| Introduction |
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xi | |
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1 The foundations of economics |
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1.1 Economics is a social science |
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1 | (1) |
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2 | (7) |
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1.3 Choice and opportunity cost |
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9 | (1) |
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1.4 The use of models in economics |
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10 | (6) |
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1.5 Central themes in economics |
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16 | (3) |
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1.6 Theory of knowledge and economics |
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19 | (2) |
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2 Competitive markets: demand and supply (Unit 1.1) |
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2.1 The nature of markets |
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21 | (6) |
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27 | (3) |
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2.3 Determinants of demand |
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30 | (5) |
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2.4 Linear demand functions (HL only) |
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35 | (5) |
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40 | (2) |
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2.6 Determinants of supply |
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42 | (6) |
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2.7 Linear supply functions (HL only) |
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48 | (5) |
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3 Market equilibrium and efficiency (Unit 1.1) |
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53 | (5) |
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3.2 Market equilibrium and linear equations (HL only) |
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58 | (6) |
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3.3 Role of price in resource allocation |
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64 | (2) |
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66 | (6) |
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4 Elasticities (Unit 2.1) |
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72 | (1) |
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4.2 Price elasticity of demand (PED) |
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73 | (7) |
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4.3 Applications of price elasticity of demand |
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80 | (3) |
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4.4 Cross-price elasticity of demand (XED) |
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83 | (4) |
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4.5 Income elasticity of demand (YED) |
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87 | (3) |
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4.6 Price elasticity of supply (PES) |
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90 | (8) |
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5 Government intervention (Unit 1.3) |
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98 | (2) |
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5.2 Tax incidence (HL only) |
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100 | (7) |
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107 | (6) |
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5.4 Price controls: maximum price controls |
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113 | (3) |
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5.5 Price controls: minimum price controls |
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116 | (7) |
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6 Market failure (Unit 1.4) |
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6.1 The meaning of market failure and externalities |
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123 | (3) |
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6.2 Negative externalities |
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126 | (7) |
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6.3 Positive externalities |
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133 | (4) |
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6.4 Lack of merit goods and public goods |
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137 | (2) |
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6.5 Common access resources and the threat to sustainability |
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139 | (4) |
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6.6 Additional forms of market failure |
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143 | (2) |
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6.7 Asymmetric information and abuse of monopoly power (HL only) |
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145 | (3) |
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7 Costs, revenues and profit (Unit 1.5 HL only) |
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7.1 Costs of production: economic costs |
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148 | (4) |
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7.2 Production in the short run: law of diminishing marginal returns |
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152 | (5) |
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7.3 From short-run productivity to long-run costs of production |
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157 | (6) |
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7.4 Revenues: total, average and marginal revenue |
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163 | (6) |
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7.5 The short-run profit maximization rule |
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169 | (7) |
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8 Perfect competition (Unit 1.5 HL only) |
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8.1 Perfect competition: assumptions of the model |
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176 | (2) |
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8.2 Cost and revenue curves in a PC market |
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178 | (1) |
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8.3 Profit maximization in the short run |
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179 | (4) |
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8.4 Profit maximization in the long run |
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183 | (5) |
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188 | (2) |
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8.6 Efficiency in the perfectly competitive market |
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190 | (6) |
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9 Monopoly (Unit 1.5 HL only) |
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9.1 Monopoly: assumptions of the model |
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196 | (1) |
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197 | (2) |
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9.3 Demand and revenue curves under monopoly |
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199 | (2) |
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9.4 Profit maximization for the monopolist |
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201 | (2) |
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203 | (1) |
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204 | (1) |
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9.7 Disadvantages and advantages of monopoly |
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205 | (3) |
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9.8 Monopolies and efficiency |
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208 | (1) |
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9.9 Policies to regulate monopoly power |
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209 | (1) |
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9.10 Price discrimination |
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209 | (8) |
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10 Monopolistic competition and oligopoly (Unit 1.5 HL only) |
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10.1 Monopolistic competition: assumptions of the model |
