GCE Getting Started - Pearson qualifications · Web viewd) Banker to the banks – lender of last resort The Bank of England’s own website and the BBC’s can provide some useful

AS and A LevelEconomics B

SCHEME OF WORKAS and A level thematic approach

AS and A level Economics B scheme of work

AS and A level Economics B: scheme of work

Introduction

This document provides a sample scheme of work for AS and A level Economics B that 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 AS. If a more integrated approach is adopted then this scheme can be adapted to fit – the integrated course planner, provided separately, could be used as a guide for re-organising this scheme of work.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 are at times 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 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, provided separately, 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 2014. This material is not copyright free.2


Theme 1: Year 12 autumn term

Week Topic Content Some suggested activities/resources

Teaching points to note

1 1.1 Scarcity, choice and potential conflicts

1.1.1 – The economic problema) The problem of scarcity (where there

are unlimited wants and finite resources)

b) Choices and potential trade-offsc) The importance of opportunity costs to

consumers, producers and government

Most standard economics texts will cover this area well. Once the idea has taken hold, students can be asked how they make choices, and how they think a business or government makes choices. A range of scenarios can be introduced and the consequences of the choices (opportunity costs and trade-offs) developed. Opportunity cost can be related to students’ own experiences, such as staying on at school and going to university.YouTube has a range of useful clips that can be used to introduce the ideas and develop discussion.

The following are just some of the many useful websites that can provide teaching resources relevant to this specification:● www.macmillanhighered.com/catalog/

contentnew.aspx?title=13774● www.economicsuk.com/blog/ ● http://

economicsforteachers.blogspot.co.uk/● http://welkerswikinomics.com/blog/ ● www.economicsdegree.net/

enlightened-economists/● www.tutor2u.net ● www.bized.co.uk Throughout this course, real-life examples should be used to illustrate the theory. The exam papers will be based on actual businesses and economic scenarios. Students should illustrate their responses with relevant examples rather rely on generic answers.Stress that economics appears in both national and local news stories; it is therefore vital to start watching the news and reading newspapers.Businesses may have a range of objectives and not just one. Students should be able to evaluate the extent to which a particular objective may be important.As the business grows, market share and

1.2 Enterprise, business and the economy

1.1 Scarcity, choice and potential conflicts

1.2.3 – Factors of productiona) Enterprise b) Capital, land and labour:● premises● equipment● raw materials● managers and employees 1.1.2 – Business objectivesa) Different business objectives and

reasons for them:● profit maximisation● sales maximisation● satisficingb) Other objectives:● survival

Students can be asked to research examples of each of the business objectives, saying why they are important to that business.Further discussion can raise the relative importance of each one, and the extent to which they may or may not be compatible with each other.Some of these ideas share common ground with the work on entrepreneurs in topics 1.2.1 and 1.2.2.Using a local business will help to bring this to life.Students could produce an analysis of a business they are familiar with, identifying these categories.

© Pearson Education Ltd 2014. This material is not copyright free. 3

http://www.macmillanhighered.com/catalog/contentnew.aspx?title=13774

http://www.macmillanhighered.com/catalog/contentnew.aspx?title=13774

http://www.bized.co.uk/

http://www.tutor2u.net/

http://www.economicsdegree.net/enlightened-economists/

http://www.economicsdegree.net/enlightened-economists/

http://welkerswikinomics.com/blog/

http://economicsforteachers.blogspot.co.uk/

http://economicsforteachers.blogspot.co.uk/

http://www.economicsuk.com/blog/




● market share● cost efficiency● return on investment● employee welfare● customer satisfaction● social objectives

cost efficiency may become more important than survival. More ethical considerations, such as the impact on other stakeholders, should be examined, as should why some businesses have differing objectives. Social objectives and non-financial objectives, such as employee welfare and customer satisfaction, are becoming just as important for many businesses, especially in very competitive markets.

2 1.2 Enterprise, business and the economy

1.2.1 – Role of an entrepreneur in the economya) Creative destruction (organising factors

of production to create and set up an enterprise)

b) Making decisions to operate, expand and develop a business

c) Selling the output for more than the cost of the inputs (adding value)

1.2.2 – Entrepreneurial motivesa) Profit as an incentiveb) Non-financial motives: ethical stance,

social entrepreneurship, independence, home working

Using real-life examples of entrepreneurs is a good way to introduce this topic. There are many good case studies out there that illustrate how entrepreneurs have started and then run a business. These can be used to illustrate the various points here.Students can be given a specific business or entrepreneur to research and then make a presentation about back to the group.The BBC website has lots of resources covering business start-ups.The Edexcel communities site has some useful resources here under the old Unit 1 (6BS01).

3 1.1 Scarcity, choice and potential conflicts

1.2 Enterprise, business and the economy

1.1.3 – Stakeholders (economic agents) and their objectivesa) Stakeholders (economic agents)b) Stakeholder objectivesc) Stakeholder conflictsd) Corporate social responsibility

Students could find their own examples of stakeholder conflicts from current events or pressure group websites.It would be useful to look at a range of businesses which have corporate social responsibility (CSR) policies to compare and contrast them, e.g. BP, BAT, Disney, Tesco and The Body Shop.

Stakeholders reappear later in the course and it is important that students understand both their role and the nature of likely conflicts.

1.2.4 – Specialisationa) Division of labour: advantages and

disadvantages to employers and employees

Tutor2u has a video on specialisation across the ages using examples of the Model T Ford and Mercedes-Benz. Watch this and get students to identify key benefits and disadvantages of division of labour for firms



Week Topic Content Some suggested

activities/resources


b) Specialisation: advantages and disadvantages to the firm

and employees.

www.businesscasestudies.co.ukhas some useful case studies on specialisation.

4 1.3 Introducing the market

1.3.1 – Demanda) Consumer objectives and decisionsb) The demand curvec) The distinction between movements

along a demand curve and shifts of a demand curve

d) The factors that may cause a shift in the demand curve:

● changes in the prices of substitutes and complementary goods

● changes in real incomes● changes in tastes and fashions● advertising and branding● changes in size and age distribution of

the population

There are plenty of exercises available online and in textbooks that provide useful practice for students on these topics. There are also many worksheets available that provide useful practice.Examples of the kind of questions that might arise on this topic can be found in the sample assessment materials.

