Economics

• Fiscal policy involves changing tax rates or government spending levels.
• The government can use fiscal policy to influence the economy.
• Expansionary fiscal policy is used during recessions, while contractionary fiscal policy is used when inflation is high.
• Monetary policy is the use of interest rate changes to influence economic activity.
• Inflation refers to an increase in prices over time, while deflation is a decrease in prices.
• Monetary policy is used by central banks to control interest rates, which affects borrowing costs and investment decisions.
• Central banks have different objectives depending on their country's economic situation.
• Inflation targeting aims to keep inflation at a certain level through monetary policy.
• Government spending on goods and services increases aggregate demand.
• Tax cuts increase disposable income and consumer spending, leading to an increase in aggregate demand.
• Increasing taxes reduces disposable income and decreases consumption, resulting in a decrease in aggregate demand.
• Central banks are responsible for implementing monetary policy.
• Interest rates affect borrowing costs and investment decisions.
• Inflation targeting is a common approach to setting interest rates.
• Governments may choose to target either price stability (low inflation) or full employment as their primary goal.
• A central bank is responsible for implementing monetary policy.
• Central banks have different objectives depending on the country's priorities.
• Central banks have different goals depending on their mandate, such as controlling inflation or promoting employment growth.
• Interest rates are influenced by factors like supply and demand for money, inflation expectations, and monetary policy actions.
• Governments may also implement policies such as tax cuts or subsidies to stimulate demand.
• Taxes are levied on income, consumption, property, and capital gains.
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• Economics for CSEC® Examinations is an independent publication and has not been authorized, sponsored, or otherwise approved by CXC
• Text © Patricia Gopie

  2010
• Design and illustration © Macmillan Publishers Limited

  2010
• All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publishers
• Printed and bound in Malaysia
• To my family for their love and support, and to my students, for in teaching you, I learnt
• Types of business organisation

  • Sole proprietorships
  • Partnerships
  • Joint stock companies
  • Cooperatives
  • Multinational corporations (MNCs)
• Economies and diseconomies of scale

  1. Productive capacity

  2. Economies of scale

  3. Diseconomies of scale

  4. Division of labour
• Market forces

  Determinants of demand
• The theory of supply

  1. Firm and industry supply

  2. Determinants of supply
• Equilibrium in the market

  1. Demand and supply in the market

  2. Shortages and surpluses

  3. Shifts in demand and supply
• Elasticity

  1. Degrees of elasticity

  2. Factors affecting the price elasticity of demand

  3. Price elasticity of supply
• Market structure

  Spectrum of markets
• Market failure

  1. Causes of market failure

  2. Consequences of market failure
• The financial sector

  1. Money

  2. Features of money

  3. Functions of money

  4. The money supply
• The financial sector
• Money
• The money supply