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JC Economics Tuition Notes


Familiarise yourself with the economic definitions

To support your revision efforts, Economics Focus features an economics definitions list section that provides concise explanations of terms that are commonly described and used in CSQs and Essays. During your study, should you encounter any unfamiliar terms that require further elaboration, search for the keyword in this page and enter the related page for more information. We have separated the content by chapters for easy reference.

Should you require further assistance for your revision of A Level Economics, do consider enrolling in our economics tuition classes. The programmes will provide a comprehensive coverage of content in exam-oriented ways, seen in terms of content enrichment based on the chapters tested for H1 and H2 Economics students. Also, you can seek guidance from the JC Economics tutors, who will provide explanation and examples to facilitate conceptual understanding of economics terms.

List of Chapters for JC Economics Tuition

How to use these JC Economics Notes?


As shown below, the economics definition list is separated by two major areas: Microeconomics and Macroeconomics. Within each area, there are different chapters displayed based on the latest syllabus content set by SEAB. At any point of time during your revision, you can refer to these online notes to obtain an elaboration of the economics key terms.

Alternatively, you can treat the notes as a compiled dictionary for Economics, but the content is sectioned into separate chapters, rather than in alphabetical order. Given the differences in coverage of content for H1 and H2 Economics students, we have annotated the chapters that are specifically for H2 Economics students.

1

Introduction to Economics

At the introduction, you will explore the basics of Economics and how you can relate to the its concepts. By learning Economics, you will learn to understand how individuals make decisions, either as a consumer or producer. Also, you will then proceed to large-scale decisions, seen in terms of firms and governments. Economics can be studied in two major aspects, namely Microeconomics and Macroeconomics.

Microeconomics

Decision-making at individual, household, and firm levels


Microeconomics refers to the study of individuals and firms in making decisions to optimise resource allocation, given that there is the basic problem of scarcity. In this overarching theme, you will explore various facets of Economics, like demand and supply analysis and factors affecting the price mechanism. The knowledge gained from the learning experience is applicable to your personal experiences as you will become more aware of the underlying reasons affecting the price changes of goods and services.

1

Introduction to Microeconomics

For the study of Microeconomics features two major themes, as stated by the SEAB syllabus content requirements, namely Theme 1 on Central Economic Problem and Theme 2 on Markets. Within these two themes, you will examine various aspects of economics, like Demand and Supply analysis and Market Failures.

2

Central Economic Problem

In the topic of Central Economic Problem, you can search for the following key terms to understand the meaning of the economic definitions commonly used in CSQs and essays: scarcity, opportunity cost, utility, marginal utility, capital good, factors of production, production possibility curve (PPC), increasing opportunity cost, constant opportunity cost, decreasing opportunity cost, law of diminishing marginal utility.

3

Theory of Demand and Supply

The list of definitions are as follows: demand, supply, market equilibrium, supply curve upward sloping, change in quantity demanded, change in quantity supplied, change in demand, change in supply, excess demand condition, excess supply condition, glut, shortage, inferior good, normal good, luxury good, competitive demand, joint demand, derived demand, composite demand, joint supply, competitive supply, fixed supply, non-price determinants of demand, non-price determinants of supply, downward-sloping demand curve, substitution effect, income effect.

4

Price Elasticity of Demand and Supply

For Price Elasticity of Demand and Supply, the concepts covered will be related to the preceding chapter that utilises the demand and supply analysis. Examine the following key terms to understand and apply the definition well: Price Elasticity of Demand (PED), Price Elasticity of Supply, magnitudes of PED, magnitudes of PES, determinants of PES, determinants of PED, using PED to maximise total revenue, uses of PED, uses of PES, limitations of PED and PES.

5

Income and Cross Elasticity of Demand

H2 Economics Only

The list of definitions are as follows: demand, supply, market equilibrium, supply curve upward sloping, change in quantity demanded, change in quantity supplied, change in demand, change in supply, excess demand condition, excess supply condition, glut, shortage, inferior good, normal good, luxury good, competitive demand, joint demand, derived demand, composite demand, joint supply, competitive supply, fixed supply, non-price determinants of demand, non-price determinants of supply, downward-sloping demand curve, substitution effect, income effect.

