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style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35118/unit-2111-market-power-theory-of-production-and-costs-hl.html" title="Unit 2.11(1) Market power - Theory of production and costs (HL)">Unit 2.11(1) Market power - Theory of production and costs (HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35125/unit-2112-market-power-perfect-competitionhl.html" title="Unit 2.11(2) Market power - Perfect competition(HL)">Unit 2.11(2) Market power - Perfect competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35147/unit-2113-market-power-monopolyhl.html" title="Unit 2.11(3) Market power - Monopoly(HL)">Unit 2.11(3) Market power - Monopoly(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35151/unit-2114-market-power-monopolistic-competitionhl.html" title="Unit 2.11(4) Market power - Monopolistic competition(HL)">Unit 2.11(4) Market power - Monopolistic competition(HL)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35153/unit-2115-market-power-oligopolyhl.html" title="Unit 2.11(5) Market power - Oligopoly(HL)">Unit 2.11(5) Market power - Oligopoly(HL)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../41603/economics-real-world-examples-and-extension-material-.html" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43378/opportunity-cost-and-production-possibility-curves.html" title="Opportunity cost and production possibility curves">Opportunity cost and production possibility curves</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42559/demand-theory.html" title="Demand theory">Demand theory</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41886/the-price-mechanism.html" title="The price mechanism">The price mechanism</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43188/market-demand-and-supply.html" title="Market demand and supply">Market demand and supply</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41705/demerit-goods.html" title="Demerit goods">Demerit goods</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42275/market-failure-and-climate-change.html" title="Market failure and climate change">Market failure and climate change</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42925/market-power.html" title="Market power">Market power</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42099/applying-game-theory.html" title="Applying game theory">Applying game theory</a></li></ul></ul><li class="ancestor parent" style="padding-left: 14px"><i class="expander fa fa-caret-right fa-rotate-90"></i><a class="" href="../34407/chapter-3-macroeconomics.html" title="Chapter 3: Macroeconomics">Chapter 3: Macroeconomics</a></li><ul class="level-2 expanded"><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34355/unit-311-measuring-the-level-of-economic-activity.html" title="Unit 3.1(1): Measuring the level of economic activity">Unit 3.1(1): Measuring the level of economic activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34432/unit-312-measuring-economic-development.html" title="Unit 3.1(2): Measuring Economic Development">Unit 3.1(2): Measuring Economic Development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34485/unit-321-variations-in-economic-activity-aggregate-demand-ad-.html" title="Unit 3.2(1): Variations in economic activity - aggregate demand (AD) ">Unit 3.2(1): Variations in economic activity - aggregate demand (AD) </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34487/unit-322-variations-in-economic-activity-aggregate-supplyas.html" title="Unit 3.2(2): Variations in economic activity - aggregate supply(AS)">Unit 3.2(2): Variations in economic activity - aggregate supply(AS)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34758/unit-331-macroeconomic-objectives-economic-growth.html" title="Unit 3.3(1) Macroeconomic objectives: economic growth">Unit 3.3(1) Macroeconomic objectives: economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34771/unit-332-macroeconomic-objectives-unemployment-.html" title="Unit 3.3(2) Macroeconomic objectives: unemployment ">Unit 3.3(2) Macroeconomic objectives: unemployment </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34778/unit-333-macroeconomic-objectives-inflation-and-deflation--1.html" title="Unit 3.3(3) Macroeconomic objectives: inflation and deflation ">Unit 3.3(3) Macroeconomic objectives: inflation and deflation </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34925/unit-341-economics-of-inequality-and-poverty-1.html" title="Unit 3.4(1) Economics of inequality and poverty">Unit 3.4(1) Economics of inequality and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34946/unit-342-policies-to-improve-equality-equity-and-poverty.html" title="Unit 3.4(2) Policies to improve equality, equity and poverty">Unit 3.4(2) Policies to improve equality, equity and poverty</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34993/unit-35-government-management-of-the-economy-monetary-policy-1.html" title="Unit 3.5 Government management of the economy – monetary policy">Unit 3.5 Government management of the economy – monetary policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../34962/unit-36-government-management-of-the-economy-fiscal-policy-1.html" title="Unit 3.6 Government management of the economy – fiscal policy">Unit 3.6 Government management of the economy – fiscal policy</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35017/unit-371-market-based-supply-side-policies--1.html" title="Unit 3.7(1) Market based supply-side policies ">Unit 3.7(1) Market based supply-side policies </a></li><li class="current" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="unit-372-interventionist-supply-side-policies-.html" title="Unit 3.7(2) Interventionist supply-side policies ">Unit 3.7(2) Interventionist supply-side policies </a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45803/economics-real-world-examples-and-extension-material--1.html" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42639/measuring-economic-well-being-1.html" title="Measuring economic well-being">Measuring economic well-being</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43044/inflation.html" title="Inflation">Inflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../42350/inequality.html" title="Inequality">Inequality</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41639/inequity-1.html" title="Inequity">Inequity</a></li></ul></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../35414/chapter-4-the-global-economy.html" title="Chapter 4: The Global Economy">Chapter 4: The Global Economy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35346/unit-41-benefits-of-international-trade-1.html" title="Unit 4.1 Benefits of international trade">Unit 4.1 Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35348/unit-4243-trade-protectionism-1.html" title="Unit 4.2/4.3 Trade protectionism">Unit 4.2/4.3 Trade protectionism</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35407/unit-44-economic-integration-.html" title="Unit 4.4 Economic integration ">Unit 4.4 Economic integration </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35409/unit-45-exchange-rates-1.html" title="Unit 4.5 Exchange rates">Unit 4.5 Exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35413/unit-46-balance-of-payments--1.html" title="Unit 4.6 Balance of payments ">Unit 4.6 Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35675/unit-47-sustainable-development.html" title="Unit 4.7 Sustainable development">Unit 4.7 Sustainable development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35685/unit-48-measuring-development--1.html" title="Unit 4.8 Measuring development ">Unit 4.8 Measuring development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35687/unit-49-barriers-to-economic-development-1.html" title="Unit 4.9 Barriers to economic development">Unit 4.9 Barriers to economic development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../35702/unit-410-economic-growth-and-economic-development-strategies.html" title="Unit 4.10: Economic growth and economic development strategies">Unit 4.10: Economic growth and economic development strategies</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../45804/economics-real-world-examples-and-extension-material-.html" title="Economics real world examples and extension material ">Economics real world examples and extension material </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41927/foreign-currency-1.html" title="Foreign currency">Foreign currency</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43532/exchange-rates-1.html" title="Exchange rates">Exchange rates</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../43804/balance-of-payments.html" title="Balance of payments">Balance of payments</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../41796/economic-development-1.html" title="Economic development">Economic development</a></li></ul></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../20132/units-1-2-microeconomics.html" title="Units 1-2: Microeconomics">Units 1-2: Microeconomics</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 1: Introduction to economics">Unit 1: Introduction to economics</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20091/introductory-activity-1.html" title="Introductory activity">Introductory activity</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20093/unit-11-scarcity-choice-and-opportunity-cost.html" title="Unit 1.1: Scarcity, choice and opportunity cost">Unit 1.1: Scarcity, choice and opportunity cost</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21647/factors-of-production-1.html" title="Factors of production">Factors of production</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20114/economic-systems.html" title="Economic systems">Economic systems</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20134/public-and-private-sectors-1.html" title="Public and private sectors">Public and private sectors</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28055/unit-12-economics-as-a-social-science-1.html" title="Unit 1.2: Economics as a social science">Unit 1.2: Economics as a social science</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29921/circular-flow-of-national-income.html" title="Circular flow of national