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217 | (1) |
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10.2 Demand and revenue curves for monopolistic competition |
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218 | (1) |
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10.3 Profit maximization in monopolistic competition |
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219 | (3) |
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10.4 Price and non-price competition |
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222 | (1) |
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10.5 Monopolistic competition and efficiency |
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222 | (1) |
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10.6 Monopolistic competition vs perfect competition and monopoly |
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223 | (1) |
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224 | (2) |
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226 | (2) |
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228 | (2) |
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10.10 Tacit or informal collusion |
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230 | (1) |
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10.11 Non-collusive oligopoly |
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231 | (3) |
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11 Measuring national economic performance (Unit 2.1) |
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11.1 The circular flow model of income |
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234 | (3) |
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11.2 The measurement of economic activity: GDP, GNP and GNI |
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237 | (17) |
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254 | (2) |
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12 Aggregate demand and aggregate supply (Unit 2.2) |
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256 | (1) |
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12.2 The components of AD |
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257 | (1) |
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12.3 Determinants of AD or shifts in the AD curve |
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258 | (14) |
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12.4 The Keynesian spending multiplier |
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272 | (2) |
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12.5 Aggregate supply and equilibrium national output |
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274 | (1) |
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12.6 Short-run equilibrium in the AD/AS model: the Keynesian, sticky wage model |
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275 | (4) |
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12.7 Long-run equilibrium in the AD/AS model: the neo-classical, flexible wage model |
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279 | (2) |
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12.8 Shifts in aggregate supply |
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281 | (4) |
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13 Macroeconomic objective: unemployment (Unit 2.3) |
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13.1 Introduction to the four macroeconomic objectives |
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285 | (1) |
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13.2 The meaning of unemployment |
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286 | (7) |
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13.3 Consequences of unemployment |
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293 | (2) |
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13.4 Types of unemployment and their causes |
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295 | (5) |
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14 Macroeconomic objective: low inflation (Unit 2.3) |
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14.1 The meaning of inflation, disinflation and deflation |
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300 | (9) |
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14.2 Types of inflation and their causes |
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309 | (2) |
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14.3 Consequences of inflation |
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311 | (4) |
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14.4 Deflation and its consequences |
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315 | (3) |
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14.5 Relationships between unemployment and inflation: the Phillips curve (HL only) |
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318 | (10) |
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15 Macroeconomic objective: economic growth (Unit 2.3) |
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15.1 The meaning of economic growth |
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328 | (5) |
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15.2 Causes of economic growth |
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333 | (4) |
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15.3 Calculating economic growth (HL only) |
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337 | (3) |
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15.4 Consequences of economic growth |
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340 | (4) |
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16 Macroeconomic objective: equity in income distribution (Unit 2.3) |
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16.1 Equality vs efficiency in market economies |
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344 | (2) |
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16.2 Indicators of income equality/inequality |
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346 | (5) |
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16.3 Indicators of poverty |
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351 | (2) |
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16.4 The role of taxation in income distribution |
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353 | (9) |
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16.5 Other measures to promote equality |
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362 | (3) |
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16.6 The relationship between equity and efficiency |
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365 | (2) |
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17 Fiscal policy (Unit 2.4) |
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17.1 The government budget |
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367 | (3) |
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17.2 Automatic fiscal policy and the impact of automatic stabilizers |
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370 | (2) |
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17.3 Discretionary fiscal policy and its effect on potential output |
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372 | (3) |
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17.4 The Keynesian spending multiplier (HL only) |
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375 | (3) |
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17.5 Evaluation of fiscal policy |
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378 | (7) |
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18 Monetary policy (Unit 2.5) |
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18.1 Interest rates and the role of a central bank |
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385 | (8) |
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18.2 Monetary policy and short-term demand management |
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393 | (2) |
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18.3 Evaluation of monetary policy |
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395 | (6) |
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19 Supply-side policies (Unit 2.6) |
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19.1 Role of supply-side policies |
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401 | (2) |
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19.2 Market-based supply-side policies |
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403 | (4) |
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19.3 Evaluation of market-based supply-side policies |
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407 | (1) |
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19.4 Interventionist supply-side policies |