6

Government Regulation

In the topic of Government Regulation, which is part of Theme 2 (Markets), you can examine the economic definitions, like producer surplus, price ceiling, floor price, direct tax, indirect tax, tax incidence, consumer tax burden, producer tax burden,black market, specific tax, subsidy, ad valorem tax, consumer surplus, minimum price, maximum price, deadweight loss, consumer benefit, producer benefit.

7

Cost of Production

H2 Economics Only

The Cost of Production chapter is specifically for H2 Economics students. Cost of Production is a topic that relates to the different factors influencing firms in making decisions to set price and output. Their decisions are based on aims, particularly profit maximisation, which is the primary motivation for their market presence.

In this chapter, you can derive a clearer understanding of the following economics terms to comprehend how firms make pricing and output decisions: short run, long run, variable factors of production, fixed factors of production, variable cost, fixed cost, average variable cost, average fixed cost, average total cost, marginal product, marginal revenue, average product, economies of scale, internal economies of scale, external economies of scale, internal diseconomies of scale, external economies of scale, benefits of EOS, increasing returns to scale, constant returns to scale, decreasing returns to scale, bureaucratic red-tape, low-labour morale, division of labour, advantages of large firms, disadvantages of large firms, law of diminishing returns, law of variable proportion, acquisition, merger, survival of small firms, niche market, horizontal integration, vertical integration, impacts of merger on firms, consumers and society, source of efficiency influencing the law of production in short and long run, specialisation of production, production law, factors of production, production condition.

8

Market Structures

H2 Economics Only

Market Structures is a chapter applicable only to H2 Economics students. In this chapter, students will learn how to identify the four different types of market structures that firms belong to, namely perfect competition, monopoly, monopolistic competition, and oligopoly.

To understand the characteristics and behaviour of firms in the respective market structures, it is important for students to understand the following economics definitions: perfect market structure, imperfect market structure, perfect competition, monopoly, oligopoly, monopolistic competition, perfect market competition, market concentration ratio, subnormal profit, normal profit, supernormal profit, market power, how market power affects price, output and production equilibrium, artificial and natural barriers to entry, how barriers to entry affect firms in monopolistic competition, production equilibrium and profit levels, price discrimination, contrived barriers, first degree price discrimination, second degree price discrimination, third degree price discrimination, negative impacts of price discrimination, positive impacts of price discrimination, conditions for price discrimination, price competition, benefits and limitations of price competition, predatory pricing, non-price competition, types of non-price competition, product differentiation, kinked-demand curve, allocative efficiency, production efficiency, aims of firms, x-efficiency, profit maximization, cost minimization, two-tier charge, marginal cost pricing (MC), natural monopoly, reasons for regulation of monopolies, consumer exploitation, nationalization, legalization, price regulation, Anti Trust Law, Free Competition Act, rival firm, collusive activity, dominant firm, collusive oligopoly, barometric price leader, low-cost price leader, patent right, how patent right affects market power, production equilibrium, consumers and firms, licensing, intellectual property right, collusion, growth maximisation, liberalization of market, mutual interdependency, price rigidity, perfect mobility of factors of production, cost condition.

9

Market Failures

For the topic of Market Failures, you will examine the market mechanism and reasons for its failure, which leads to welfare loss to the society. As such, the occurrence of market failure necessitates government intervention, seen in terms of the various measures and policies.

To understand the meaning and impacts of market failures, as well as how governments can intervene to correct the problems, you can refer to the following economics definitions: cost-benefit analysis, market mechanism, free market economy, market failure, moral suasion, air pollution, carbon permit, direct provision, merit goods, bureaucratic inefficiency.

Macroeconomics

Decision-making of governments at the national and international levels


In the overarching theme of Macroeconomics, you will learn to assess economic performance of small and large countries before moving on to the examination of government policies. These areas of study are essential in helping you to understand the significance of different macroeconomic objectives, like the pursuit of economic growth and low unemployment rate. In addition, Macroeconomics covers the study of international aspects, such as the introduction of trade and foreign exchange in affecting the economic stability of countries.

