Understanding Economics AS Level Book

980.00

Book Code : 155
Number of Pages : 334
Author : Muhammad Kamran Malik
Language : English
Publishers : Read and Write Publications

 

Categories: ,

Description

TABLE OF CONTENTS
PREFACE
HOW TO USE THIS BOOK 
SECTION 1 BASIC ECONOMIC PROBLEM 
SCARCITY AND OPPORTUNITY COST …………………………………………………………………………………………….. 9
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………….. 10
SECTION 2 PRODUCTION POSSIBILITY CURVE 
PPC AND SCARCITY ………………………………………………………………………………………………………………….. 15
PPC AND OPPORTUNITY COST …………………………………………………………………………………………………… 15
PPC AND ECONOMIC EFFICIENCY ………………………………………………………………………………………………. 16
SHIFTS IN PPC …………………………………………………………………………………………………………………………. 16
CONSUMER GOODS AND CAPITAL GOODS ………………………………………………………………………………….. 18
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………….. 19
SECTION 3 ECONOMIC SYSTEMS 
FREE MARKET ECONOMY …………………………………………………………………………………………………………. 32
COMMAND ECONOMY …………………………………………………………………………………………………………….. 34
MIXED ECONOMY ……………………………………………………………………………………………………………………. 35
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………….. 36
SECTION 4 POSITIVE AND NORMATIVE STATEMENTS
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………….. 40
SECTION 5 DEMAND
LAW OF DEMAND ……………………………………………………………………………………………………………………. 43
DEMAND SCHEDULE ………………………………………………………………………………………………………………… 43
DEMAND CURVE ……………………………………………………………………………………………………………………… 43
FACTORS CAUSING SHIFTS IN THE DEMAND CURVE (DEMAND DETERMINANTS) ……………………………… 46
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………….. 48
SECTION 6 SUPPLY
LAW OF SUPPLY ………………………………………………………………………………………………………………………. 56
SUPPLY SCHEDULE …………………………………………………………………………………………………………………… 56
SUPPLY CURVE ………………………………………………………………………………………………………………………… 56
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………….. 59
SECTION 7 MARKET EQUILIBRIUM
CHANGES IN THE EQUILIBRIUM PRICE ………………………………………………………………………………………… 63
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………….. 65
SECTION 8 ELASTICITY OF DEMAND
PRICE ELASTICITY OF DEMAND (P.E.D) ……………………………………………………………………………………….. 86
Total Revenue (TR) or Total Expenditures (TE) method 89
Graphical Method 92
POINT ELASTICITY OF DEMAND …………………………………………………………………………………………………………. 93
INCOME ELASTICITY OF DEMAND (M.E.D) …………………………………………………………………………………. 100
Cross price elasticity of demand (C.E.D) 102
Limitations of demand elasticities 104
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 105
SECTION 9 PRICE ELASTICITY OF SUPPLY 
DETERMINANTS OF PRICE ELASTICITY OF SUPPLY ………………………………………………………………………. 130
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 133
SECTION 10 CONSUMER AND PRODUCER SURPLUS
CONSUMER SURPLUS …………………………………………………………………………………………………………….. 139
Changes in Consumer Surplus 140
PRODUCER SURPLUS ……………………………………………………………………………………………………………… 142
Changes in Producer Surplus 142
PRICES AS RATIONING AND ALLOCATIVE MECHANISMS …………………………………………………………………………… 144
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 146
SECTION 11 TAXES AND SUBSIDIES
TAXES 156
1) Specific tax 156
2) Ad valorem tax (percentage tax) 156
SUBSIDIES …………………………………………………………………………………………………………………………….. 161
Specific subsidy 161
Ad valorem subsidy (percentage subsidy) 161
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 164
SECTION 12 MAXIMUM AND MINIMUM PRICES 
MAXIMUM PRICE ………………………………………………………………………………………………………………….. 175
Impacts of a maximum price 175
MINIMUM PRICE …………………………………………………………………………………………………………………… 176
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 180
SECTION 13 PUBLIC AND PRIVATE GOODS
PUBLIC GOODS ……………………………………………………………………………………………………………………… 198
PRIVATE GOODS ……………………………………………………………………………………………………………………. 199
MERIT GOODS ………………………………………………………………………………………………………………………. 199
DEMERIT GOODS …………………………………………………………………………………………………………………… 199
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 200
SECTION 14 FACTORS OF PRODUCTION 
(1) LAND ……………………………………………………………………………………………………………………….. 207
(2) CAPITAL ……………………………………………………………………………………………………………………. 207
(3) LABOUR ……………………………………………………………………………………………………………………. 208
(4) ENTREPRENEURSHIP ………………………………………………………………………………………………….. 208