income">Circular flow of national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29829/unit-1-review-terms-1.html" title="Unit 1: Review terms">Unit 1: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../41600/introduction-to-economics-crossword-1.html" title="Introduction to economics crossword">Introduction to economics crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../4331/unit-1-multiple-choice-quiz.html" title="Unit 1: Multiple choice quiz">Unit 1: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20177/unit-21-23-competitive-markets-demand-and-supply-1.html" title="Unit 2.1-2.3: Competitive markets - demand and supply">Unit 2.1-2.3: Competitive markets - demand and supply</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28517/unit-21-demand-1.html" title="Unit 2.1: Demand">Unit 2.1: Demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22349/determinants-of-demand-1.html" title="Determinants of demand">Determinants of demand</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29949/unit-22-supply-.html" title="Unit 2.2: Supply ">Unit 2.2: Supply </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20184/changes-to-supply-and-demand-.html" title="Changes to supply and demand ">Changes to supply and demand </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21992/practise-exercises-1.html" title="Practise exercises">Practise exercises</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../26112/gold-exchange-game-demand-and-supply-1.html" title="Gold exchange game: Demand and supply">Gold exchange game: Demand and supply</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20194/unit-23-competitive-market-equilibrium-1.html" title="Unit 2.3: Competitive market equilibrium">Unit 2.3: Competitive market equilibrium</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20144/producer-and-consumer-surplus-1.html" title="Producer and consumer surplus">Producer and consumer surplus</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../22351/veblen-goods-and-super-luxury-goods-1.html" title="Veblen goods and super luxury goods">Veblen goods and super luxury goods</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../25677/are-cryptocurrencies-the-new-tulipmania.html" title="Are Cryptocurrencies the new Tulipmania?">Are Cryptocurrencies the new Tulipmania?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20472/unit-21-23-multiple-choice-quiz.html" title="Unit 2.1-2.3: Multiple choice quiz">Unit 2.1-2.3: Multiple choice quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20113/unit-24-consumer-and-producer-behaviour-hl-only-1.html" title="Unit 2.4: Consumer and producer behaviour (HL only)">Unit 2.4: Consumer and producer behaviour (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../36073/behavioural-economics-consumer-biases-nudge-theory-hl-only-1.html" title="Behavioural economics: Consumer biases / nudge theory (HL only)">Behavioural economics: Consumer biases / nudge theory (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20378/business-objectives-hl-only.html" title="Business objectives (HL only)">Business objectives (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28741/unit-21-24-review-terms--1.html" title="Unit 2.1-2.4: Review terms ">Unit 2.1-2.4: Review terms </a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20195/unit-25-26-elasticity-1.html" title="Unit 2.5-2.6: Elasticity">Unit 2.5-2.6: Elasticity</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../28713/unit-25-price-elasticity-of-demand-1.html" title="Unit 2.5: Price elasticity of demand">Unit 2.5: Price elasticity of demand</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21545/determinants-of-price-elasticity-.html" title="Determinants of price elasticity ">Determinants of price elasticity </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21532/ped-elasticity-and-sales-revenue.html" title="PED elasticity and sales revenue?">PED elasticity and sales revenue?</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21259/unit-25-income-elasticity-of-demand-yed.html" title="Unit 2.5: Income elasticity of demand (YED)">Unit 2.5: Income elasticity of demand (YED)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21200/unit-26-price-elasticity-of-supply.html" title="Unit 2.6: Price elasticity of supply">Unit 2.6: Price elasticity of supply</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20207/perfectly-elastic-inelastic-supply-curves.html" title="Perfectly elastic / inelastic supply curves">Perfectly elastic / inelastic supply curves</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20230/a-mathematical-note-about-elasticity-.html" title="A mathematical note about elasticity ">A mathematical note about elasticity </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39037/demand-and-supply-crossword.html" title="Demand and supply crossword">Demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29021/unit-25-26-review-terms-1.html" title="Unit 2.5-2.6: Review terms">Unit 2.5-2.6: Review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20474/unit-25-26-multiple-choice-quiz--1.html" title="Unit 2.5-2.6: Multiple choice quiz ">Unit 