Plenty of practice is important here, and the importance of using correctly labelled diagrams should be emphasised from the outset.Students can find this topic confusing to begin with. It is important to stress that a demand/supply curve shows how much of a good would be demanded/supplied over a given time period for a full range of possible prices, assuming anything else affecting demand/supply is fixed.It is when this assumption is removed that the curve shifts.

1.3.2 – Supplya) Producer objectives and decisionsb) The supply curvec) The distinction between movements

along a supply curve and shifts of a supply curve

d) The factors that may cause a shift in the supply curve:

● changes in the costs of production● the introduction of new technology

Although students may need to show the impact of indirect taxes and subsidies in a diagram, they will not need to consider the impact of tax incidence.


http://www.businesscasestudies.co.uk/




● indirect taxes● subsidies● changes in the number of firms in an

industry● external shocks


1.3.3 – Price determinationa) Equilibrium price and quantity and how

they are determinedb) The use of supply and demand

diagrams to depict excess supply and excess demand

c) The operation of market forces to eliminate excess demand and excess supply

d) The use of the supply and demand model to show how shifts in demand and supply curves cause the equilibrium price and quantity to change in real-world situations

e) The limitations of the supply and demand model and its predictions

Past papers for Unit 2b in the outgoing specification have some useful questions on drawing demand and supply diagrams.Other exercises can be found in textbooks and online.

Emphasise that a change in demand does not cause a change in supply, and vice versa. Stress the precise use of terminology throughout this section.It is important to stress cause and effect when going through some examples. This is an area where students get confused. For example, a successful advertising campaign will cause an increase in demand which in turn causes an increase in price. The new equilibrium shows a higher price co-existing with a higher quantity demanded. Students will then often try to argue that a higher price will cause a fall in demand! Therefore it is always important to stress what is causing the changes.


1.3.4 – Price mechanisma) Functions of the price mechanism to

allocate resources: rationing, incentives, signalling

b) How firms respond to a change in demand

c) The price mechanism in the context of different types of markets:

● mass markets● niche marketsd) Potential market growth

www.economicsonline.co.uk and www.tutor2u.net have some useful material that can be used here.The Open University has a video clip – 60 seconds adventure in economics – to illustrate the invisible hand.Students can be asked to come up with real-life examples of how the price mechanism brings about change in different markets.


http://www.tutor2u.net/

http://www.economicsonline.co.uk/





1.3.5 – Understanding the consumera) Primary and secondary market research

data (quantitative and qualitative) used to quantify likely demand and gain insight into consumer behaviour

b) Limitations of market research, sample size and bias

c) Categorising consumers: market segmentation

The topics in this section are well covered in many of the standard texts.

There is much scope here for students to undertake some market research for themselves and to evaluate the validity of their results.It would be easy to put together a worksheet here with different adverts/products and to get the students to identify the market segments they are aimed at.


1.3.6 – The competitiona) Market positioning: market mapping

and market mapsb) Competitive advantage of a product or

servicec) Product differentiationd) Adding value to products/servicese) How firms decide on price and level of

outputf) Nature and range of markets: stable

and dynamic markets

Again, there is much work that students could do with real-life products/services. Groups could be given a business each and asked to find out its market position, drawing a market map to show the competition and say how it demonstrates the concepts of competitive advantage, product differentiation, added value and pricing strategy.

8 1.4 The role of credit in the economy

1.4.2 – Risk and liabilitya) The meaning of riskb) Implications of limited and unlimited

liability

The main sources of credit/finance are well covered but it will probably be necessary to prepare some material about online collaborative funding or crowdsourcing.





There are more and more examples of businesses/ventures starting in this way.

1.4.3 – Types and sources of credit and the impact of credit within the economya) Types of credit:● loans● overdrafts● trade creditb) Sources of credit:● banks● other firmsc) Other types of finance:● venture capital● share capital● leasingd) Other sources of finance:● owner’s capital: personal savings● retained profit● sale of assets● individual investors● online collaborative funding

Kickstarter and other crowdfunding sites can provide useful case studies that students can then assess, deciding the level of risk and whether other forms of credit might be possible and if not, why not.

9 1.4 The role of credit in the economy

1.4.3 – Types and sources of credit and the impact of credit within the economye) Challenges in obtaining credit:● role and impact of credit on the

economy1.4.1 – Role of banks in the economya) Channelling savings towards investmentb) Role of banks in providing credit

The BBC website has some good material on more recent problems in the economy.






c) Interest rates and collateral

1.6 Revenue, costs, profits and cash

1.6.1 – Revenue and costsa) Calculation of sales volume and sales

revenueb) Calculation of average, fixed, variable

and total costsc) Calculation of percentage change1.6.2 – The relationship between revenue and costsa) Contribution: selling price – variable

cost per unitb) Break-even point: total fixed costs +

total variable costs = total sales revenue

c) Using contribution to calculate the break-even point

d) Margin of safetye) Limitations of break-even analysis

There are plenty of exercises and worksheets available on these topics. See the sample assessment materials for a guide as to the types of questions which may be asked.

Calculations may appear in the exam (see the sample assessment materials for examples), and students should be used to manipulating and calculating these terms.Teachers may have to go through percentage changes clearly, since students often struggle in this area.Students should be encouraged to always show their workings clearly.

10 1.6 Revenue, costs, profits and cash

1.6.3 – Profit and lossa) Profit as an incentive in a competitive

market: market entry and exitb) How firms calculate:● gross profit● operating profit● profit for the year (net profit)c) Statement of comprehensive income

(profit and loss account)d) How firms measure profitability:● gross profit margin● operating profit margin● profit for the year (net profit) margin

This can be linked back to the price mechanism covered in week 6.All these areas are well covered in the standard texts, with plenty of exercises. See the sample assessment materials for a guide as to the types of questions which may be asked.

