What is Economics? Economics studies what is going on around you now. It provides a framework to help you understand who gets what and why. The A Level concentrates on how a market economy should work and what happens when it fails. Below are some of the topics you will study and area which questions will cover. • The central problem of all economic societies Scarcity, choice, allocation of resources What is produced, how it is produced and for whom Different economic systems. • Demand Theory What we demand, why and what affects our demand for goods and services. • Costs and supply What firms produce, how and why. • Market Equilibrium Concept of equilibrium, price mechanism, benefits of the market. Market failure. Green economics. • Factors of Production Land, labour, capital, enterprise. How rent, wages, interest and profit are determined. Why some people are paid more than others. • Money and Banking What is money? How banks create money. Functions of financial institutions. How are interest rates determined? How can Government policies affect the money supply? Fiscal and monetary policy. • International Economics Why do we trade? What do we trade and with whom? Balance of payments. Exchange rates. Trade agreements. Economics of the European Union. • How income and expenditure is determined in the whole economy What we consume/invest/export/ and how it affects what we produce as a country. Unemployment, inflation, economic growth and balance of payments Government objectives. Britain’s post-war economic performance. • The Economic Role of Government Why do Government and Local Authorities provide certain goods and services? (NHS, libraries, swimming pools). How can the Government and local authorities raise money (taxes)? Which taxes are ‘good’ and which are ‘bad?’ Government spending and borrowing. National debt.