2.5-2.6: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44474/unit-21-25-competitive-markets-quiz-1.html" title="Unit 2.1- 2.5: Competitive markets quiz">Unit 2.1- 2.5: Competitive markets quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20243/unit-27-the-role-of-government-in-microeconomics--1.html" title="Unit 2.7: The role of government in microeconomics ">Unit 2.7: The role of government in microeconomics </a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../26590/indirect-taxation.html" title="Indirect taxation">Indirect taxation</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20246/ped-and-the-burden-of-tax-hl-only-.html" title="PED and the burden of tax (HL only) ">PED and the burden of tax (HL only) </a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20277/government-subsidies--1.html" title="Government subsidies ">Government subsidies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29117/unit-27-indirect-tax-and-subsidy-review-terms-1.html" title="Unit 2.7: Indirect tax and subsidy review terms">Unit 2.7: Indirect tax and subsidy review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20287/price-controls-maximum-price--1.html" title="Price controls − maximum price ">Price controls − maximum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20288/minimum-price-.html" title="Minimum price ">Minimum price </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21540/minimum-wage-.html" title="Minimum wage ">Minimum wage </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../38849/labour-market-crossword-1.html" title="Labour market crossword">Labour market crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29260/unit-27-price-controls-review-terms-1.html" title="Unit 2.7: Price controls review terms">Unit 2.7: Price controls review terms</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20303/unit-28-210-market-failure--1.html" title="Unit 2.8-2.10: Market failure ">Unit 2.8-2.10: Market failure </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21543/unit-28-merit-goods--1.html" title="Unit 2.8: Merit goods ">Unit 2.8: Merit goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../23123/unit-28-demerit-goods-negative-externalities-1.html" title="Unit 2.8: Demerit goods / negative externalities">Unit 2.8: Demerit goods / negative externalities</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../38850/market-failure-crossword-1.html" title="Market failure crossword">Market failure crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29262/unit-29-economics-of-the-environment-and-public-goods--1.html" title="Unit 2.9: Economics of the environment and public goods ">Unit 2.9: Economics of the environment and public goods </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20332/unit-210-asymmetric-information-hl-only-1.html" title="Unit 2.10: Asymmetric information (HL only)">Unit 2.10: Asymmetric information (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29828/unit-28-210-market-failure-review-sheet.html" title="Unit 2.8-2.10: Market failure review sheet">Unit 2.8-2.10: Market failure review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29827/unit-28-210-market-failure-review-terms.html" title="Unit 2.8-2.10: Market failure review terms">Unit 2.8-2.10: Market failure review terms</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20479/unit-27-210-multiple-choice-quiz--1.html" title="Unit 2.7-2.10: Multiple choice quiz ">Unit 2.7-2.10: Multiple choice quiz </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44501/unit-27-210-government-failure-revision-quiz-1.html" title="Unit 2.7-2.10 Government failure revision quiz">Unit 2.7-2.10 Government failure revision quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20330/unit-211-market-power-hl-only-1.html" title="Unit 2.11: Market power (HL only)">Unit 2.11: Market power (HL only)</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29835/assessment-map.html" title="Assessment map">Assessment map</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21528/production-hl-only.html" title="Production (HL only)">Production (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29978/revenue-theory-hl-only.html" title="Revenue theory (HL only)">Revenue theory (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20357/costs-of-production-hl-only.html" title="Costs of production (HL only)">Costs of production (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21286/economies-and-diseconomies-of-scale-hl-only.html" title="Economies and diseconomies of scale (HL only)">Economies and diseconomies of scale (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22494/long-run-average-cost-curves-hl-only.html" title="Long run average cost curves (HL only)">Long run average cost curves (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../29838/breakeven-hl-only.html" title="Breakeven (HL only)">Breakeven (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20340/economic-profit-hl-only.html" title="Economic profit (HL only)">Economic profit (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39082/market-power-crossword.html" title="Market power