Calculations may appear in the exam (see the sample assessment materials for examples), and students should be used to manipulating and calculating these terms.Note the use of International Accounting Standards (IAS) terms.





e) How firms increase profit1.6.4 – Business survival and cash flowa) Distinction between profit and cash flowb) Importance of cash flow for business

survivalc) Forecasting and interpreting cash flowd) Use of a cash-flow forecast to identify

credit requirements and minimise risk

Students should be able to complete a simple cash-flow forecast. They should understand the components of cash inflow and cash outflow, be able to calculate net cash flow, and be able to move balances forward.

11 1.2 Enterprise, business and the economy

1.2.5 – The wider economic environment

a) Implications for firms of changes in:● interest rates● exchange rates● taxation● unemployment● inflation

The BBC is a good source of up-to-date information on macroeconomic indicators. Students could look at how they have changed (or not changed) over recent years and use this as a basis for considering the impact on firms.

This introduces the wider business environment in which all businesses operate. This is to give students a ‘basic’ understanding of the factors which impact on businesses and their decisions. These will be examined in much more detail in Theme 4. Students do not need to know what causes these changes; they just need to know how they will affect a business.

12 1.5 Market failure and government intervention

1.5.1 – Market failure and externalitiesa) Private costs, external costs and social

costsb) Private benefits, external benefits and

social benefitsc) Costs and benefits from the production

and consumption of goods and services

Once the theory has been absorbed, students could be asked to apply these terms to the production and consumption of something such as a car or alcohol, and to identify examples of each’s cost and benefit.

Students need to know and understand these terms and have a practical grasp of real-life examples.

d) Strength of the market economy: markets work well when the private and social benefits exceed (or are equal to) the private and social costs

e) Weaknesses of the market economy: some markets fail because of the existence of external costs, leading to under/over production or consumption

Students could produce posters or PowerPoint presentations illustrating the strengths and weaknesses of the market economy.

13 1.5 Market failure and government

1.5.2 – Government intervention and failure

Possible examples to use include: green subsidies, congestion charges, a minimum






intervention a) Purpose of intervention with reference to market failure in various contexts

b) Methods of government intervention:● regulation● legislation● indirect taxation● grants and subsidies● voluntary agreements

price for alcohol, and farm subsidies.

c) Causes of government failure:● distortion of price signals● unintended consequences● excessive administrative costs● information gapsd) Government failure in various markets

The government’s housing subsidy could be used as an example here.

14 Revision Revision and exam practice for AS level examinations and/or mock examinations for Theme 1.

Refer to Paper 1: Markets, Consumers and Firms in the sample assessment materials.



Theme 2: Year 12 spring/summer term

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

1 2.1 Business growth and competitive advantage

2.1.1 – Growtha) Objectives of growth:● to achieve economies of scale

(internal and external)● increased market power over

consumers and suppliers● increased market share and brand

recognition● increased profitability

There is a good introductory video on BBC Bitesize GCSE Business Studies: Economies and diseconomies of scale.The standard texts cover this area well.

b) Problems arising from growth:● diseconomies of scale● internal communication● potential skills shortagesc) The role of corporate culture2.1.2 – Methods of growtha) Organic and inorganic growthb) Horizontal, vertical and conglomerate

integration2.1.5 – How small firms competea) Small-firm survival in competitive

markets:● product differentiation and unique

selling points (USPs)● flexibility in responding to customer

needs● customer service● targeting niche markets

Tutor2u has a good case study on PepsiCo called Economies and diseconomies of scale at PepsiCo.Case studies would be useful here – www.businesscasestudies.co.uk has a good one on Jaguar changing its corporate culture. Google is always an interesting one to use as well.




Week Topic Content Some suggested activities/resources Teaching points to note● achieving competitive advantage

through relationships with stakeholders

2 2.1 Business growth and competitive advantage

2.1.3 – Research and development (R&D) and innovationa) Competitive advantage through

innovationb) Incentive to increase market powerc) Product and process innovationd) Role of state fundinge) Product life cycle and extension

strategies

The Times 100 (www.businesscasestudies.co.uk) has a useful case study on Sheffield Forgemasters International Ltd.The Global Innovation 1000 study by PWC has a lot of good material that can be used as examples or for discussion/group work.

2.1.4 – How the digital economy affects markets and firmsa) Market information in the digital

economy:● price comparison sites● viral marketing● social media

The resource bank on the Edexcel website for Unit 2b had some worksheets on the digital economy.

b) The supply-side:● micromarketing● online retailing and online distribution● recruiting and training staff with

digital skills

Amazon provides a good example of micromarketing.

c) The demand-side:● satisfying consumers with the long tail● wider geographical markets

There are some video clips to introduce the long tail on YouTube.

d) Impact on markets and firms:● impact on costs, prices, profit and loss● firm creation and destruction in a new

business environment

ATKearney has a useful article called Online retail. Its global ecommerce index may be useful here and in the global business sections later in the specification.

3 2.2 Firms, consumers and elasticities of demand

2.2.1 – Price elasticity of demand (PED)a) The significance of price elasticity of

There are many resources available to help with this topic including the TES, Bized, Tutor2u and economicsonline.

Use worksheets to help students become familiar with the calculations and interpretation of the results.





demand to firms (in both niche and mass markets) in terms of implications for pricing

b) Calculation of price elasticity of demand

c) Interpretation of numerical values of price elasticity of demand

d) The factors influencing price elasticity of demand

e) The relationship between price elasticity of demand and total revenue

Get students to practise these calculations using examples. See the sample assessment materials for a guide as to the types of questions which may be asked.

2.2.2 – Competing on pricea) Pricing strategies:● cost plus (calculating mark up on unit

cost)● price skimming● penetration● predatory● competitive● psychologicalb) Factors that determine the most

appropriate pricing strategy for a particular situation:

● number of USPs/amount of differentiation

● price elasticity of demand● amount of competition● strength of brand● stage in the product life cycle● costs and the need to make a profitc) Changes in pricing to reflect social

trends (online sales and price comparison sites)

Again, there are many useful resources online that can be used.Students could be given a range of real-life businesses or products/services, and asked to recommend an appropriate pricing strategy and justify their choice.




4 2.2 Firms, consumers and elasticities of demand

2.2.3 – Types of non-price competitiona) The impact of marketing on the

demand curve:● product differentiation● advertising and other promotional

methods● distribution methodsb) Devising appropriate marketing

approaches

Students could be asked to research and provide examples of businesses that use these approaches.