1

Introduction to Macroeconomics

For the study of Macroeconomics, it features the third and finale theme, known as Theme 3 on The National and International Economy. You will examine how governments operate as economic agents. The lessons will focus on different forms of government intervention that affect growth, inflation unemployment, exchange rates, balance of payments, income distribution, particularly in the context of Singapore. The knowledge acquired from Themes 1 and 2 are applicable to the study of economics at the national and international levels.

2

National Income Accounting

In the topic of National Income Accounting, you will understand how economic performance is assessed through the use of various economic indicators. By doing so, governments and academics can identify and measure the qualitative and quantitative aspects of a country’s standard of living. The information gained from the study will help governments to make informed decisions and policymaking for the pursuit of different macroeconomic aims.

The study of National Income Accounting requires an in-depth and broad understanding of the following definitions: nominal and real Gross Domestic Product (GDP), nominal and real Gross National Product (GNP), GDP at 2000 base year price level, net property income from abroad, personal income, personal disposable income, qualitative and quantitative standard of living, real per capita income, Human Development Index (HDI), Measurement of Economic Welfare (MEW), Consumer Price Index (CPI), cost of living, cost of living index, labour force, working population, real and nominal GDP growth rate, balance of trade, current account, capital account, financial account, nominal and real effective exchange rate, Gini coefficient ratio, wage-to-GDP ratio, time comparison, space comparison, national income figures, actual and potential production capacity, limitation of GDP figures, problems of time and space comparison, purchasing power parity, GDP deflator, net factor income from abroad, export competitiveness, privatization, labour productivity, budget deficit

3

AS-AD Models / National Income Determination

For the topic of AS-AD models or National Income Determination, you are required to understand the circular flow of income as a model to observe the flow of transactions amongst households, firms, governments and the foreign sector.

You can study the topic better by understanding the following economic definitions: circular flow of income, multiplier process, reverse multiplier process, equilibrium level of national income, aggregate demand (AD), aggregate supply (AS), determinants of supply, determinants of demand, general price level, resource capacity of production, aggregate demand components, determinants of consumption, saving, investment, government expenditure, and balance of trade, size of economy, aggregate expenditure, Keynesian model.

4

Economic Growth

For the topic of Economic Growth, you examine the meaning of growth and its impacts on the economy. Given that the pursuit of economic growth is one of the many key aims of a government, it is imperative that you analyze the benefits and shortcomings that hinder countries from achieving this goal.

Your revision should encompass the recognition of the following key definitions: economic growth, potential and short-term growth, actual growth, sustainable economic growth, long-term growth, production possibility curve, desirable economic growth, inclusive growth, Gross Happiness Index (GHI), Genius Progress Indicator (GPI), life expectancy, jobless growth, technical recession, economic recession, inflationary condition, overheated economy, rising cost condition, subprime mortgage, capital flow, raw materials, physical capital, capital goods, foreign direct investment (FDI), literacy rate, child mortality rate, hot money.

5

Inflation

The chapter on Inflation discusses the meaning of a sustained increase in general price level, which has implications on individuals as consumers and producers, firms, and governments. The impacts of inflation can be addressed effectively by understanding the different causes before appropriate policies can be implemented.

The following economic definitions will help you to comprehend the chapter: inflation, galloping inflation, mild inflation, hyperinflation, stagflation, deflation, Consumer Price Index, demand-pull inflation, structural rigidities, cost-push inflation, asset-based inflation, imported inflation, tax-based inflation, internal value of money, external value of money, cost of living index, price-wage spiral, wage-price spiral, core inflation, speculation, hot money, capital flow.

6

Unemployment

The topic of unemployment relates to the understanding of jobs and how the utilization of labour resources within a country can affect economic development. Pay attention to the factors affecting unemployment to recognise the potential economic repercussions that can be positively or negatively related.

