A LEVEL ECONOMICS 9158 SYLLABUS
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ZIMBABWE SCHOOL EXAMINATIONS COUNCIL ZGCE ADVANCED L EVEL SYLLABUS ECONOMI CS 9158 EXAMINATION SYLLABUS FOR 2013 - 2016 ECONOMICS ZGCE ADVANCED LEVEL Contents Page Introduction 3 Aims 3 Assessment Objectives 4 Scheme of Assessment 5 Curriculum Content 7 Appendix A: Comparison of Curriculum content with A Level Syllabus 9074 Appendix B: Resource List Appendix C: Checklist of Economic Terms and Concepts NOTE Additional copies of this syllabus and the specimen paper booklet can be ordered from ZIMSEC. 2 1 INTRODUCTION 1.1 The aim of this syllabus is to enable Centres to develop an Economics course that is suitable for Advanced Level candidates. 1.2 Three methods of assessment are used (multiple choice, data response questions and essays). 1.3 Candidates must offer papers 1, 2 and 3. 1.4 No previous study of the subject is assumed by the syllabus. 2 AIMS 2.1 The syllabus is intended to encourage a course that will: 3 (a) provide a basis of factual knowledge of economics, (b) encourage the development in the student of: (i) a facility for self-expression, not only in essay form but also using additional aids such as statistics and diagrams where appropriate, (ii) the habit of using works of reference as sources of data specific to economics, (iii) the habit of reading critically to gain information about the changing economy in which we live, (iv) an appreciation of the methods of study used by the economist and of the most effective ways in which economic data may be analysed, correlated, discussed and presented. ASSESSMENT OBJECTIVES These indicate the skills that the examination will be designed to test in conjunction with the subject matter listed in the syllabus. 3.1 Candidates are expected to: 1 DEMONSTRATE KNOWLEDGE AND UNDERSTANDING of the specified content, 2 INTERPRET economic information presented in verbal, numerical or graphical form, 3 3.2 3 EXPLAIN AND ANALYSE economic issues and arguments, using relevant economic concepts, theories and information, 4 EVALUATE economic information, arguments, proposals and policies, taking into consideration relevant information and theory, and distinguishing facts from hypothetical statements and value judgements, 5 ORGANISE, PRESENT AND COMMUNICATE economic ideas and informed judgements in a clear, logical and appropriate form. The Multiple Choice component (Paper 1) will seek to test particularly Assessment Objectives 1, 2 and 3. The Data response component (Paper 2) will seek to test particularly Assessment Objectives 2 and 3, and to a lesser extent Assessment Objectives 1, 4 and 5. The Essay component (Paper 3) will seek to test particularly Assessment Objectives 1, 3, 4 and 5 and to a lesser extent Assessment Objective 2. 4 Scheme of Assessment Three compulsory papers will be set as follows: Paper Duration Mark Weighting 1 Multiple Choice 1½ hours 40 items, all to be attempted 30% 2 Data Response 1¼ hours 2 questions, both to be answered 20% 3 Essays 3 hours 4 questions to be answered from a 50% choice of about 12 Papers 1 and 2 will be timetabled in the same session with a short break between the papers. Candidates must offer Papers 1, 2 and 3. Paper 1 Multiple Choice All the multiple choice items will be of the simple type with four responses suggested for each item. Multiple choice questions will be set on the whole syllabus. Of the forty questions, no more than ten (25%) will test knowledge alone and no less 30 (75%) for skills 2 and 3 (interpretation, explanation and analysis). Paper 2 Data Response This paper aims to test particular skills rather than specific areas of knowledge, and for this reason each paper will contain two compulsory questions carrying 20 marks each. No question will demand knowledge of a particular economy, and data will be included from various economies. The data may be presented in graphical or tabular or textual format. Within each question there will be a number of sub-questions, and it is the examiners' intention that earlier sub-questions will test skills of definition, description, identification and observation. Later sub-questions will test the skills of application, analysis and evaluation by inviting candidates to use their knowledge of economic principles to solve specific problems that can be observed in the data before them. Although all the sub-questions will be related to the data presented in each question, each of the sub-questions will present separate aspects so that success in any particular sub-question will not be dependent on success in earlier sub-questions. 5 6 The two questions in a paper will therefore aim to test the candidate's ability to answer: (a) basically straightforward questions in which the data required are fairly obvious, (b) questions that require some simple re-arrangement or summarising of the data, (c) more complex questions that require candidates to search the data to select relevant material for their answer, (d) a final sub-question that will require candidates to evaluate and analyse aspects of the data in relation to their understanding of some of the central concepts of economics. Paper 3 Essays Candidates will be required to answer any four questions. SPECIFICATION GRID SKILL PAPER 1 PAPER 2 PAPER 3 1 Knowledge and understanding 20-25% 20% 28% 2 Interpretation 50-55% 40% 16% 3 Analysis 20-25% 30% 20% 4 Evaluation --- 5 Organisation, Presentation and Communication --- 10% 36% NB Each question in Paper 3 will test up to the highest skill. 