2.2.4 – Income elasticity of demand (YED)a) The significance of income elasticity of

demand to firmsb) Calculation of income elasticity of

demandc) Interpretation of numerical values of

income elasticity of demandd) The factors influencing income

elasticity of demand

A worksheet could give examples of products or services, e.g. a new range of designer clothing, an online banking service, a new chocolate bar, or a children’s charity. Ask the students to devise appropriate marketing strategies and justify their choices.Get students to practise these calculations using examples. See the sample assessment materials for a guide as to the types of questions which may be asked.

5 2.3 Productive efficiency

2.3.1 – Productivitya) Productivity (output per unit of input in

a given time period):● factors influencing productivity● link between productivity and

competitiveness● productivity and wages● productivity and economic growthb) Distinction between labour and capital

intensive production

GCSE Bitesize has a basic introduction to production and efficiency. YouTube also has numerous clips on the subject.

Students often confuse ‘production’ with ‘productivity’.

2.3.2 – Capacity utilisationa) Full capacity and spare capacityb) Capacity utilisation:● current output (divided by) maximum

possible output (as a percentage)c) Implications of under- and over-

utilisation of capacityd) Ways of improving capacity utilisation

Worksheets involving calculations of capacity utilisation and assessing the implications would be useful here. The sample assessment materials have an example of what might appear.




6 2.3 Productive efficiency

2.3.3 – Efficiency and competitiveness using lean productiona) Quality: control, assurance, Total

Quality Management (TQM)b) Continuous improvement (Kaizen)c) Just in time (JIT) management of stockd) Competitive advantage from lean

production

The Nissan case study from http://www.businesscasestudies.co.uk could be useful here.

2.3.4 – Impact on costs and sales revenuea) Impact on average costsb) Minimising waste of resourcesc) Competitive advantage of short

product development lead times

YouTube has some useful video clips about lean production.The fashion industry is a good example to use here. Zara has created a competitive advantage from short lead times. www.forbes.com and www.businessweek.com both have useful articles.

7 2.4 Life in a global economy

2.4.1 – Globalisationa) Characteristics of globalisation:● increased investment flows● world trade rising as a proportion of

world Gross Domestic Product (GDP)● increased migrationb) Factors contributing to globalisation in

the last 50 years:● trade liberalisation● capital market liberalisation● political change resulting in the

opening up of China and the former Soviet Union

● reduced cost of transport and communications

● increased significance of global (transnational) companies

Centres that have followed the outgoing specification will have studied Unit 3: International Business. This section and a great deal of Theme 3 covers similar ground and existing resources will still be useful.www.globalsherpa.org is an invaluable source for information, data, charts and tables, as well as some useful quizzes.YouTube has a good introductory video titled How containerization shaped the modern world.

2.4.2 – Developed, emerging and Wikipedia has some useful statistics and graphs


http://www.globalsherpa.org/

http://www.businessweek.com/

http://www.forbes.com/



Week Topic Content Some suggested activities/resources Teaching points to notedeveloping economiesa) Growth rate of the UK and BRIC (Brazil,

Russia, India and China) economies since 2000

b) Indicators of growth:● GDP per capita● literacy● health● Human Development Index (HDI)c) Characteristics of developed (mature),

emerging and developing economiesd) Mean and median incomes

under ‘BRIC’. These can be used as part of a lesson or a handout.Students could discuss the strengths and limitations of each of the indicators as a measure of growth.

8 2.4 Life in a global economy

2.4.3 – International tradea) Specialisation and international tradeb) Trading blocsc) Trade and growthd) Imports and exports: visibles and

invisiblese) Impact of cheap imports on standards

of living

Use real examples for specialisation such as Indonesia and palm oil, Brazil and soya, or the UK and financial services. Students could be asked to discuss the advantages and disadvantages of specialisation.Tutor2u has a good introduction to trade blocs titled International Economics – Trade Blocs.

2.4.4 – Exchange ratesa) Changes in exchange ratesb) Impact of changing exchange rates on

firmsc) Interpretation of exchange rate datad) Interpretation of effective exchange

rates

Students always seem to find this topic confusing. Plenty of examples and practice will help. The acronym ‘SPICED’ (Strong Pound: Imports Cheap, Exports Dear) can help students to remember.

9 2.5 The economic cycle

2.5.1 – The economic cyclea) Understanding of the economic cycleb) Characteristics of a boomc) Characteristics of a recessiond) Implications for firms of fluctuations in

economic activity2.5.2 – Circular flow of income, expenditure and output

Prepare a worksheet/PowerPoint of 20 or so assorted images that illustrate a stage of the economic cycle, such as a factory closing or new houses being built. Ask the students to identify which stage of the cycle they think the picture represents and to say why.




a) The circular flow of incomeb) The impact of injections into and

withdrawals from the circular flow of income

c) Factors influencing AD: components C + I + G + (X – M)

d) Factors influencing AS:● changes in the cost of inputs and

resources● changes in productivity

10 2.5 The economic cycle

2.5.3 – Inflationa) Inflation, deflation and disinflationb) Interpret price indices (RPI and CPI)

and the rate of inflationc) Real and nominal values, constant and

current prices

Use current events and trends to look at this topic. Key data on the UK economy is available from Tutor2u, the Office for National Statistics (ONS) and the ‘Economy’ section on the BBC News website. The BBC also has a good range of explanatory video clips on these topics.

d) Causes of inflation:● demand pull● cost pushe) The impact of inflation on firms:● uncertainty● loss of international competitivenessf) The impact of inflation on individuals:● loss of real income● savers and borrowers

The use of a historic inflation calculator (try www.thisismoney.co.uk) can allow students to see for themselves the importance of real values in economic analysis.Provide students with data sheets which show measures of economic performance over the last 10–15 years; these can be obtained from Tutor2u.

It is useful to highlight years where the cause of inflation has been predominately cost push or demand pull.

