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Topics Covered in Unit 3 - Economic objectives and the role of government

3.1 Economic growth

  • explain what is meant by economic growth
  • calculate and explain how economic growth is measured with reference to Gross Domestic Product (GDP) and GDP per capita
  • analyse recent and historical GDP data
  • analyse the determinants of economic growth, including investment, changes in technology, size of workforce, education and training, availability of natural resources and government policies
  • evaluate the costs and benefits of economic growth, including the impact on economic, social and environmental sustainability

3.2 Low unemployment

  • explain what is meant by employment and unemployment
  • explain how unemployment is measured using the Claimant Count
  • calculate the unemployment rate
  • analyse recent and historical unemployment figures
  • explain the types of unemployment, including cyclical, frictional, seasonal and structural unemployment
  • evaluate the causes and consequences of unemployment for individuals, regions and the government

3.3 Fair distribution of income

  • explain what is meant by the distribution of income, including different types of income and the difference between income and wealth
  • calculate income and wealth
  • evaluate the causes of differences in the distribution of income and wealth and the consequences for an economy

3.4 Price stability

  • explain what is meant by price stability and inflation, including the difference between real and nominal values
  • explain how inflation is measured using the Consumer Price Index (CPI)
  • calculate the effect of inflation on prices
  • analyse recent and historical inflation figures
  • evaluate the causes of inflation and the consequences for consumers, producers, savers and the government

3.5 Fiscal policy

  • explain purposes of government spending and sources of government revenue, including direct taxes and indirect taxes
  • explain what is meant by a balanced government budget, budget surplus and budget deficit
  • explain what is meant by fiscal policy and how it can be used to achieve economic objectives
  • calculate and analyse how taxes and government spending can affect markets as well as the overall economy
  • evaluate the costs, including opportunity cost, and the benefits of fiscal policy on the economy to achieve economic objectives
  • evaluate economic consequences of measures to redistribute income and wealth, including progressive taxes

3.6 Monetary policy 

  • explain what is meant by monetary policy and how it can be used to achieve economic objectives
  • analyse how monetary policy can affect growth, employment and price stability
  • evaluate the effects of monetary policy on consumer spending, borrowing, saving and investment

3.7 Supply side policies

  • explain what is meant by supply side policy and how it can be used to achieve economic objectives
  • evaluate the costs, including opportunity cost, and the benefits of supply side policies for the economy

3.8 Limitations of markets

  •  explain what is meant by positive and negative externalities
  •  explain government policies to correct positive and negative externalities, including taxation and subsidies, state provision, legislation and regulation and information provision
  •  evaluate the use and impact of government policies to correct positive and negative externalities
  •  evaluate the costs, including opportunity cost, and the benefits of government policies to correct positive and negative externalities 

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