JC A Level H1 Economics Syllabus (2023)
Not only do we provide you with the latest 2023 A Level H1 Economics Syllabus but also relevant links to some of our resources as you run through this syllabus.
(Click on if you are looking for H2 Economics Syllabus instead.)
The 2023 A Level H2 Economics Syllabus aims to develop in students:
1. an understanding of fundamental economic concepts, theories and principles, and of the tools and methods of analysis used by economists
2. the ability to use the tools and methods of economic reasoning to explain and analyse economic issues, and to evaluate perspectives and decisions of economic agents
3. the habit of reading critically, from a variety of sources, to gain information about the changing economic activities and policies at the national and international levels (This is why we have our economics blog posts and also sharings on our facebook page.)
4. the ability to use evidence in making well-reasoned economic arguments to arrive at rational and considered decisions.
The syllabus comprises three core themes:
● The Central Economic Problem
● Markets
● The National Economy
| Theme 1: The Central Economic Problem |
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| 1.1 Scarcity as the Central Economic Problem 1.1.1 Scarcity, choice and resource allocation a. The Central Economic Problem is scarcity, arising from limited resources and unlimited wants b. Scarcity implies that choices have to be made in the allocation of resources between different uses c. When choices are made, trade-offs and opportunity costs are incurred d. The concepts of scarcity, choice and opportunity costs can be explained from the perspectives of different economic agents (consumers, producers and governments) e. Production Possibility Curve can be used to illustrate scarcity, choice, opportunity cost, productive efficiency, full employment, unemployment or under-utilisation of economic resources and changes in the productive capacity of an economy. 1.1.2 Decision-Making Process of Economic Agents (Learn from a funny blog post here: Real World Economics Applied: To HK or Not) a. Understanding objectives of rational economic agents ● Consumers – maximisation of utility (satisfaction) ● Producers – maximisation of profits ● Governments – maximisation of social welfare b. In the pursuit of their objectives, economic agents have to be:
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Concepts and Tools of Analysis
● Scarcity, choice and opportunity cost
● Production possibility curve (PPC)
● Marginalist principle or approach to weighing costs and benefits
Theme 2: Markets
Theme 2.1 Price Mechanism and its Applications
2.1.1 Price mechanism and its Functions
a. How the price mechanism allocates scarce resources in the free market through signalling, incentive and rationing functions
2.1.2 Demand and Supply Analysis and its Applications
a. Market demand as a summation of individual demand
b. Market Supply as a summation of individual supply
c. Changes in price of the good/service itself cause a movement along the demand/supply curve
(See video on here)
d. Changes in non-price determinants of demand and supply cause shifts in the demand/supply curve
e. The market equilibrium price and quantity are determined by the interaction of demand and supply
f. Changes in demand and supply can affect equilibrium price and equilibrium quantity, consumer expenditure, producer revenue
g. These outcomes can be affected by price elasticities of demand and supply
Check out our Economics Summary notes on PED and PES
2.1.3 Government Intervention in Markets
a. Governments may intervene in markets in the form of taxes, subsidies, price controls (maximum and minimum prices) and quantity controls (quotas)
b. Government intervention in markets can affect the equilibrium price and quantity, consumer expenditure and producer revenue
c. Impact of government intervention on markets may be affected by price elasticities of demand and supply
Concepts and Tools of Analysis
- Price mechanism
- Ceteris paribus
- Change in demand vs change in quantity demanded
- Change in supply vs change in quantity supplied
- Demand and its determinants – non-price factors
- Supply and its determinants – non-price factors
- Market equilibrium – equilibrium price and quantity
- Market disequilibrium – shortage and surplus (See Market Adjustment Process Video)
- Price elasticity of demand
- Price elasticity of supply
- Consumer expenditure and producer revenue
- Taxes and subsidies
- Price controls – maximum and minimum prices
- Quantity controls – quotas
- Application to the real-world markets, including the labour market, is required
Theme 2.2 Microeconomic Objectives and Policies
2.2.1 Governments’ Microeconomic Objectives
a. Governments’ microeconomic objectives are efficiency and equity
b. Efficiency in markets occurs when the social optimum is achieved, where Marginal Social Benefit (MSB) = marginal Social Cost (MSC), maximising society’s welfare
c. Deadweight loss results when the social optimum is not achieved = can be explained as the reduction in net benefit to society when output level is not at the social optimum
d. Efficient resource allocation may not result in equitable outcomes
e. Equity occurs when there is fairness in the distribution of essential goods and services
2.2.2 Market Failure and its Causes
a. Market failure occurs when the free market is unable to allocate resources efficiently
b. Markets may fail in terms of
• non-provision of public good due to characteristics of non-excludability, non-rivalry and non-rejectability
• non-socially optimal levels of goods and services due to the presence of externalities and/or information failure
2.3.3 Microeconomic Policies
a. Microeconomic policy decisions undertaken by governments to achieve microeconomic objectives in relation to efficiency and equity
b. Policy measures including taxes and subsidies, quotas and tradeable permits, joint and direct provision, rules and regulations, and public education in achieving efficiency and equity
c. Effectiveness of policy measures in achieving efficiency and equity
Concepts and Tools of Analysis
- Market failure
- Allocative efficiency
- Deadweight loss
- Equity
- Marginal private benefit and cost
- Marginal external benefit and cost
- Marginal social benefit and cost
- Social versus private (market) optimum
- Over-consumption and production
- Under-consumption and production
- Public goods– Non-excludability, non-rivalry and non-rejectability
- Positive and negative externalities
- Merit and demerit goods
- Information failure due to consumer ignorance
- For externalities, a two-diagram approach will suffice – showing that MSC is higher than MPC for negative externalities, and MSB is higher than MPB for positive externalities.