2.5.4 – Employment and unemploymenta) Employment, underemployment and

unemploymentb) Measures of unemployment:● the claimant count● the International Labour Organisation

(ILO) measure

The BBC Learning Zone Class Clip ‘Inflation and the economy’ provides an explanation of the effects of inflation and deflation on the economy and a comparison with Japan.


http://www.thisismoney.co.uk/



11 2.5 The economic cycle2.6 Introduction to macroeconomic policy

2.5.4 – Employment and unemploymentc) The causes of unemployment:● structural unemployment● occupational immobility● geographical immobility● technological unemployment● demand deficiency and cyclical

unemployment

Link occupational immobility to structural unemployment. Students could be shown shipbuilding decline via video clips, for example.

d) The impact of unemployment on firms and individuals

The impact of unemployment has appeared in past AS papers which could be used for practice.

2.6.1 – Possible macroeconomic objectivesa) Economic growthb) Low unemploymentc) Low and stable rate of inflationd) Balance of payments equilibrium on

current account

Students could discuss the reasons as to why a government would want to pursue these objectives.

The conflicts and trade-offs involved in pursuing these objectives appear in Theme 4 but could be introduced here.

12 2.6 Introduction to macroeconomic policy

2.6.2 – Policy instrumentsThe nature and impact of the following on the economy, firms and economic agents:a) Fiscal policy:● adjusting levels of government spending

and taxation to affect aggregate demandb) Monetary policy:● adjusting interest rates to affect

aggregate demand

This needs to be linked to the earlier work on AD/AS in 2.5.2

13 2.6 Introduction to macroeconomic policy

c) Supply-side policies:● taxes, benefits, education and

training, grants and subsidies infrastructure

d) Exchange rate policy:● floating rate2.6.3 – Potential policy conflicts and trade-offs

Any information gathered in topics 2.5.3 and 2.5.4, such as inflation and unemployment data,




a) Inflation and unemploymentb) Economic growth and negative

externalitiesc) The issues governments face in

managing the macro-economyd) How different macroeconomic

perspectives influence policy decisionse) The likely effects of individual policy

instruments on specific problems; possible unintended consequences

could be used to illustrate the trade-offs.Students should be aware that politics has a role to play in determining policy, and the main political parties’ economic policies could be examined with discussion of the possible reasons for differences between them.

14 Revision and AS level exam preparation

Revision and exam practice for AS level examinations and/or mock examinations for Theme 1 and Theme 2.

Refer to Paper2: The Wider Economic Environment in the sample assessment materials.

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 for Year 13. This will allow scope for more consolidation of concepts covered and more revision time at the end of the course.



Theme 3: Year 13 autumn term



1 3.1 Globalisation 3.1.1 – Growing economiesa) Growing economic power of:● Asia (China and India)● Africa● other emerging marketsb) Implications of economic growth for

individuals and firms:● trade and rationalisation opportunities

for firms● shifting employment patternsc) Rising incomes

Centres that have followed the outgoing specification will have studied Unit 3: International Business. This section and a great deal of Theme 3 covers similar ground and existing resources will still be useful. Useful worksheets/homeworks can be compiled from the past papers for Unit 3.http://globalconnections.hsbc.com has some good resources on different countries under its ‘Tools & data’ tab.www.globalsherpa.org is an invaluable source for information, data, charts and tables, as well as some useful quizzes.

It is important to keep up to date with the latest figures here. For example, China’s growth rate has slowed considerably in the last few years.Students will not need to study these countries in great depth or memorise statistics; rather, a broad overview is required.

2 3.1 Globalisation 3.1.1 – Growing economiesd) Conversion of nominal to real valuese) Calculating and interpreting index

numbers

Worksheets can be devised to give practice in understanding index numbers, or get them from the web (Bized has one). See the sample assessment materials for a guide as to the types of questions which may be asked.Alex Tabarrok on ‘How ideas trump crises’ is a good introduction to globalisation and free trade.UNCTAD is a good source of up-to-date information, or try Googling ‘FDI and growth news’.The TES resources bank has ‘EU top trumps’, which is a fun introduction to the EU.Tutor2u has a good resource called ‘Trade Agreements & Free Trade Areas’.

3.1.2 – Trade and growtha) Increasing trade liberalisationb) The role of specialisation and increasing

specialisation by countryc) Trade liberalisation and economic

growthd) Foreign direct investment (FDI) and link

to growth3.1.3 – Trading blocsa) Trade creation and trade diversionb) Expansion of trading blocs:

Students do not need to study the theory of comparative advantage. However, they should have an understanding that economic growth is likely if countries specialise in what they do best or least badly, and then trade.


http://www.globalsherpa.org/

http://globalconnections.hsbc.com/




● EU and the single market● ASEAN● NAFTA

3 3.1 Globalisation 3.1.3 – Trading blocsc) Impact on firms of trading blocsd) Growing interdependence3.1.4 – Trade policy and trade negotiationsa) Protectionism:● tariffs and import quotas (with

diagrammatic representation)● other trade barriers● government legislation and domestic

subsidies

Tutor2u has a range of useful activities and resources that can be used here.

Students need to be able to use appropriate diagrams to show the impact of protectionism, such as a shift of the supply curve following the imposition of a tariff and a partly vertical supply curve following the imposition of a quota.

b) International trade negotiations:● role of G20● role of international institutions (World

Trade Organisation (WTO), International Monetary Fund (IMF), World Bank)

● bilateral trading agreements

Students can be asked to research the latest stage of trade negotiations. They could also see what is happening by using the WTO, IMF and World Bank sites.Googling should bring up some recent examples of bilateral trade agreements. At the time of writing, recent agreements included ones between India and Finland, and Australia and Japan.

4 3.1 Globalisation3.2 Economic factors in business expansion

3.1.5 – Exchange rate changesa) Impact of changes in exchange rates

and the possible effects on:● the current account and the balance of

payments● economic growth; firms● employment/unemployment● the rate of inflation● FDI flows

Bized and Tutor2u both have some useful material on the economics effects of exchange rate changes.There should be plenty of video clips and resources on sites such as the BBC website.






3.2.1 – Conditions that prompt tradea) Push factors:● saturated markets● competitionb) Pull factors:● economies of scale● risk spreadingc) Possibility of offshoring and outsourcingd) Extending the product life cycles by

selling in multiple marketse) Raising capacity utilisation

Try to use real-world examples when teaching this. For example, get students to find out how slow growth in the Eurozone from 2012–2014 affected the UK’s export sales.

