CAPE ECON Study Guide 1.docx

1、CAPE ECON Study Guide 1For Self-Study and Distance LearningThis material has been developed forThe Caribbean Examinations Council (CXC)Copyright 2009 CXCPrepared by:Roger HoseinWith contributions from: Sace Narine and Rebecca GookoolTABLE OF CONTENTSStudy GuidesTitlesPage1MODELS OF THE MACROECONOMY

2、(NATIONAL INCOME ACCOUNTING)1 2MODELS OF THE MACROECONOMY (CLASSICAL MODELS OF THE MACROECONOMY)243MACROECONOMIC PROBLEMS AND POLICIES (UNEMPLOYMENT AND INFLATION)734MACROECONOMIC PROBLEMS AND POLICIES (MONETARY AND FISCAL THEORIES AND POLICIES)965GROWTH, SUSTAINABLE DEVELOPMENT AND GLOBAL RELATIONS

3、137INTRODUCTIONPurposeThe Caribbean Examinations Council (CXC), has developed Self-Study Guides for a number of Caribbean Secondary Education Certificate (CSEC) and Caribbean Advanced Proficiency Examination (CAPE) subjects. The main purpose of the Guides is to provide both in-school and out-of-scho

4、ol candidates with resource materials which should help them in preparing for CXC examinations. Each Study Guide is student centered and its language is student friendly.The Economics Unit 2 course is designed for persons over the age of sixteen who wish to further their studies. The course is equal

5、ly useful to persons who are pursuing part-time study and those enrolled full-time in an educational institution.You may have completed five years of secondary education, or you may be a mature student with work experience. The course is based on the assumption that you are already able to do the fo

6、llowing:1. interpret, accurately, material intended for the informed lay-person;2. express personal opinions and factual information, clearly, demonstrating logical sequencing and appropriate English registers up to the level of the CSEC General Proficiency or its equivalent.Course AimsThe course ai

7、ms to enable students to:1. promote understanding of the basic principles and concepts of economics which are accepted in large measure by economists while recognising that the field is changing continuously;2. develop an appreciation of the various methods used by economists in analysing economic p

8、roblems;3. develop an understanding of the global economy and of the relationships between rich and poor nations with respect to international trade and finance and the most important international financial institutions;4. encourage students to apply economic principles, theories and tools to every

9、day economic problems, for example, inflation, unemployment, environmental degradation, sustainable development and exchange rate instability and to contribute meaningfully to any dialogue on these issues;5. encourage students to apply economic theory to the critical issues which affect the small op

10、en Caribbean-type economy;6. encourage students to evaluate contentious economic issues so that decision-making may be informed by logical and critical thinking;7. sensitize students to the need for ethical behaviour in the conduct of economic transactions.Course StructureThe course consists of five

11、 Study Guides, which are all based on the CAPE Economics Unit 2 Syllabus. Each Study Guide addresses the skills and content of a specific Module of the Syllabus. The Module on which the Study Guide is based is always indicated at the beginning of the Study Guide. However, the sequence of the Study G

12、uides does not mirror that of the syllabus Modules since the syllabus Modules are not bound by a rigid sequence. The sequence of topics in this course is designed to facilitate study by leading you through topics in a way which will enable you to build on previously learnt skills.What Resources Will

13、 You Need?Remember that these Study Guides will not be all that you need to complete the syllabus and prepare for your examination. You are expected to make use of the resources listed at the end of the course book as well as engage in other wide, general reading, which will improve your general kno

14、wledge, vocabulary and structural competence.You will also need basic study equipment, for example, paper, pens, pencils, and highlighters for marking important parts of the text. A good dictionary and a thesaurus are also essential to this programme.Managing Your TimeRemember to put aside special t

15、ime each day for general reading in addition to your study time.Study Guide Structure Each Study Guide is divided into eight sections to facilitate your study, as indicated below:(i)IntroductionThis places what you are about to study in the context of your everyday life and relates it to what you ha

16、ve done in previous Study Guides.(ii)ContentThis lists the topics that are to be covered in the Study Guides.(iii)ObjectivesThese help you to identify the specific skills that you should have acquired by the end of the Study Guide. You should read these carefully to acquaint yourself with what you a