4 CURRICULUM CONTENT 1 Basic Economic Ideas (a) Scarcity, choice and resource allocation (i) (b) Meaning of scarcity and the inevitability of choices at all levels (individual, firms, governments) (ii) Opportunity cost (iii) Basic questions of what will be produced, how and for whom Different allocative mechanisms 7 (i) (ii) (iii) 2 Market economies Planned economies Mixed economies (c) Production possibility curve - shape and shifts (d) The margin: decision making at the margin (e) Positive and normative statements (f) Ceteris paribus (g) Factors of production: land, labour, capital, enterprise (h) Division of labour (i) Efficient resource allocation: concept of economic efficiency; productive and allocative efficiency. Theory of Demand (a) Individual demand curves (b) Aggregation of individual demand curves to give market demand (c) Factors influencing demand (d) Movements along and shifts of a demand curve (e) Price, income and cross-elasticities of demand (i) (ii) (iii) (f) Meaning and calculation Factors affecting Implications for revenue and other business decisions Utility Theories (i) Marginal Utility Theory: - (ii) Law of diminishing marginal utility and its relationship to derivation of an individual demand schedule and curve. Equi-marginal principle Limitations of marginal utility theory. Indifference Curves Theory 8 (g) 3 Budget lines: Income and substitution effects of a price change. Consumer surplus Theory of Supply (a) Individual firm's supply curves (b) Aggregation of individual firm's supply curves to give market supply. (c) Factors influencing market supply, including indirect taxes and subsidies. Movements along and shifts of a supply curve. (d) Price elasticity of supply, determinants, implications for speed/ease with which businesses react to changed market conditions. (e) Short-run production function; fixed and variable factors of production, total product, average product and marginal product. Law of diminishing returns (Law of variable proportions). (f) Long-run production function: returns to scale. (g) Economist's versus accountant's definition of costs Marginal cost and average cost. Short-run cost function - fixed costs versus variable costs Explanation of shape of SRAC. 4 (h) Long-run cost function. Explanation of shape of LRAC: economies and diseconomies of scale Internal and external economies and diseconomies of scale. (i) Survival of small firms Growth of firms (j) Relationship between elasticity, marginal, average and total revenue for a downward-sloping demand curve. Theory of the Firm (a) Price and output determination: - Interaction of demand and supply: equilibrium price and quantity; price as a rationing and allocative mechanism, meaning of equilibrium and disequilibrium, 9 - effect of changes in supply and demand on equilibrium price and quantity, applications of demand and supply analysis. (b) Concepts of the firm and industry. (c) Traditional objective of the firm - profit maximisation. Normal and abnormal profit. An awareness of other objectives of the firm. (d) Different market structures - perfect competition, monopoly, monopolistic competition, oligopoly. Structure of markets as explained by number of buyers and sellers, nature of product, degree of freedom of entry and nature of information. Contestable markets. (e) Conduct of firms - pricing policy and non-price policy, including price discrimination, price leadership models and mutual interdependence in the case of oligopolies. (f) Performance of firms - in terms of output, profits and efficiency. Comparisons with regard to economic efficiency, barriers to entry, price competition, non-price competition and collusion. 5 Theory of Distribution (a) Factors of production: Labour, Land, Capital and Enterprise. (b) Rewards to factors of production: wages, rent, interest and profits; share in the national income. (c) Wages (i) (ii) Demand for Labour as a derived demand - meaning and factors affecting demand - derivation of an individual firm's demand for a factor using marginal revenue product theory. Supply of Labour - meaning and factors affecting supply - net advantages and the long run supply of labour. 10 (iii) Wage determination under free market forces (competitive product and factor markets) - The role of trade unions and government in wage determination; collective bargaining. wage differentials, economic rent and quasi-rent. (d) Rent: Supply factors peculiar to land in general and for particular uses. (e) Interest: Difficulties in the concept of capital. Structure of interest rates. Loanable funds theory of interest rates and its limitations. Liquidity preference theory of interest rates and its limitations. Interest rate determination in practice, including role of government and of international influences. (f) Profit: Accountant's and economist's concepts of profit. Normal profit as transfer earnings. Abnormal profit. Role of profit. 