What students need to learn:
Content
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Students should be able to:
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Additional Guidance Notes
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Macro economic policies
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Evaluate the use of policies to achieve economic objectives including
macroeconomic stability. For example, how fiscal policy is used to achieve budgetary
objectives; the role of independent central banks to achieve inflation
targets; the use of supply-side policies to achieve economic growth.
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Students should have an understanding of global factors influencing a
country’s inflation rate; for example the impact of low wages in developing countries
or the impact of a rise in commodity prices.
The AD/AS model introduced in Unit 2 should be applied in analysing
and evaluating these policies. The distinction between short and long run aggregate
supply curves should be considered, as well as the factors influencing each.
Students should be aware of the problems facing policy makers when
applying policies, for example inaccurate information; risks and
uncertainties.
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Public expenditure
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Give reasons for the changing size and pattern of public expenditure
in different countries.
Examine how the state might tax revenues to improve human capital.
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Students should understand the significance of differences in tax structures;
public expenditure and public finances between countries. For example,
students might examine the significance
of the differences of the size of the state sector between a developed
economy such as the UK and a developing economy such as Malaysia.
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Taxation
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Understand taxation: direct and indirect; progressive, proportional
and regressive taxes.
Understand how governments might use pubic expenditure and taxation
to reduce poverty.
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Students should understand the possible link between changes in tax
rates and tax revenues.
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Public sector borrowing and
Public sector debt
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Understand the significance of the size of public sector borrowing
and debt.
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Students should understand the significance of differences in the state
of public finances between countries, for example with respect to
attractiveness to foreign direct investment and incentives.
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