You are expected to understand the following definitions: unemployment, unemployment rate, labour force, active working population, working age population, labour participation rate, inactive working population, economically inactive labour force, equilibrium level of unemployment, disequilibrium level of unemployment, natural rate of unemployment, demand-deficient unemployment, cyclical unemployment, frictional unemployment, sector unemployment, displacement of workers, structural unemployment, regional unemployment, technological unemployment, seasonal unemployment, wage flexibility, Job Credit Scheme.

7

Aims of Government & Macroeconomic Policies

Following the understanding of different economic indicators, you will learn how governments can achieve their macroeconomic aims. There are many policies that can be implemented to pursue certain objectives. However, these policies may have limitations that should be identified.

The study of this chapter requires knowledge of the following key terms: aims of government, sustainable economic growth, full employment, price stability, balance of payment equilibrium, external equilibrium, equal distribution of income, equity, demand-side management policy, supply-side management policy, monetary policy, expansionary and contractionary monetary policy, fiscal policy, expansionary and contractionary fiscal policy, strong and weak exchange rate policy, infrastructural development, trade facilities development, capital accumulation, manpower development, technological development, supply-side fiscal policy, tariffs, subsidies, quotas, exchange controls, embargoes, free trade agreements (FTAs), direct controls, price regulation policies, assets, Marshall-Lerner condition, flexible wage structure.

8

Balance of Payment

H2 Economics Only

Balance of Payment refers to the statement of a country’s economic transactions with the rest of the world within a given time period. The study of this chapter allows students to understand how the transactions within and across borders are accounted for, which affects the external equilibrium as one of the four major aims of government.

Hence, pay attention to the following key terms to comprehend the topic: balance of payment, current account, capital account, financial account, balancing item, overall balance, official financial account, balance of payment equilibrium, J-curve effect, balance of payment deficit and surplus, balance of payment disequilibrium, invisible balance, income balance, visible balance, trade balance.

9

Foreign Exchange

H2 Economics Only

Foreign Exchange is also known as ‘forex’ in short. This chapter relates to the understanding of international markets, seen in terms of the flow of currency across national boundaries. Given the continual changes in the value of currency, governments may adjust values based on their macroeconomic objectives, particularly the use of exchange rate management policies.

As such, you should study the following economic terms to grasp the chapter: exchange rate, appreciation, depreciation, flexible exchange rate system, managed-float exchange rate system, fixed exchange rate system, overvaluation, undervaluation, exchange rate regulation, purchasing power parity (PPP), nominal and real effective exchange rate, speculation, market equilibrium for foreign exchange, capital accumulation, capital investment, capital control, currency manipulation, gradual and modest appreciation, official reserves, mortgage loan, trade-weighted exchange rate, basket of currency, future value of saving, per capita income.

10

International Trade

H2 Economics Only

International Trade is a topic that relaxes the assumption of a closed economy, whereby countries can engage in trade with each other. The comprehension of international trade is important as you will recognise the benefits that are attainable. However, opening up a country to trade also implies that the economy is vulnerable to external fluctuations.

Therefore, it is imperative to understand the following definitions to understand how governments preempt and respond to potential challenges: Theory of Comparative Advantage, specialization, absolute advantage, trading price, dynamic comparative advantage, diversification, terms of trade, free trade agreement, import substitution strategy, protectionism, dumping, trade diversion, exchange controls, tariffs, quotas, embargoes, import expenditure, intellectual property rights, government procurement, custom union, trade creation, preferential trade agreement (PTA), common market, export revenue, balance of trade, infant industry argument, advanced economy, emerging economy, factor endowment, taxation, mobility of resources, deregulation, transaction, trade union, retaliation.

11

Globalisation

H2 Economics Only

Globalization refers to the substantial surge in number of economic activities between countries, leading to the economic integration of markets. This topic will examine the factors affecting globalization, as well as the impacts on economies as a whole.

You should examine the following economic definitions to develop a wholesome understanding of the topic: globalization, capital and labour flow, flow of fund, foreign direct investment (FDI), economic integration, international factor flows, standard trading procedure, outsourcing, remittance, brain drain, asset appreciation.