6 Government Intervention in the Price System (a) Sources of market failure (i) (ii) (iii) (iv) (b) Externalities Meaning of deadweight losses Market imperfections - existence of monopolistic elements. Public goods and merit goods Cost Benefit Analysis (i) (ii) Social costs as the sum of private and external costs. Social benefits as the sum of private benefits and external benefits. (c) Conditions for allocative efficiency. (d) Objectives of government microeconomic policy: efficiency, equity. (e) (i) (ii) (iii) (f) Policies to correct market failure: regulation: maximum price controls, price stabilisation, taxes, subsidies, direct provision of goods and services, production quotas, butter stock. Policies towards income and wealth redistribution. Effectiveness of government policies. Decision making using cost benefit analysis 11 (g) Commercialisation and Privatisation Problems of transition when central planning in an economy is reduced. 7 International Trade (a) Principles of absolute and comparative advantage, and their real-world limitations. Other explanations/determinants of trade flows e.g. political Opportunity cost concept applied to trade. (b) Arguments for free trade and motives for protection (c) Types of protection and their effects (d) Economic integration: free trade area, customs union, economic union: advantages and disadvantages. Its real world significance to developing and developed countries. (e) The role and impact of commodity agreements. (f) Terms of trade: calculation, meaning, trends. Relationship to Balance of Payments. (g) Balance of Payments (BOP) Components of Balance of Payments Its nature and meaning in terms of current and capital transactions. The Balance of Payments - composition of the trading and non-trading accounts. Significance of net property income from abroad and capital transactions in developed and developing economies. Balance of Payments problems (i) (ii) (iii) (h) Meaning of BOP equilibrium and disequilibrium Causes of BOP disequilibrium Consequences of BOP disequilibrium on domestic and external economy. Fluctuations in foreign Exchange Rates (i) (ii) (iii) Definitions and measurements of exchange rates - nominal, real, trade-weighted exchange rates. Determination of exchange rates-floating, fixed, managed float. Factors underlying fluctuations in exchange rates. 12 (iv) (i) 8 Policies designed to (i) correct BOP disequilibrium (ii) influence the exchange rate. Theory and Measurement in the Macroeconomy (a) The circular flow of income between households, firms, government and the international economy. (b) National Income Statistics (i) (ii) (iii) (iv) (v) (c) Measurement of national income Use of National income statistics as measures of economic growth and living standards. Money and real data; Gross Domestic Product (GDP) deflator. Comparison of economic growth rates and living standards over time and between countries: purchasing power parity theory. Other indicators of living standards and economic development. National Income Determination (i) (ii) (iii) 9 effects of changing exchange rates on the economy. Main schools of thought on how the macroeconomy functions. Keynesian and Monetarist views. Aggregate Expenditure function (AE) Meaning, components of AE and their determinants. Income determination using AE income approach and withdrawal/injection approach. Inflationary and deflationary gaps; full employment level of income versus equilibrium level of income. The multiplier Autonomous and induced investment; the accelerator. Shape and determinants of AD Shape and determinants of AS Interaction of AD and AS: determination of level of output, prices and employment. Money and the Price Level (a) (b) Money: its functions and characteristics Money supply - Broad and narrow money supply Government accounts; government budget, deficit financing Sources of money supply in an open economy (commercial banks/credit creation, central bank, deficit financing, total currency 13 flow). (c) The demand for money - (d) Interest rate determination Liquidity preference theory and loanable funds theory. General Price Level: price indices Inflation: 10 (i) (ii) (iii) (iv) definition of inflation and degrees of inflation causes of inflation consequences of inflation policies to cure inflation. Macroeconomic Problems and Policies (a) Economic Growth and Development (i) (ii) (iii) (iv) (v) (vi) (vii) (b) Definition of economic growth and development Indicators of comparative development and underdevelopment in the world economy - economic, monetary, non-monetary and demographic indicators. Characteristics of developing economies: population growth and structure, income distribution, economic structure, employment composition, external trade and urbanisation in developing economies, the nature of dependency, including the role of multinational corporations. Actual versus potential growth in national output. Factors contributing to economic growth Costs and benefits of growth Policies for development: analysis of factors in the development process; policies of trade, aid and industrialisation; dev elopment through borrowing and its implications in terms of external debt, the debt crises. The role of international financial institutions e.g. IMF and World Bank. Unemployment (i) Definition of unemployment, full employment and natural rate of unemployment (ii) Difficulties involved in measuring unemployment; employment statistics; patterns and trends in unemployment/employment. Size and components of labour force; labour productivity Causes