Check out our resource providing many microeconomics and macroeconomics definitions
Theme 3: The National Economy
Theme 3.1 Introduction to Macroeconomics Analysis
3.1.1 Aggregate Demand (AD) and Aggregate Supply (AS)
a. Aggregate Demand (AD) and its components: consumption (C), investment (I), government spending (G) and net exports (X – M)
b. How AD is affected by changes in the determinants of C, I, G and (X – M)
c. How Aggregate Supply (AS) is affected by its determinants
d. How interaction of AD and AS determines equilibrium level of national output and general price level
Concepts and Tools of Analysis
- Aggregate demand and determinants of C, I, G and (X – M)
- Aggregate supply
- Determinants of aggregate supply
- National output
- General price level
- An awareness of an increase in AD having a multiplied effect on national income will suffice.
- An understanding that trade affects standard of living significantly in Singapore through its impact on aggregate demand and aggregate supply is required
Theme 3.2 Macroeconomics Objectives and Policies
3.2.1 Standard of living and Macroeconomic Indicators
(Check out our Standard Of Living Infographic here)
a. Economies are primarily concerned with improving the standard of living
• Standard of living involves material and non-material aspects, as measured by real national income per capita taking into account other indicators such as income distribution, leisure time, quality of environment
b. Standard of living is affected by an economy’s ability to achieve macroeconomic objectives in terms of sustainable and inclusive economic growth, low unemployment, and price stability
c. Macroeconomic indicators
• Indicators of economic performance include real Gross Domestic Product (GDP) or Gross National Income (GNI), real GDP or GNI per capita, unemployment rate, Consumer Price Index (CPI)
• Human Development Index (HDI) as an indicator to reflect standard of living
• Gini coefficient as an indicator to reflect income distribution
d. Comparison of living standards over time and over space (between economies)
Check out our video on whether RGNI per capita can measure Standard of Living
3.2.2 Macroeconomic issues
a. Macroeconomic issues and their causes:
- Undesirable Economic growth – persistently low or negative, unsustainable, non-inclusive due to factors such as changes in AD or AS, environmental degradation, inequitable income distribution (Check out our Notes on Economic Growth).
- Unemployment – demand-deficient, structural, frictional due to factors such as lack of AD, technological changes, mismatch of skills, transition between jobs
- Price instability – demand-pull inflation, cost-push inflation, deflation due to factors such as changes in AD, costs of production, productive capacity
Various videos on Inflation, Unemployment and balance of trade can be found here
b. Consequences of undesirable economic growth, unemployment, price instability, persistently large balance of trade deficit or surplus for economic agents on the standard of living
3.2.3 Macroeconomic Policies
a. Macroeconomic policy decisions undertaken by governments to achieve macroeconomic objectives in relation to living standards
b. Policy measures and their effectiveness in achieving macroeconomic objectives:
• Fiscal policy – How discretionary fiscal policy can influence the level of economic activities and living standards through government spending and taxation
• Monetary policy – How monetary policy can influence the level of economic activities and living standards through the management of exchange rates (case of Singapore) and interest rates
• Supply-side policies – How supply-side policies can improve quantity, quality and mobility of factors of production to increase the productive capacity of an economy and hence affect living standards
Concepts and Tools of Analysis
- Standard of living
– Material and non-material well-being
– Gross Domestic Product (GDP) and Gross National Income (GNI) – Human Development Index (HDI) - Income distribution – Income inequality– Gini coefficient
- Economic growth
- Actual and potential growth
- Sustainable growth
- Inclusive growth
- Full employment and unemployment
- Demand-deficient unemployment
- Structural unemployment
- Frictional unemployment
- Price stability
- Demand-pull inflation
- Cost-push inflation
- Deflation
- Consumer price index (CPI)
- Nominal and real concepts
- Discretionary fiscal policy
- Government budget surplus and deficit
- Monetary policy
- Interest rates
- Exchange rate appreciation and depreciation
- Supply-side policies
- An understanding that governments around the world focus on different macroeconomic objectives, depending on the state of the economy and the level of development of the country is required.
- An awareness of the desirability for a government to maintain fiscal sustainability over the long term is required.
- An understanding of how transfer payments can improve income distribution and help achieve inclusive growth is required.
- An understanding that economic growth, price stability and full employment, and therefore the standard of living of an economy can be affected by changes in global economic conditions is required.
- An understanding of nominal and real concepts is required. An understanding of how index numbers are interpreted, including the base year and use of weights, is required. Calculation of index numbers and national income is not required.
- An understanding of the meaning of the Gini coefficient (using the Lorenz curve) and the variation of the coefficient between 0 and 1 is required.