Students need to be aware of the current state of the Eurozone and its impact on the EU, as well as on those countries such as the UK which do not share the Euro.

5 3.2 Economic factors in business expansion

3.2.2 – Assessing the potential of different economiesa) Factors influencing expansion into a

market:● levels and growth of disposable

income● ease of doing business● infrastructure● political stability● exchange rate

There is a good worksheet on the outgoing specification’s resources bank – see Unit 3 6BS03 Topic 3 Case study: Assessing country markets. This gives some information on a range of indicators for some East European countries. Students then have to decide where they would locate a range of different businesses based on these indicators and be able to justify their choices.

Students will not be expected to have in-depth knowledge of potential markets and locations but rather an appreciation of the various influencing factors involved and how they will differ in importance for different businesses.

b) Factors influencing the location of production sites:● costs of production● skills and availability of labour force● infrastructure● location in trade bloc● government incentives● ease of doing business● political stability

Exam papers from Unit 3: International Business of the 2008 Economics & Business specification contain some questions on factors influencing location which might be useful for exercises and homework.

Point out that the biggest recipients of FDI are the developed nations; it’s not all about finding lowest cost sites.





● natural resources● likely return on investment

6 3.3 Impact of globalisation on global companies

3.3.1 – Responding to global demanda) Globalisation vs glocalisationb) Different approaches to global markets:● domestic/ethnocentric● mixed/geocentric● international/polycentricc) Price and non-price competition in

global markets:● adapting marketing strategies for

global marketsd) Branding and differentiation in global

markets

Students will need to recognise the different approaches that businesses will use and the advantages and disadvantages of doing so. There are many excellent case studies and examples that will help do this. YouTube has some very good clips to illustrate this such as ‘McDonald’s global and local strategy’ and ‘McDonald’s global strategy’.Students could be asked to research examples of different marketing approaches.

Students need a range of examples to illustrate the different approaches.


3.3.2 – Demand-side factors in global marketsa) Cultural/social factors:● cultural differences● different tastesb) Information and communication factors:● language, unintended meanings,

inappropriate/inaccurate translations

‘SOM 354: Coca-Cola International Business Strategy’ on YouTube gives a good (if rather ‘corporate’) introduction into the range and scale of different products a large MNC has and how they differ from area to area. Other good YouTube examples include McDonald’s.

c) How firms respond to these demand-side factors

● adapting marketing strategies for niche and mass markets

A quick Google will reveal many classic marketing blunders that can entertainingly illustrate this section.

Examples of global niche markets should be used.


3.4.1 – The impact of multinational corporations (MNCs)a) Impact of MNCs on the local economy:● local labour, wages, working conditions

and job creation

Students can explore this section and the next by presenting case studies to the group on a particular MNC, highlighting/illustrating both positive and negative impacts of MNCs.

Students will need to be able to assess the relative benefits and drawbacks that MNCs bring to an economy and to understand the controversies that can surround them. It is important that they understand both sides of the argument and are able to present a






● local firms● the local community and environmentb) Impact of MNCs on the national

economy:● economic growth● FDI flows● balance of payments● technology and skills transfer● consumers● business culture● tax revenues and transfer pricing

balanced answer using examples.

9 3.4 Impact of globalisation on local and national economies

3.4.2 – Ethical issuesa) Stakeholder conflictsb) Pay and working conditionsc) Environmental considerations:● emissions● waste disposald) Supply chain considerations:● exploitation of labour● child laboure) Marketing considerations:● misleading product labelling● inappropriate promotional activities

Students could research a particular business and see what the potential conflicts are and what impact this has had. They could then report their findings to the group.The International Labour Organisation (ILO) has some useful material and resources for this topic.

10 3.4 Impact of globalisation on local and national economies3.5 Global labour markets

3.4.3 – Controlling MNCsa) Factors to consider:● political influence● legal control● pressure groups

There have been many attempts to encourage self-regulation, either from within industry itself or encouraged by outside bodies, such as OECD’s Guidelines on Multinational Enterprises, UNCTAD’s Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive

Students need to be aware of the various ways in which the activities of MNCs might be regulated, influenced or controlled. They need to know how effective these factors might be and what will make them more or less effective depending on the situation. For example, the USA or China is likely to





● social mediab) Self-regulation

3.5.1 – Employment patternsa) Growth of the global labour forceb) Structural changec) Interdependence of labour markets

Business Practices, or the UN’s Global Compact. Students could look at these agreements and assess their effectiveness.

have much greater influence over MNCs than Mozambique or Ethiopia.

11 3.5 Global labour markets

3.5.2 – Wage ratesa) Factors that influence the supply of and

demand for labourb) The importance of skills, training and

educationc) Impact of global competition, recession

and redundanciesd) Impact of trade unions and professional

bodies

A worksheet on the determination of wage rates that requires diagrams and explanation would be useful here.

Demand and supply diagrams can be useful here to illustrate the impact of these factors on wage rates.Students need to be able to show the impact in diagrammatic form and understand the implications for business and the economy.

3.5.3 – Minimum wage legislationa) Minimum wages in developing and

developed countriesb) Skill shortages and their impact on

international competitivenessc) Migration:● within economies● between economiesd) Inequality and incentives

The BBC has up-to-date information on minimum wages as well as some useful short clips and articles.www.china-briefing.com has some useful data on minimum wages in China.Students could research and prepare a debate on the pros and cons of minimum wages and/or migration.

12 3.6 Inequality and re-distribution

3.6.1 – Poverty and inequalitya) Absolute and relative povertyb) Measures of poverty:● national measures● international measuresc) Measures of inequality:

Worksheets could be produced using material from the World Bank, Barnardo’s, www.globalissues.org and www.gov.uk. There are many websites including these that have useful information, charts and statistics.

Students need to be familiar with these concepts and how they affect individuals, businesses and the economy as a whole. They should understand how inequality and poverty are measured and be able to interpret the results and trends over time. They should be aware of how these problems have been tackled and be able to


http://www.gov.uk/

http://www.globalissues.org/

http://www.china-briefing.com/





● Gini coefficient● Lorenz curve (diagrammatic analysis)

evaluate their effectiveness.