and types of unemployment Solutions to unemployment (iii) (iv) (v) 14 (c) Inflation (see Money and price level) (d) (e) BOP (see International trade) Exchange rate fluctuations (see International trade) (f) Inter-connectedness of problems: Links between macroeconomic problems and their interrelatedness, for example - (g) relationship between internal and external value of money relationship between balance of payments and inflation relationship between inflation and unemployment; trade-off between inflation and unemployment. Objectives of macroeconomic policy Stabilisation: price stability, equity, full employment, BOP equilibrium, growth and development. (h) Types of policy: Aims and instruments of each policy; how each is used to control inflation, stimulate employment, stimulate growth, correct balance of payment disequilibrium; the effectiveness of each (i) (ii) (iii) (iv) (v) (vi) (vii) (i) Fiscal policy Monetary policy Exchange rate policy Supply side policies Incomes policy Trade Policy Price Policy Conflicts between policy objectives and evaluating policy options to deal with problems. 15 APPENDIX A COMPARISON OF CURRICULUM CONTENT WITH A LEVEL SYLLABUS 9058 Compared with the A Level Economics syllabus 9058, The following topics are deleted or downgraded so that they will not be the subject of specific questions: t free goods t Giffen goods t factor rewards linked to costs t nationalisation t objectives of public sector firms t official definitions of money t description of credit creation process and the following topics are added or upgraded so that they could be the subject of specific questions: t contestable markets t interaction of aggregate demand and aggregate supply t exchange rate policy and supply side policies as macroeconomic policies. 16 APPENDIX B RESOURCE LIST This is NOT a list of prescribed texts, but merely an attempt to provide a range of alternatives from which teachers may like to choose. Author Title Publisher ISBN Date Anderton, AG Economics Causeway 1873929374 1995 Beardshaw, J Economics: A Student's Guide Longman 0582303486 1998 Begg, David et al Economics McGraw Hill 0077094123 1997 Davies, Brinley et al Investigating Economics Macmillan 0333638085 1996 Dunnett, A Understanding the Market Longman 0582325064 1998 Grant, Susan Workbook for Stanlake, Introductory Economics Addison Wesley Longman 0582302560 1997 Hardwick, Philip et al Introduction to Modern Economics Addison Wesley Longman 0582357152 1999 Heather, Ken Understanding Economics Prentice Hall 0136501699 1997 Ison, Stephen Economics FT Management 0273634275 1999 Lipsey, Richard and Chrystal, K Alec Introduction to Positive Economics OUP 0198774257 1995 Livesey, Frank Textbook of Core Economics Longman 0582238676 1995 Sloman, John Essentials of Economics Prentice Hall 013779844X 1997 Stanlake, GF and Grant S Introductory Economics Longman 0582246148 1995 17 Dictionaries Bannock, Graham et al. (eds) Penguin Dictionary of Economics Penguin 014053760 1998 Pearce, Dav id (ed.) Macmillan Dictionary of Modern Economics Macmillan 0333576934 1992 Wall, Nancy et al. The Complete A - Z Economics and Business Studies Handbook Hodder 0340669853 1996 Internet: Teachers will also find useful material on website http://www.bized.ac.uk/ 18 APPENDIX C CHECKLIST OF ECONOMIC TERMS AND CONCEPTS NB A checklist such as this is neither exhaustive nor prescriptive: unless it is indicated as `not required', the omission of an item from this list does not mean that examiners will not refer to it, while teachers may find if helpful or desirable in their courses to introduce terms and concepts even if they lie outside the scope of the examined syllabus. TOPIC abnormal profit TOPIC average propensity absolute advantage average revenue accelerator average variable cost active balances balance for official financing ad valorem tax balance of payments aggregate demand balance of trade aggregate expenditure balanced Budget aggregate supply balancing item allocative efficiency Bank Rate appreciation (exchange rate) barriers to entry at constant prices barriers to exit at current prices barter at factor cost base date at market prices bilateral trade automatic stabilisers birth rate autonomous broad money supply average cost budget line average fixed cost average product canons of taxation cross-elasticity of demand 19 capital current account of Balance of Payments capital account of Balance of Payments customs unions capital gain cyclical unemployment capital market deadweight losses capital: output ratio death rate cartels deficit cash ratio deficit financing cash ratio deposits deflation central bank deflationary gap ceteris paribus demand change in demand demand conditions change in quantity demanded demand cuve cheques demand-deficiency unemployment circular flow of income demand-pull inflation closed economy demand schedule closed shop demerit good coincidence of wants dependency ratio collective bargaining depreciation (of capital) command economy depreciation (exchange rate) commercial banks derived demand commodity agreements devaluation comparative advantage development comparative costs diminishing marginal utility complementary goods diminishing returns concentration, industrial direct taxation consumer surplus discount houses consumption diseconomies of scale contestable markets dissaving