Cambridge International as and a level Economics Ebook

283
Index
 

---

transmission of 
255
see also
 policies, government
monopolies
comparison with perfect 
competition 
171–2
defi nition and characteristics 
160
, 
170–71
natural monopolies 
167
, 
170–71
see also
cartels
; 
competition
; 
oligopolies
monopsony
in labour markets 
212
motives
precautionary 
256
speculative 
254
transactions 
256
multidimensional poverty index (MPI) 
231
multinationals
purpose and role in developing 
economies 
259–60
multiplier income 
246–7
narrow money 
253
national income multiplier 
245–7
nationalisation
decisions concerning prices and output 
under 
198–9
signifi cance as form of government 
intervention 
74
natural monopolies 
167
, 
270–72
natural rate of unemployment 
241
negative consumption externalities 
194–6
negative externality 
134
negative income tax 
202
negative output gaps 
221
negative production externalities 
192–4
noise, infl ationary 
88
, 
89
nominal GDP 
226
normal goods 
41
normative statements 
18–19
notional demand 
40
‘nudge’ theory 
198
oligopolies
behaviours of oligopolistic fi rms 
182–4
cooperation and collusion of 
oligopolists 
169–70
defi nition and characteristics 
160
, 
168–9
omissions and errors
signifi cance as balance of payments 
element 
92–3
open economies 
245
opportunity costs 
15
, 
16
optimum population (concept) 
236
output
capital-output ratios 
253
decisions concerning 
198–9
gaps in and trade cycle 
221–2
role as measure of GDP 
225
pareto optimality 
133
parities, purchasing power 
229
see also factors impacting e.g
.
 effi
ciency
payments, balance of
disequilibria of 
93–4
macroeconomic policies to correct 
disequilibrium of 
118–26
protection procedures 
110
relationship of infl ation and 
266–7
signifi cance and components 
90–94
see also
 
failures, market
see also
factors aff ecting e.g. 
competition
; 
demand;
 
equilibrium and disequilibrium;
regulation
;
 supply
markets, labour
government intervention and 
203–8
monopsony in 
212
wage determination in 
208–12
Marshall-Lerner condition 
99
maximisation
of profi ts as objective of fi rms 
151
, 
178–9
of sales revenue as objective 
of fi rms 
179–80
of volume of sales as objective of 
fi rms 
180–81
maximum price 
68
means-tested benefi ts 
201
measurable economic welfare (MEW) 
231
measurement
economic performance 
224–5
unemployment 
243–4
exchange rates 
94–5
infl ation 
86
menu costs 
88
, 
89
merit goods 
35–6
microeconomics and microeconomy 
considerations of equity, effi
ciency, income 
and wealth 
199–200
forms, strengths and weaknesses of 
government intervention 
68–78
government failures in intervention 
in 
212–14
intervention on prices and 
output 
198–9
intervention to correct economic 
externalities 
192–8
intervention using ‘nudge’ theory 
198
labour market forces and government 
intervention 
203–8
monopsony in labour markets 
212
policies redistributing income and 
wealth 
201–3
price system and 
38–67
wage determination in perfect and 
imperfect markets 
208–12
minimum effi
cient scale 
157
minimum price 
69
minimisation
of loss as objective of fi rms 
181
mixed economies 
23–5
models
markets 
159–60
monetary policies
aims and types of macroeconomic 
116
to correct balance of payments 
disequilibrium 
120–21
see also factors infl uencing e.g.
 
defl ation
; 
infl ation
money
defi nition of supply of 
116
distinction between real and money 
values 
86–9
money GDP 
226
narrow money 
253
quantity theory of 
153
relationship between internal and external 
value 
266
sources of supply 
253–5
J-curve eff ect 
99
joint demand 
42
joint supply 
61
Keynesian multiplier 
245–7
Keynesianism
approach to macroeconomy 
255–8
kinked demand curves 
183
Kuznet’s curve 
231
labour 
division of 
19–20
government intervention and markets 
of 
203–8
infl uences on size and composition of 
force of 
239–40
productivity of 
240–41
protection procedures from cheap 
110
wage determination in markets of 
208–10
see also
 
employment
; 
unemployment
Labour Force Survey 
244
Laff er curve 
271
leadership, price 
169
, 
185–6
 
leakages and withdrawals 
249–50
legality, frameworks of
role in aiding economic development 
261
limit pricing 
168
, 
185
liquidity preference theory 
256–7
liquidity ratio 
254
liquidity trap 
257–8
long-run aggregate supply 
82
, 
83–4
Lorenz curve 
200
loss
deadweight 
191–2
minimisation of as objective of fi rms 
181
macroeconomics and macroeconomy 
aims of government policies 
265–6
defi nition and characteristics 
81
, 
218
failures of government policies 
269–71
interventions to correct balance of 
payments disequilibrium 
118–26
Keynesian approaches to 
255–8
problems arising from confl icts of 
government objectives 
269
terms and protection of trade 
within 
100–110
types and aims of government 
intervention 
115–18
see also factors infl uencing e.g. 
defl ation;
demand
;
 infl ation
; 
payments, balance of
; 
rates
,
 exchange
; 
supply
see also features e.g.
development, 
economic;
 
growth, economic;
sustainability 
margin, the
defi nition and uses 
18
marginal product 
151
marginal propensity to consume 
247
marginal propensity to import 
246
marginal propensity to save 
246
marginal revenue products 
204
marginal utility 
145–6
markets, economic
barriers to exit from 
167
contestable markets 
172–3
defi nition, models and structures 
159–60
examples of 
39
284
Cambridge International AS and A Level Economics