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408 | (3) |
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19.5 Evaluation of interventionist supply-side policies |
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411 | (3) |
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20 International trade (Unit 3.1) |
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20.1 The benefits of trade |
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414 | (4) |
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20.2 Absolute and comparative advantage (HL only) |
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418 | (8) |
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20.3 The World Trade Organization |
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426 | (5) |
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21 Protectionism (Unit 3.1) |
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21.1 The case for protectionism |
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431 | (5) |
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21.2 The case against protectionism |
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436 | (2) |
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21.3 Types of protectionism |
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438 | (15) |
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22 Exchange rates (Unit 3.2) |
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22.1 Determination of exchange rates |
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453 | (4) |
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22.2 Causes of change in the exchange rate |
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457 | (2) |
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22.3 Effects of change in the exchange rate |
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459 | (2) |
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22.4 Government intervention |
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461 | (5) |
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22.5 Evaluation of different exchange rate systems (HL only) |
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466 | (5) |
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22.6 Exchange rate calculations and linear functions (HL only) |
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471 | (8) |
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23 The balance of payments (Unit 3.3) |
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23.1 Meaning of the balance of payments |
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479 | (1) |
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23.2 Components of the balance of payments |
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480 | (9) |
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23.3 Relationship between the accounts |
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489 | (2) |
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23.4 Current account deficits |
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491 | (10) |
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23.5 Current account surpluses |
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501 | (8) |
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24 Economic integration (Unit 3.4) |
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24.1 Forms of economic integration |
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509 | (1) |
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24.2 Preferential trade agreements |
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510 | (1) |
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511 | (5) |
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516 | (2) |
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24.5 Trade creation vs trade diversion (HL only) |
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518 | (5) |
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25 Terms of trade (Unit 3.5 HL only) |
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25.1 Meaning and measurement of terms of trade |
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523 | (1) |
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25.2 Changes in the terms of trade |
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524 | (2) |
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25.3 Consequences of changes in the terms of trade |
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526 | (11) |
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26 Introduction to economic development (Units 4.1, 4.2) |
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26.1 Economic growth and economic development |
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537 | (10) |
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26.2 Common characteristics of economically less developed countries |
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547 | (2) |
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26.3 Diversity among economically less developed countries |
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549 | (2) |
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26.4 Single indicators of economic development |
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551 | (7) |
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26.5 Multiple indicators of economic development |
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558 | (2) |
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26.6 Composite indicators of economic development |
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560 | (5) |
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27 Domestic and international factors and economic development (Units 4.3, 4.4) |
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27.1 Domestic factors and economic development |
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565 | (9) |
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27.2 International obstacles to economic development |
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574 | (2) |
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27.3 International factors that contribute to economic development |
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576 | (5) |
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27.4 Development section research project |
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581 | (8) |
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28 Foreign investment, aid, trade and debt (Units 4.5, 4.6, 4.7) |
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28.1 The meaning of FDI and MNCs |
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589 | (1) |
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28.2 Conditions that favour MNC investment |
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590 | (4) |
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594 | (3) |
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597 | (6) |
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28.5 Evaluation of foreign aid |
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603 | (4) |
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28.6 Major institutions in development |
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607 | (4) |
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28.7 Foreign debt and its consequences |
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611 | (5) |
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29 The balance between markets and intervention (Unit 4.8) |
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29.1 Markets and intervention: the debate continues |
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616 | (2) |
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29.2 Market-oriented and interventionist policies |
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618 | (9) |
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29.3 Complementary approach: a market with government intervention |
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627 | (11) |
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30 Theory of knowledge and economics |
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638 | (12) |
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31 Advice and skills for the Internal Assessment portfolio |
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650 | (15) |
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32 Advice and skills for the exams and Extended Essay |
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665 | (17) |
| Answers to quantitative exercises |
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682 | (15) |
| Index |
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697 | |
Lisainfo e-raamatute kohta