3.6.2 – Reducing povertya) Economic development and economic

growthb) International aid and improvements in

welfare; non-governmental organisations (NGOs)

c) Poverty reduction policies

The United Nations Development Programme website has lots of useful information and case studies that could be incorporated into lessons and worksheets, as does the OECD.

13 3.6 Inequality and re-distribution

3.6.3 – The impact of inequality on economic agentsa) On individualsb) On firms: connections between low

income and low productivityc) On the economy

The impact of inequality can be a controversial area, depending upon political viewpoint. A good introduction would be to have a look at the work of Professor Richard Wilkinson on www.ted.com/talks

Awareness of current measures and policies would be useful here but detailed knowledge of the tax system is not required. Students should know the general purpose of taxation and its role in the redistribution of income and wealth, and a source of government revenue for the provision of services.

3.6.4 – Re-distribution of income and wealtha) The distinction between income and

wealthb) Incentives and the poverty trapc) Taxation and the provision of services

Students could research and discuss the merits/effects of current government policies.

14 Revision and A level exam preparation

Revision and exam practice for A level examinations and/or mock examinations for Theme 3.

Refer to Paper 3:The Global Economy in the sample assessment materials.


http://www.ted.com/talks


Theme 4: Year 13 spring/summer term



1 4.1 Competition and market power

4.1.1 – Spectrum of competitiona) Characteristics of monopoly, oligopoly,

imperfect and perfect competitionb) How the model of perfect competition

helps to explain how markets workc) The impact of market structure on

pricing strategies and consumersd) Non-price competitione) The limitations of the model of perfect

competition

EconEd Active has some good active learning activities on these topics and others.

It might be useful to explain the idea and usefulness of economic models here and to stress the theoretical nature of perfect competition as compared to monopoly, oligopoly and imperfect competition.Students should realise that pure monopoly is rare but that monopoly power is much more common, and that it is the degree of monopoly power that is important.


4.1.2 – Barriers to entrya) Contestability and ease of entryb) Barriers to entry:● product differentiation● branding● start-up costs● intellectual property rights● R&D and technology changec) The impact of barriers to entry on

market structured) Economies of scale and their impact on

cost and price4.1.3 – Oligopolya) Concentration ratiosb) Competition in an oligopoly;

interdependence and price stability

Students could consider a range of different businesses/markets, discussing the extent of barriers to entry and the impact this has on competition and consumers. Case studies of businesses that have successfully overcome barriers to entry could include those such as Aldi and the supermarkets, Innocent and drinks, Triumph and motorbikes.Get students to research the main examples of barriers to entry. They should also find examples which link to different types of industries. Alternatively, give groups different types of industries which come under the umbrella of ‘oligopoly’ and get them to come up with the main types of barriers to entry in these industries.






c) Tacit agreementd) Price discrimination

3 4.2 Market power and market failure

4.2.1 – Market failurea) Significance of market power:● cartels, collusion, restrictive practices

and tacit agreement● monopsony power● natural monopolies● power in the labour marketb) The implications of market failure in the

business world for economic agents and governments

4.2.2 – Business regulationa) Promoting competition through:● preventing anti-competitive practices● controlling mergers and takeovers● privatisationb) Regulating natural monopoliesc) Protecting consumersd) The work of the Competition and

Markets Authoritye) Impact of EU competition policyf) Employee protection

A good approach in this section generally is to look at case studies/examples where the Competition and Markets Authority (CMA) or other regulators have acted. Plenty of examples are available on Tutor2u, the BBC and newspaper websites.A wide range of contexts can be found to illustrate monopsony power. Show students the ‘Supermarkets “hurting suppliers”’ BBC video clip.Students could also think about Amazon’s monopsony.Recent examples such as the Eurotunnel/Sea France case could be used here.The websites of the CMA and the European Commission have good explanatory sections and case studies.

In each case it is important to consider what action has been taken and why the action was needed.

4 4.2 Market power and market failure

4.2.3 – Arguments for and against regulationa) The benefits of regulationb) The costs of regulation

A good excuse for a formal class debate!The European labour market would provide a good case study here by contrasting those countries that have less regulation, such as the UK, with those that are still comparatively highly regulated.The standard texts cover this area well and

It is important to displace populist attitudes with some case-by-case consideration of exactly what types of regulation are damaging to business and, of these, which might be eliminated without very detrimental effects on people.

4.1 Competition and 4.1.4 – Business objectives and pricing





market power decisionsa) Calculate average cost, average

revenue and profitb) Calculate marginal cost and marginal

revenuec) Link between marginal cost and

revenue and contributiond) The impact of objectives on pricing

strategies

there are numerous worksheets available. Students will need to practise these calculations and be able to interpret the results.See the sample assessment materials for a guide as to the types of questions which may be asked.


4.1.5 – Productive and allocative efficiencya) The distinction between allocative

efficiency and productive efficiencyb) The significance of the margin;

opportunity costs, trade-offs and allocative efficiency

c) Increasing productivity to reduce average cost through greater efficiency by improving:

● technology● human capital (skills training and

education)● the quality of managementd) Matching the structure of production to

the pattern of consumer preferences (market orientation)

e) How markets interact with one another

This topic is well covered on websites and in textbooks.

4.3 Market failure across the economy

4.3.2 – Externalitiesa) Private, external and social costs and

benefitsb) The impact on society of charging

prices that do not reflect total internal and external costs

c) Environmental externalities

Tutor2u has some very good presentations and resources on these topics.Real-world examples are key to understanding all aspects of this section on market failure.

Topic 4.3 builds on Topic 1.5 and students should be familiar with the concepts, but some revision may be useful before starting.