cost of living distribution of income cost benefit analysis division of labour cost of production dumping craft union economic efficiency credit creation economic growth credit multiplier economic union economic rent economies of large dimensions free trade 20 economies of scale free trade areas effective demand frictional unemployment efficiency full employment elastic funding elasticity of demand general government final consumption elasticity of supply general unemployment enterprise general union entrepreneur government expenditure equi-marginal utility gross domestic product equilibrium gross domestic product deflator equilibrium price gross national product equilibrium quantity horizontal integration equity (fairness) household expenditure exchange control hyperinflation Exchange Rate Mechanism IBRD (the World Bank) excise duties idle balances exports IMF external balance immobolity of labour external benefit impact of a tax external economies imperfect competition externalities imperfections factor cost adjustment import penetration factor of production imports financial economies of scale incidence of a tax fiscal boost, inflationary income effect fiscal drag, inflationary income elasticity of demand fiscal policy income tax fixed capital incomes policy fixed capital formation increasing returns fixed costs indices fixed exchange rates indifference curves floating exchange rates indirect tax foreign exchange induced investment industrial union marginal physical product 21 inelastic marginal propensity infant industries argument marginal revenue inferior goods marginal revenue product inflation marginal tax rates inflationary gap marginal utility infrastructure market injections market economy integration market failure interest market system interest rate marketing economies intermediation, financial Marshaall-Lerner Condition internal economies of scale maximisation investment measure of value invisible balance medium of exchange J-curve menu costs of inflation Keynesian merit goods labour microeconomics laissez-faire migration land Minimum Lending Rate law (economic) mixed economy law of demand mobility of labour law of supply Monetarism leakages monetary policy liquidity money liquidity preference money supply liquidity ratio monopolistic competition liquidity trap monopoly loanable funds theory monopsony Lome Convention multilateral trade long run multinationals Maastricht, Treaty of multiplier Macroeconomic narrow money supply managed floating National Debt marginal cost notational income natural increase natural rate of unemployment perfectly inelastic 22 natural monopoly Phillips Curve near-money planned economy negative externalities point elasticity net advantage positive externalities net domestic product positive statement net national product poverty trap net property income from abroad precautionary demand for money nominal price agreements non-excludability price competition non-pecuniary advantages price discrimination non-price competition price elasticity of demand non-rivalness price leadership normal goods price mechanism normal profit primary sector normative statement principle of multiples in economies of scale occupational mobility private benefits official financing private costs oligopoly private goods open economy private sector liquidity open market operations privatisation opportunity cost producers' surplus optimum output production possibility curve optimum population productive efficiency optimum resource allocation productivity other things being equal profit paradox of thrift profit maximisation paradox of value progressive taxation Pareto optimality proportional taxation patents protectionism paternalism PSBR pecuniary advantages PSDR pensions public goods perfect competition purchasing power parity perfectly elastic quality of life Quantity Theory of Money specific tax 23 quasi-rent speculative demand for money quotas standard of deferred payments rate of interest standard of living rationing store of wealth real structural unemployment rectangular hyperbola subsidy reflation substitute goods regional policies substitution effect regressive taxation supernormal profit rent supply reserve currencies supply conditions resources supply curve Restrictive Practices Court supply-side economies retail banks surplus Retail Prices Index sustainability revaluation tariffs risk-bearing economies of scale taxation sales maximisation technical economies sales revenue maximisation technical unemployment satisficing profits terms of trade saving tertiary sector scarcity total currency flow seasonal unemployment total revenue second best theory trade creation secondary sector trade cycle services trade diversion shares trade unions shoe leather cost of inflation trading possibility curve short run transactions demand for money Smith, Adam transfer earnings social benefits transfer payments social costs Treasury Bills special deposits unemployment Special Drawing Rights unit of account specialisation unitary elasticity unstable equilibrium 24 urbanisation utility value added variable costs variable proportions velocity of circulation vertical integration visible balance voluntary unemployment wage differentials wage drift wages weights withdrawals working capital yield 25
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