crossword">Market power crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../22495/revision-exercise-on-cost-and-revenue-hl-only.html" title="Revision exercise on cost and revenue (HL only)">Revision exercise on cost and revenue (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29845/unit-211-costs-revenue-and-profit-review-sheet-hl-only.html" title="Unit 2.11: Costs, revenue and profit review sheet (HL only)">Unit 2.11: Costs, revenue and profit review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44484/unit-211-multiple-choice-quiz-sl-units-1.html" title="Unit 2.11: Multiple choice quiz (SL units)">Unit 2.11: Multiple choice quiz (SL units)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29846/market-structures-hl-only-1.html" title="Market structures (HL only)">Market structures (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29981/perfect-competition-hl-only-1.html" title="Perfect competition (HL only)">Perfect competition (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24486/profit-in-perfect-competition-hl-only-1.html" title="Profit in perfect competition (HL only)">Profit in perfect competition (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21302/efficiency-in-perfect-competition-hl-only.html" title="Efficiency in perfect competition (HL only)">Efficiency in perfect competition (HL only)</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20430/monopoly-hl-only-1.html" title="Monopoly (HL only)">Monopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../24529/profit-and-revenue-maximisation-in-monopoly-hl-only-1.html" title="Profit and revenue maximisation in monopoly (HL only)">Profit and revenue maximisation in monopoly (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21306/a-comparison-of-monopoly-and-perfect-competition-hl-only-1.html" title="A comparison of monopoly and perfect competition? (HL only)">A comparison of monopoly and perfect competition? (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20435/monopolistic-competition-hl-only-1.html" title="Monopolistic competition (HL only)">Monopolistic competition (HL only)</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20436/oligopoly-hl-only-1.html" title="Oligopoly (HL only)">Oligopoly (HL only)</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../22310/game-theory-hl-only-1.html" title="Game theory (HL only)">Game theory (HL only)</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29918/unit-211-market-structures-review-sheet-hl-only-1.html" title="Unit 2.11: Market structures review sheet (HL only)">Unit 2.11: Market structures review sheet (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32337/unit-211-diagram-revision-.html" title="Unit 2.11: Diagram revision ">Unit 2.11: Diagram revision </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20480/unit-211-multiple-choice-quiz-hl-only-1.html" title="Unit 2.11: Multiple choice quiz (HL only)">Unit 2.11: Multiple choice quiz (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32425/unit-212-the-markets-inability-to-achieve-equity-hl-only-1.html" title="Unit 2.12: The market’s inability to achieve equity (HL only)">Unit 2.12: The market’s inability to achieve equity (HL only)</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../21842/unit-3-macroeconomics-.html" title="Unit 3: Macroeconomics ">Unit 3: Macroeconomics </a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../3942/unit-31-measuring-economic-activity-and-illustrating-its-variati-1.html" title="Unit 3.1: Measuring economic activity and illustrating its variations">Unit 3.1: Measuring economic activity and illustrating its variations</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20558/calculating-national-income-1.html" title="Calculating national income">Calculating national income</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21297/gdp-gni-as-a-measure-of-living-standards.html" title="GDP / GNI as a measure of living standards">GDP / GNI as a measure of living standards</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20567/national-income-statistics-1.html" title="National income statistics">National income statistics</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21580/the-business-cycle-1.html" title="The business cycle">The business cycle</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29931/unit-31-economic-activity-review-sheet-1.html" title="Unit 3.1: Economic activity review sheet">Unit 3.1: Economic activity review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20592/unit-32-variations-in-economic-activityaggregate-demand-and-aggr-1.html" title="Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply">Unit 3.2: Variations in economic activity—aggregate demand and aggregate supply</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../29933/aggregate-demand-and-supply.html" title="Aggregate demand and supply">Aggregate demand and supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21582/components-of-aggregate-demand-1.html" title="Components of aggregate demand">Components of aggregate demand</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20634/equilibrium-in-macroeconomics-neo-classical-perspective-1.html" title="Equilibrium