17、re meant to be learning during the Study Guide.(iv)ActivitiesInstructions are provided at the start of each activity. Read all instructions carefully before you attempt the activity. Some activities require you to think about something before you read any further. You should take the necessary time

18、to do so. The thinking activity is designed to help you focus your thoughts in the direction which will facilitate your ability to complete the activities that follow.(v)FeedbackEach activity has a feedback section that allows you to determine how well you have done in the activity. If you have not

19、completed the activity successfully, you should re-read the preceding examples or information carefully.(vi)ExamplesThese are meant to guide you to an understanding of the concept being taught. All examples should be read carefully before you attempt any activities that follow.(vii)End TestThis come

20、s at the end of each Study Guide and is designed to ensure that you have acquired those skills identified in the objectives. There is a feedback section following the End Test which allows you to measure the accuracy of your answers to the test so that you will know whether or not you have acquired

21、the competencies. If there are questions in the End Test that you have not answered satisfactorily, ensure that you return to the relevant section of the Study Guide and review those areas until you are satisfied that you have understood the concept.(viii)Key PointsThese summarize important concepts

22、 that you need to remember and pay special attention to as you work through the course.AssignmentsCourse assignments are included in order to allow you to check your progress through the course. The assignments enable you to determine your areas of weakness and to check your understanding of the con

23、cepts.ExaminationsYou must ensure that you have access to the version of the syllabus that outlines the structure of the examination for the year in which you intend to write it.STUDY GUIDE 1MODELS OF THE MACROECONOMY(NATIONAL INCOME ACCOUNTING)INTRODUCTIONWelcome to the CAPE Economics Unit 2 Study

24、Guide. While the Unit 1 Study Guide dealt with micro-economics, this Study Guide focuses on macro-economic issues.Do you know the difference between micro and macroeconomics? The Wikipedia encyclopedia states that micro-economics is “the branch of economics that studies how individuals, households a

25、nd firms make decisions to allocate limited resources.” Macroeconomics, on the other hand, is the the branch of economics that deals with the performance, structure and behaviour of a national or a regional economy as a whole.”This Study Guide therefore is designed to give you a thorough understandi

26、ng of the principles of economics that apply to your local and regional economic system as a whole. Let us begin by examining how a nation deals with issues surrounding National Income Accounting.GENERAL OBJECTIVEOn completion of this Study Guide, you should appreciate the notion of National Income

27、Accounting and the importance of these accounts for macroeconomic theory and policy.SPECIFIC OBJECTIVESYou should be able to:1. explain the circular flow of income;2. use key terms associated with National Income Accounting;3. assess the different ways of deriving National Income Accounts;4. interpr

28、et National Income statistics;5. use National Income Accounts to analyze the performance on an economy as a whole;6. derive real GDP from nominal GDP;7. evaluate the limitations of GDP.CONTENT Economic agents in the Circular Flow of Income Model. Key terms associated with the Circular Flow of Income

29、 Model. Gross Domestic Product (GDP), Gross National Product (GNP) and other measures. Calculation of GDP, GNP and their components (personal income, disposable income), Net National Income (NNI), and per capita income; avoidance of double counting. Total measures of:(a) GDP at market prices;(b) GDP

30、 at factor costs. Use of National income accounts. Calculation of real and nominal GDP using the price deflator. Limits of National Income Accounts as a measure of well-being.NATIONAL INCOME ACCOUNTINGECONOMIC AGENTS IN THE CIRCULAR FLOW OF INCOME MODEL A. Two Sector Economy Model The circular flow

31、of income in macroeconomics refers to the flow of incomes and expenditures among the principal economic agents in an economy. In a two-sector economy, the economic agents are households and firms whilst in a four-sector economy there are two additional players; the government and the international s

32、ector. One of the basic assumptions of this model is that households own all the factors of production, whilst firms undertake the production of all goods and services. The other fundamental assumptions are that all incomes received by households are either spent or saved, and only firms undertake investment. Savings is a withdrawa