying policies: shocks and then be asked to devise policies and to
• inaccurate information determine the problems associated with making
• risks and uncertainties decisions.
• inability to control external shocks.
12 Revision of Units 3 and 4
Revision and exam
Exam preparation
preparation
13 Revision of Units 3 and 4
Revision and exam
Exam preparation
preparation

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INTERNATIONAL ADVANCED LEVEL

IAS/ IAL Economics: Scheme of Work

© Pearson Education Ltd 2018. 1

Unit 1: Year 12 Term 1

Week Topic Content Some suggested activities/resources Teaching points to note

© Pearson Education Ltd 2018. 2

Week Topic Content Some suggested activities/resources Teaching points to note

Discuss the opportunity cost of going to

4 Production possibility frontiers

© Pearson Education Ltd 2018. 3

Week Topic Content Some suggested activities/resources Teaching points to note

Students could consider growth rates in different

c) The role of financial markets: Students are required to have a basic

© Pearson Education Ltd 2018. 4

Week Topic Content Some suggested activities/resources Teaching points to note

6 Free market, mixed and

© Pearson Education Ltd 2018. 5

Week Topic Content Some suggested activities/resources Teaching points to note

© Pearson Education Ltd 2018. 6

Week Topic Content Some suggested activities/resources Teaching points to note

1.3.3 Supply 1 The supply curve

Note: students often confuse production

© Pearson Education Ltd 2018. 7

Week Topic Content Some suggested activities/resources Teaching points to note

1.3.2 Consumer 3 Price, income and cross

© Pearson Education Ltd 2018. 8

Week Topic Content Some suggested activities/resources Teaching points to note

© Pearson Education Ltd 2018. 9

Week Topic Content Some suggested activities/resources Teaching points to note

1.3.4 Price 1 Determination of market

© Pearson Education Ltd 2018. 10

Week Topic Content Some suggested activities/resources Teaching points to note

4 Indirect taxes and subsidies

1.3.2 Consumer 3 Price, income and cross

© Pearson Education Ltd 2018. 11

Week Topic Content Some suggested activities/resources Teaching points to note

2 Positive and negative

e) The impact of externalities in various

© Pearson Education Ltd 2018. 12

Week Topic Content Some suggested activities/resources Teaching points to note

4 Imperfect market information

Education could be used again in context of

© Pearson Education Ltd 2018. 13

Week Topic Content Some suggested activities/resources Teaching points to note

c) Contexts in which governments may Review news websites on themes such as

© Pearson Education Ltd 2018. 14

Week Topic Content Some suggested activities/resources Teaching points to note

1.3.1 Introductory 6 Free market economies, mixed

© Pearson Education Ltd 2018. 15

Unit 2: Year 12 Terms 2/3

© Pearson Education Ltd 2018. 16

Week Topic Content Some suggested activities/resources Teaching points to note

3 Employment and unemployment

© Pearson Education Ltd 2018. 17

Week Topic Content Some suggested activities/resources Teaching points to note

© Pearson Education Ltd 2018. 18

Week Topic Content Some suggested activities/resources Teaching points to note

4 Government expenditure (G)

© Pearson Education Ltd 2018. 19

Week Topic Content Some suggested activities/resources Teaching points to note

b) Factors influencing LRAS. Changes in:

© Pearson Education Ltd 2018. 20

Week Topic Content Some suggested activities/resources Teaching points to note

2 Injections and withdrawals