Download Form 7 Economics Syllabus

1
Form 7 Economics Syllabus
Introduction and Measurement:
Measuring GNP, Inflation & unemploy‘t
Introduction
The Aggregate Output
Two-sector Circular Flow Model
Items Excluded from N.I Accounting
Output Approach
Expenditure Approach
Income Approach
Merits & Limitations of N.I. Statistics
Measuring Inflation
Constructing Price Index
Consumer Price Index
Implicit GNP deflator
Measuring Unemployment
Method of Analysis
Economic Theory
Exogenous and Endogenous Variables
Ceteris Paribus / Expansion of the model
Properties of a Linear Function
Concept of Equilibrium
Identities and Equations
Comparative Statics
Simple Keynesian Model: National Income Determination
2-sector N.I Model
Aggregate Demand & Supply
National Income Identities
Equilibrium Income
Consumption Function
Investment Function
Aggregate Demand Function
Output-Expenditure Approach to income determination
Injection & Withdrawal Approach
The equilibrium Condition Revisited
Concluding Remarks on the Model
Paradox of Thrift
Flow Chart in the Two-sector Model
3-sector N.I. Model
Introducing the Government Sector
Government Expenditure Function
Consumption and Tax Functions
AD Function
Income Determination : Output-Exp. App.
Simple Algebra of Income Determination
factors affecting equilibrium Income
Expenditure and Tax Multipliers
Injection & Withdrawal Approach
Concluding Remark on the 3-sector model
Policy implications
Fiscal Policy & Gov‘t Budget
Recessionary Gap & Fiscal Policy
2
Financing a Deficit Budget
Automatic Built-in Stabilizers
4-sector Model
Import and Export Functions
AD Function
Equilibrium Income & the multiplier
Foreign Sector & Income Determination
Injector and Withdrawal Approach
Summary
IS-LM Model
Short run IS-LM model
Interest-induced Investment Function
AD function & equilibrium Income
Deriving the IS curve
Alternative method of deriving IS fn.
Simple algebra of the IS curve
Slope of the IS function
Shift of the IS curve
Changes in lump-sum tax Versus
Changes in autonomous spending
Asset market
Demand for money
Derivation of the LM function
LM curve
Alternative method of deriving LM fn.
Simple algebra of the LM curve
Slope of the LM curve
Movement of the LM curve
Interest rate and the income determination
Implication of the IS-LM model
Effects of a change in IS
Effects of a change in LM
Disequilibrium in the Goods market
Disequilibrium in the Money market
Goods mkt. and money mkt. Diseq’m
Fiscal and Monetary Policy
Fiscal Policy
Expansionary & contractionary fiscal policy
Crowding-out effect
Effectiveness of Fiscal policy
Remarks on the Effectiveness of F. policy
Monetary policy
Expansionary and contractionary monetary policy
Effectiveness of monetary policy
Concluding remarks on the effectiveness of monetary policy
Deflationary & Inflationary Income gap
More on the Fiscal policy
IS-LM model Vs Simple Keynesian model
Income and Interest Rate Determination: The Classical Tradition
Basic Framework
Employment & real Income determination
3
Interest rate determination
Consumption and Investment : A General Analysis
Determinants of Consumption
Keynesian Theory of Consumption
Alternative Theories of Consumption
Factors Affecting consumption
Determinants of Investment
Money: Nature of money and Theories of Money Demand
Nature and function of money
Characteristics of Good money
Evolution of money
Money demand
Keynesian money demand theory
Keynesian liquidity trap analysis
Alternative approach of the dd. for money
Quantity Theory of Money & Demand for Money
- Classical version, Cambridge version
- the Cambridge version of QT as a Theory of money demand
- The Cambridge k and income velocity of money, V
- Limitations of the Theory
Portfolio Choice Analysis
Money: Money Supply and Monetary Policy in HK
Definitions of money supply
Determination of money supply
- Definitional Identities
- Assumptions
- Derivation of the Banking Multiplier
An illustration of the multiplying effects
- the simple banking multiplier
- Limitations of the model
- Applications of the banking multiplier
Factors affecting money supply
Monetary policy revisited
Monetary policy in HK
Inflation: Causes and Effects
Introduction
The nature of inflation
Causes of inflation
- Inflation as a monetary phenomenon
- Non-monetary causes of inflation
Redistribution effects of inflation
Real costs of inflation
Inflationary expectation & interest rates
Money supply & interest rate
Ways to deal with inflation
Theory of unemployment
Introduction
The Natural Rate Hypothesis
Types of unemployment
Determinants of the natural rate
4
measures to reduce the natural rate
Search Theory of unemployment
Trade-off between unemployment & Inflation: Phillips Curve
Inflationary expectations and the trade-off
Movements of the Phillips Curve
Keynesian Involuntary unemployment
Cost of unemployment - is it wasteful?
Cures to unemployment
International Trade: Theory of Comparative Advantage
Production & Consumption Possibilities under Autarkt
Marginal rate of transformation
Autarky’s optimum, domestic price ratio
An open economy with free trade
A numerical model of absolute advantage
An introduction to the trade models on comparative advantage
Constant cost model
Terms of trade
Graphical illustration on the constant cost trade model
Increasing cost model
Other gains from free trade
Trade Restriction
Arguments for Protectionism
Forms of trade restriction
Graphical analysis of import tariffs
Graphical analysis of import quotas
Tariffs Vs Quotas
Balance of Payments Accounting
The Current Account
Capital Account
The Balance of Payments Accounts
Balance of Payments Surpluses and Deficits
Exchange Rate Systems
Flexible Exchange Rate System
Exchange Rate and the Balance of
Payments
Marshall-Lerner Condition
Factors Affecting the exchange rate
Fixed exchange rate system
Fixed exchange rate and the BOP
Ways to deal with the BOP Disequilibrium
- Automatic mechanisms
- Discretionary policies
Linked Exchange Rate System in HK
- Operation of the Linked Exchange rate system
- Difference between the Linked rate and the pegged rate
- The linked rate and speculative activities
Linked exchange rate system & the BOP
- The market exchange rate of the HK$
Fixed Vs Flexible exchange rate system