6 4.3 Market failure across the economy

4.3.1 – Market failure in societya) The consequences of under-provision

and under-consumption of merit and other goods and services

b) Positive and negative externalitiesc) Over-consumption of demerit goodsd) Factor immobility (occupational and

geographical)e) Imperfect and asymmetric informationf) Consequences of environmental change4.3.3 – Policies to deal with market failurea) The provision of public and merit goods,

indirect taxation of demerit goods, tradable pollution permits, provision of information, legislation and regulation

b) The impact of these policies on the economy and society, long- and short term

Give students a selection of goods/services and get them to say whether they are private goods or public goods. Are they non-rivalrous or non-excludable, or do they contain elements of both?There are many practical examples that can be used here, e.g. the under consumption of merit goods such as education and the problem of NEETs. For over consumption of de-merit goods, there is the ‘obesity crisis’. For asymmetric information, there is the misselling of financial products. Students can research these areas and discuss possible solutions and/or the success or otherwise of current government policies.Tutor2u has a presentation on housing market failure as well as many other resources that deal with this topic

Students’ understanding of market failure and externalities should enable them to apply it in unfamiliar contexts.

7 4.4 Macroeconomic policies and impact on firms and individuals

4.4.1 – The AD/AS modela) Changes in Aggregate Demand (AD)b) Changes in Aggregate Supply (AS)c) Full capacity outputd) Impact of changes in AD and/or AS on

inflation and unemploymente) The multiplier effectf) How the AS/AD model sheds light on

the economy as a whole

This is well covered in the standard texts and websites such as those listed at the start of Theme 1.Using AD/AS diagrams, students could analyse the expected impact on the economy of different scenarios to show the impact on inflation, unemployment and the economy as a whole. This helps to introduce real-world application and builds up real-world knowledge.

Previous work on this topic includes topics 2.5 and 2.6 on the economic cycle and macroeconomic policy. This section requires increased depth of knowledge, together with an ability to analyse and evaluate the likely effects of specific policies. Revision will be required, along with the more holistic view that is facilitated by wide-ranging subject knowledge.

8 4.4 Macroeconomic 4.4.2 – Demand-side policies www.diffen.com is a website that compares


http://www.diffen.com/




policies and impact on firms and individuals

a) Distinction between monetary and fiscal policy:

● fiscal policy: government spending and taxation (direct and indirect)

● monetary policy: the role of the Bank of England and the Bank of England’s Monetary Policy Committee

● interest rates● asset purchases to increase the money

supply (quantitative easing)b) The impact of changing the level of AD

on the economy as a wholec) The use of AD/AS diagrams to illustrate

demand-side policies

two terms, such as ‘fiscal policy’ and ‘monetary policy’, and then provides some useful resources. Other economic terms can be explored, such real versus nominal GDP.The Bank of England and Tutor2u both have useful resources on the MPC.The Bank of England and the BBC both have good video clips to explain quantitative easing. The BBC video ‘How does quantitative easing work?’, by Stephanie Flanders, is a quick but effective clip.


4.4.2 – Demand-side policiesd) How investment, job creation and

economic growth can be encouragede) How inflation and unemployment can

be controlledf) Time lags involvedg) Strengths and weaknesses of demand-

side policiesh) Potential policy conflicts and trade-offs

facing policy-makers when applying policies

4.4.3 – Supply-side policiesa) Distinction between market-based and

interventionist methods

www.gov.uk has details of current policies in this area – search for ‘UK economy’ and then look at policies. These can be used as a basis for discussion and teaching, with their strengths and weaknesses analysed.


4.4.3 – Supply-side policiesb) Market-based and interventionist

policies to:● increase incentives● promote competition● reform the labour market

Use recent policies as much as possible as examples, such as the recent reforms of GCSEs and A levels. This could be discussed or researched, as could reform of apprenticeships.Another relevant area is the benefit system and policies designed to reduce the poverty

When discussing the likely strengths and weaknesses of supply-side policies, students should make sure they link their analysis to the achievement of the stated aim of the policy.There are many potential conflicts between macroeconomic objectives, and students


http://www.gov.uk/





● improve the skills and quality of the labour force

● improve the infrastructurec) The use of AD/AS diagrams to illustrate

supply-side policies

d) Strengths and weaknesses of supply-side policies

e) Potential policy conflicts and trade-offs facing policy-makers when applying policies

4.4.4 – The impact of macroeconomic policiesa) The possible impact of macroeconomic

policiesb) Comparing alternative approachesc) Identifying criteria for success and

evaluating effectiveness

trap. should be confident in using AD/AS analysis to explain, illustrate and evaluate these.

11 4.5 Risk and the financial sector

4.5.1 – Risks and uncertaintya) The difference between risk and

uncertaintyb) The impact of shocksc) Exchange rate risk and forward marketsd) The role of insurance in business

Students could discuss what they think is the difference between ‘risk’ and ‘uncertainty’ and the extent to which either can be managed or minimised.

4.5.2 – The role of the financial sectora) To mobilise savings for lending to firms

and individualsb) To lend to business for investment in

working capital

Students are required to have a basic understanding of the role of financial markets.





c) To lend to individualsd) To facilitate the exchange of goods and

servicese) To assess creditor riskf) To provide forward markets in

currencies and commoditiesg) To provide a market for equities

12 4.5 Risk and the financial sector

4.5.3 – The role of the central banka) The role of the Monetary Policy

Committee in setting the official interest (base) rate

b) The implementation of monetary policy to control inflation

c) Regulation of the banking industry: the Bank of England’s Financial Policy Committee

d) Banker to the banks – lender of last resort

The Bank of England’s own website and the BBC’s can provide some useful material.The BBC Learning Zone Class Clip ‘What is money and how does the Bank of England manage it’ provides a good three-minute introduction to monetary policy.

4.5.4 – The Global Financial Crisisa) Contributing factors:● sub-prime mortgages● moral hazard (too big to fail)● collapse of lending to businesses● speculation and market bubbles● the role of organisational cultureb) The role of banking regulationc) The impact of the financial sector on

economic agents and governments

YouTube has some useful introductory clips that summarise the main causes and issues.

This section requires consideration of complex issues but students do not need to analyse the Global Financial Crisis in detail. Further guidance can be found in the Getting Started guide.


Revision of Themes 1, 2, 3 and 4Exam preparation

Refer to Paper 4: Making Markets Work in the sample assessment materials.







Revision of Themes 1, 2, 3 and 4Exam preparation

Relevant parts of the outgoing specification may also provide some material for exam preparation.


Documents

GCE Getting Started - Pearson qualifications · Web viewd) Banker to the banks – lender of last resort The Bank of England’s own website and the BBC’s can provide some useful