Cambridge International as and a level Economics Ebook

On completion of this chapter you should know:
■ 
what is meant by economic growth, economic 
development and sustainability
■ 
the distinction between actual and potential growth 
in output
■ 
the factors contributing to economic growth
■ 
the costs and benefits of growth, including using and 
conserving resources
■ 
how national income statistics are used as measures of 
economic growth and living standards
■ 
the meaning of the national debt
■ 
the distinction between gross domestic product (GDP), 
gross national product (GNP) and gross national 
income (GNI)
■ 
what is meant by the national debt (government or public 
sector debt)
■ 
other indicators of living standards and economic 
development; monetary, non-monetary, Human 
Development Index (HDI), Measure of Economic Welfare 
(MEW), Multidimensional Poverty Index (MPI) and the 
Kuznets curve
■ 
the characteristics of developed, developing 
and emerging (BRICs) economies; by population 
growth and structure, employment composition, 
external trade and urbanisation in developing 
economies
■ 
how economic growth rates and living standards are 
compared over time and between countries
■ 
what influences the size and components of the labour 
force
■ 
what is meant by labour productivity
■ 
the distinction between full employment and the natural 
rate of unemployment
■ 
the causes and consequences of unemployment
■ 
how to distinguish between the types of unemployment
■ 
what is meant by the unemployment rate and the pattern 
and trends in (un)employment
216

---

■ 
why there are diff iculties involved in measuring 
unemployment
■ 
the policies to correct unemployment
■ 
the distinction between a closed and an open economy
■ 
the circular flow of income between households, 
firms, government and the international economy; the 
multiplier, average and marginal propensities to save and 
consume
■ 
what is meant by aggregate expenditure, its components 
and determinants
■ 
how inflationary and deflationary gaps can be analysed
■ 
what is meant by the full employment level of income and 
equilibrium level of income
■ 
the diff erence between autonomous and induced 
investment
■ 
what is meant by the accelerator
■ 
the Quantity Theory of Money
■ 
the distinction between broad and narrow money supply
■ 
what are the sources of money supply in an open 
economy (commercial banks and credit creation, role of 
central bank, deficit financing, quantitative easing, total 
currency flow)
■ 
the diff erence between Keynesian and monetarist 
theoretical approaches to how the macroeconomy 
functions
■ 
what the liquidity preference theory involves
■ 
what are the types of aid
■ 
the nature of dependency
■ 
the role of trade and investment, multinationals and 
foreign direct investment (FDI)
■ 
the impact of external debt
■ 
the role of the International Monetary Fund (IMF) and 
World Bank
■ 
the impact of corruption and legal framework in an 
economy.