Level 4 – Page 5 – Accountants Institute
Exam Unit: Economics (1.4)

Learning Outcome

To demonstrate an understanding of the market environment, financial environment, government policy and international trade, the principles of economics and their application to economic policies and the business environment.

Economic Concepts and Economic Growth:
1. Defining Economics
2. Opportunity Cost
3. The Nature of Profit
4. Rational Economic Behaviour
5. Three Basic Economic Problems
6. Alternative Economic Systems
7. Economic Growth
8. Welfare EconomicsDemand and Supply:
1. Demand and its Determinants
2. Demand and Price
3. Supply and its Determinants
4. Supply and Price
5. Demand, Supply and the Determination of Price
6. Shifting the Demand Curve; Moving along the Demand CurveElasticity:
1. Calculating Price Elasticity of Demand
2. Using Price Elasticity of Demand Descriptively
3. Factors Affecting Price Elasticity of Demand
4. Price Elasticity of Supply
5. Factors Affecting Price Elasticity of Supply
6. Practical Uses of Price Elasticity
7. Income Elasticity of Demand
8. Cross Elasticity of DemandLabour:
1. Population Size and Demographic Trends
2. Demand for Labour
3. The Supply of Labour
4. Wage Determination
5. Labour Productivity and the Role of Capital Technology
6. Trade UnionsCosts, Revenue and Profit:
1. The Short Run and Long Run
2. Short-Run Costs
3. Revenue
4. Profit Maximising ConditionsProduction, Finance and Marketing:
1. Long-Run Costs
2. Means and Motives for Growth
3. Industry: the Three Classes of Production
4. Specialisation
5. The Law of Comparative Advantage
6. Financial Needs of Business
7. Business Motivation
8. Financial Objectives in Public CorporationsForms of Market Structure:
1. Business Structure in a Mixed Economy
2. Public Structures in a Mixed Economy
3. Forms of Market Structure and Competition
4. A Perfectly Competitive Market
5. Analysis
6. The Demand Curve of the Individual Firm
7. The Effect of Changing Demand on the Firm’s Supply Decisions in the Short Run
8. The Supply Curves of the Firm and the Market in Perfect Competition in the Short Run
9. The Effect of Changing Demand on the Market in the Long Run
10. The Market’s Long-Run Supply Curve
11. Desirability of Perfect CompetitionImperfect Markets:
1. Imperfect Markets
2. Monopoly: Output, Prices and Efficiency
3. Barriers to Entry
4. Monopoly and Perfect Competition Compared
5. Price Discrimination
6. Public Policy Towards Competition and Business Behaviour
7. Monopolistic Competition: Output, Prices and Efficiency
8. Oligopoly: Output, Prices and EfficiencyPrivate and Public Sectors:
1. The Private and Public Sectors
2. Arguments for and Against Privatisation
3. The Location of IndustryNational Income:
1. National Income and its Calculation
2. Firms and Households
3. Leakage and Injections
4. Output, Income and Expenditure
5. Ways of Measuring National Income
6. Interpretation of National Income
7. The Standard of Living – Difficulty of Interpretation
Keynesian Theory:
1. Keynesians and the Monetarists
2. Consumption
3. Savings
4. The Keynesian Theory of Investment
5. The Accelerator
6. Equilibrium
7. Demand Management
8. The Multiplier
9. The Paradox of Thrift
10. Trade CyclesGovernment Policy Objectives:
1. Government Macroeconomic Policy
2. Unemployment
3. Measuring Unemployment
4. Causes of Unemployment
5. Remedies for Unemployment
6. Unemployment and the Future
7. Inflation
8. Sources of Inflation
9. Inflation and Unemployment
10. Economic Growth
11. Causes of Growth
12. Balance of PaymentsMoney and the Financial Environment:
1. The Qualities of Money
2. Financial Intermediaries
3. Commercial Banks and the Creation of Money
4. Control of the Money Supply
5. Central Banking – The Bank of England “Model”
6. Capital Adequacy
7. Offshore BankingMoney and Interest Rates:
1. The Demand for Money – Keynesian View
2. The Supply of Money
3. Interest Rates and Liquidity Preference
4. The Classical View of Interest Rates
5. The Pattern of Interest Rates
6. Benchmark Interest Rates
7. The Term Structure of Interest Rates – Yield CurvesFinancial Markets:
1. Capital Markets
2. The Stock Exchange
3. The Alternative Investment Market
4. Institutional Investors
5. The Venture Capital Market
6. Capital Market Instruments
7. Share Price Indices
8. The Money Markets
9. Money Market InstrumentsFiscal and Monetary Policy:
1. Government Fiscal Policy
2. Public Sector Net Cash Requirements (PSNCR)
3. Policy Implications of the Keynesian Model
4. Taxation and Expenditure Measures
5. The Principles of Taxation
6. Direct and Indirect Taxation
7. Subsidies
8. Monetary Policy
9. The Quantity Theory of Money
10. MonetarismInternational Trade:
1. The Value of International Trade and Services
2. Attributes of the International business Environment
3. Reasons for International Trading
4. Alternative Methods of Foreign Market Entry
5. Problems Associated with International Activities
6. The Benefits of Trade
7. The Law of Comparative Advantage
8. ProtectionismBalance of Payments and Exchange Rates:
1. Trade and the Balance of Payments
2. Flows of Goods, Services and Capital
3. Terms of Trade
4. The Foreign Exchange Market
5. European Developments
6. International Institutions