DIVISION OF LABOUR …………………………………………………………………………………………………………….. 208
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 209
SECTION 15 UNEMPLOYMENT
COSTS OF UNEMPLOYMENT ……………………………………………………………………………………………………. 215
REDUCING UNEMPLOYMENT ………………………………………………………………………………………………….. 215
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 216
SECTION 16 MONEY 
EVOLUTION OF MONEY ………………………………………………………………………………………………………….. 224
FUNCTIONS OF MONEY ………………………………………………………………………………………………………….. 225
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 227
SECTION 17 AGGREGATE DEMAND & AGGREGATE SUPPLY 229
AGGREGATE DEMAND (AD) …………………………………………………………………………………………………….. 229
AGGREGATE SUPPLY (AS) ……………………………………………………………………………………………………….. 231
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 234
SECTION 18 GENERAL PRICE LEVEL: PRICE INDICES
LIMITATIONS OF PRICE INDEX …………………………………………………………………………………………………. 246
NOMINAL AND REAL CHANGES ……………………………………………………………………………………………….. 246
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 248
SECTION 19 INFLATION
TYPES OF INFLATION ……………………………………………………………………………………………………………… 255
CAUSES OF INFLATION……………………………………………………………………………………………………………. 256
CONSEQUENCES OF INFLATION ………………………………………………………………………………………………. 257
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 260
SECTION 20 PRINCIPLES OF ABSOLUTE & COMPARATIVE ADVANTAGE
THEORY OF ABSOLUTE ADVANTAGE ………………………………………………………………………………………… 270
THEORY OF COMPARATIVE ADVANTAGE ………………………………………………………………………………….. 271
EXCEPTIONS TO THE THEORIES OF ABSOLUTE & COMPARATIVE ADVANTAGE ……………………………….. 275
LIMITATIONS TO THE THEORIES ………………………………………………………………………………………………. 276
CHALLENGES OF INTERNATIONAL TRADE …………………………………………………………………………………. 277
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 278
SECTION 21 TERMS OF TRADE
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 292
SECTION 22 ARGUMENTS FOR FREE TRADE & MOTIVES FOR PROTECTION 296
ARGUMENTS FOR FREE TRADE ………………………………………………………………………………………………… 297
TYPES (METHODS) OF PROTECTION AND THEIR EFFECTS …………………………………………………………….. 297
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 301
SECTION 23 ECONOMIC INTEGRATION 
FREE TRADE AREA ………………………………………………………………………………………………………………….. 312
CUSTOMS UNION ………………………………………………………………………………………………………………….. 312
COMMON MARKET ……………………………………………………………………………………………………………….. 312
FULL ECONOMIC UNION …………………………………………………………………………………………………………. 312
POLITICAL UNION ………………………………………………………………………………………………………………….. 312
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 315
SECTION 24 BALANCE OF PAYMENTS
(I) CURRENT ACCOUNT …………………………………………………………………………………………………… 319
(II) FINANCIAL (CAPITAL) ACCOUNT …………………………………………………………………………………… 319
BALANCE OF PAYMENTS PROBLEMS ………………………………………………………………………………………… 321
Why is a trade deficit bad? 321
Why is a trade surplus bad? 322
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 323
SECTION 25 EXCHANGE RATES
NOMINAL EXCHANGE RATE …………………………………………………………………………………………………….. 335
REAL EXCHANGE RATE ……………………………………………………………………………………………………………. 335
PURCHASING POWER PARITY THEORY ……………………………………………………………………………………… 335
MANAGED FLOATING …………………………………………………………………………………………………………….. 336
FLEXIBLE OR FLOATING EXCHANGE RATES ………………………………………………………………………………… 336
CHANGES IN EXCHANGE RATES ……………………………………………………………………………………………….. 337
FIXED EXCHANGE RATES …………………………………………………………………………………………………………. 338
MANAGED FLOAT ………………………………………………………………………………………………………………….. 339
ADVANTAGES & DISADVANTAGES OF FIXED & FLOATING EXCHANGE RATES …………………………………. 340
POLICIES TO CORRECT BALANCE OF PAYMENTS DISEQUILIBRIUM………………………………………………… 341
POLICIES TO CORRECT A TRADE SURPLUS …………………………………………………………………………………. 345
IMPACTS OF CHANGES IN INTEREST RATE …………………………………………………………………………………. 347
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 349
SECTION 26 FISCAL POLICY
MONETARY POLICY ……………………………………………………………………………………………………………….. 380
SUPPLY SIDE POLICIES AND NATURAL RATE OF UNEMPLOYMENT ………………………………………………… 381
SYSTEMS OF TAXATION ………………………………………………………………………………………………………….. 382
MULTIPLE CHOICE QUESTIONS ………………………………………………………………………………………………… 386
ANSWERS     393

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