---

Index 
real eff ective exchange rates 
95
real GDP 
226
redistribution
equity and policies towards income and 
wealth 
201–3
refl ationary fi scal measures 
to correct unemployment 
244
regressive taxation 
72–3
, 
201
regulation
and equality 
77
and equity 
68
, 
69
, 
74
government intervention to correct 
externalities 
193
 
signifi cance as government 
intervention 
68–70
signifi cance in relation to markets 
134
rent, economic
and transfer earnings in labour 
markets 
209–10
resources
allocation in diff erent economies 
20–25
externalities and ineffi
cient allocation 
of 
135–6
impact of increase on economic 
growth 
222
,
 223–4
types 
13–14
see also uses e.g.
 
consumers and 
consumption
; 
production
restraints, voluntary export 
109
restrictions and bureaucracy
economic and administrative as method of 
protection 
109
returns
decreasing returns to scale 
156
diminishing returns 
151
revaluation, exchange rate 
100
revenue
maximization of sales as objective of 
fi rms
 
179–80
revenue relationships of fi rms 
158
revenue product
of labour 
204–5
rights, property
government intervention to correct 
externalities 
193–4
sales
maximization of revenue and volume as 
objective of fi rms 
178–81
satisfi cing 
181
saving
average propensity to save 
248
marginal propensity to save 
246
saving function 
248
scale, economies and diseconomies of 
154
, 
155–8
scarcity
equilibrium and effi
ciency in 
104
signifi cance for expenditure switching and 
dampening 
120
signifi cance for macroeconomics 
125
schedules
demand 
40
supply 
43
scope, economies of
in relation to survival of fi rms 
175
securities, government 
254
selection, adverse 
36
microeconomy and systems of 
38–67
policies of 
184–6
price leadership 
169
, 
185–6
signifi cance and uses of shadow 
prices 
139
see also
 
consumer price index;
controls, price
private costs and benefi ts 
135–6
privatisation
decisions concerning prices and output 
under 
198–9
signifi cance as form of government 
intervention 
74–8
product, gross domestic (GDP)
role and use as measure of national 
income 
225–30
product, gross national
role and use as measure of national 
income 
225–30
productivity, labour force 
240–41
production
costs of 
151–2
, 
154–5
curves of 
27–31
defi nition and characteristics 
14
economies of scale 
155–8
from short- to long-run 
153–4
globalisation and structures of 
149–50
short-run costs of 
152–3
short-run production function 
150–51
surpluses of 
64–5
what, how and for whom 
15–16
see also
 
consumers and consumption;
goods;
 
labour
see also factors infl uencing e.g.
costs;
 
demand
; 
enterprise; supply; time; 
‘wants, unlimited’
productive effi
ciency 
130–31
products, marginal revenue 
204
profi ts
maximization of 
151
, 
178–9
progress and development
signifi cance for macroeconomics 
125
progressive taxation 
72–3
, 
201
property, rights of 
government intervention to correct 
externalities 
193–4
proportional taxes 
72
protection, trade
methods and impact 
108–11
provision, government
signifi cance as government 
intervention 
68
,
 74–5
purchasing power parities 
229
quantitative easing 
255
quantity theory of money 
153
quantities, equilibrium of 
55
, 
62
quotas 
108–9
rates, exchange
defi nition and measurement 
94–5
determination of foreign 
95–8
eff ects of changing foreign 
98–100
use as method of trade protection 
109
rates, interest 
116
ratios
dependency 
236
liquidity 
254
payments, transfer 
74
perfect competition
comparison with monopolies 
171–2
 
defi nition and characteristics 
160–65
performance, economic
comparison of performance over time 
and between countries 
226–8
role of income statistics in 
judging 
224–5
see also
 development, economic
see also factors impacting e.g.
 gross domestic 
product; gross national income
;
 gross 
national product
 
performance, fi rm
comparisons of 
186–7
permits, pollution
government intervention to correct 
externalities 
193
 
Phillips curve 
267
planned economies 
22–3
policies, government 
aims and types of macroeconomic 
115–18
, 
265–6
government failure in 
macroeconomic 
269–71
macroeconomic to correct disequilibrium 
of balance of payments 
118–26
monetary to correct unemployment 
244
prices and pricing 
184–6
problem of confl icts of for microeconomic 
failure 
213–14
problems arising from confl icts of 
objectives 
269
redistribution of income and 
wealth 
201–3
to correct unemployment 
244
pollution, permits of
government intervention to correct 
externalities 
193
 
population
classifi cation of economies according to 
growth and structure of 
235–7
positive consumption externalities 
196–8
positive externality 
134
positive output gaps 
221
positive production externalities 
196
positive statements 
18–19
potential economic growth 
220–21
poverty
cycles of 
233
multidimensional poverty index 
231
poverty trap 
201
Prebisch-Singer hypothesis 
238
precautionary motive 
256
preferences, transmission of 
63
price elasticity of supply (PES) 
53–4
price elasticity of demand (PED) 
44–7
, 
49–52
prices and pricing
challenge of game theory to 
strategies 
182
controls of 
68–70
decisions concerning under nationalisation 
and privatisation 
198–9
equilibrium of 
55
, 
59–62
income eff ect of changes in 
148
limit pricing 
168
, 
185
maximum and minimum 
68–9