in macroeconomics (neo-classical perspective)">Equilibrium in macroeconomics (neo-classical perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20439/equilibrium-in-macroeconomics-keynesian-perspective-1.html" title="Equilibrium in macroeconomics (keynesian perspective)">Equilibrium in macroeconomics (keynesian perspective)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21349/john-maynard-keynes-1.html" title="John Maynard Keynes">John Maynard Keynes</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20650/keynesian-v-free-market-debate--1.html" title="Keynesian v free market debate ">Keynesian v free market debate </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21342/changes-in-the-long-run-aggregate-supply-1.html" title="Changes in the long run aggregate supply">Changes in the long run aggregate supply</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30055/unit-32-aggregate-demand-and-supply-review-sheet-1.html" title="Unit 3.2: Aggregate demand and supply review sheet">Unit 3.2: Aggregate demand and supply review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20610/unit-35-and-36-demand-management-fiscal-and-monetary-policy-1.html" title="Unit 3.5 and 3.6: Demand management - fiscal and monetary policy">Unit 3.5 and 3.6: Demand management - fiscal and monetary policy</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30058/government-budget.html" title="Government budget">Government budget</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21585/fiscal-policy--1.html" title="Fiscal policy ">Fiscal policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21343/multiplier-hl-only.html" title="Multiplier (HL only)">Multiplier (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21795/monetary-policy--1.html" title="Monetary policy ">Monetary policy </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30071/independent-central-banks-1.html" title="Independent central banks">Independent central banks</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30083/unit-35-and-36-review-sheet.html" title="Unit 3.5 and 3.6 review sheet">Unit 3.5 and 3.6 review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20615/unit-37-supply-side-policies-1.html" title="Unit 3.7: Supply side policies">Unit 3.7: Supply side policies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20651/the-role-of-supply-side-policies-1.html" title="The role of supply side policies">The role of supply side policies</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20622/market-based-and-interventionist-supply-side-policies--1.html" title="Market based and interventionist supply side policies ">Market based and interventionist supply side policies </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39129/aggregate-demand-and-supply-crossword-1.html" title="Aggregate demand and supply crossword">Aggregate demand and supply crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30086/unit-37-review-sheet-1.html" title="Unit 3.7: Review sheet">Unit 3.7: Review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20755/unit-31-32-and-35-37-multiple-choice-quiz--1.html" title="Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz ">Unit 3.1-3.2 and 3.5-3.7: Multiple choice quiz </a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../44522/unit-31-32-and-35-37-revision-quiz-1.html" title="Unit 3.1-3.2 and 3.5-3.7: Revision quiz">Unit 3.1-3.2 and 3.5-3.7: Revision quiz</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20686/unit-33-macroeconomic-objectives.html" title="Unit 3.3: Macroeconomic objectives">Unit 3.3: Macroeconomic objectives</a></li><ul class="level-2 "><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30118/unemployment.html" title="Unemployment">Unemployment</a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21351/types-of-unemployment.html" title="Types of unemployment?">Types of unemployment?</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21593/equilibrium-unemployment-.html" title="Equilibrium unemployment ">Equilibrium unemployment </a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../21594/disequilibrium-unemployment-1.html" title="Disequilibrium unemployment">Disequilibrium unemployment</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../30458/unemployment-review-sheet-1.html" title="Unemployment review sheet">Unemployment review sheet</a></li></ul><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20713/inflation--1.html" title="Inflation ">Inflation </a></li><ul class="level-3 "><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20712/measuring-inflation-hl-only-1.html" title="Measuring inflation (HL only)">Measuring inflation (HL only)</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../20685/costs-of-inflation-and-deflation-1.html" title="Costs of inflation and deflation">Costs of inflation and deflation</a></li><li class="" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="" href="../30465/inflation-review-sheet.html" title="Inflation review sheet">Inflation review sheet</a></li></ul><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20716/unemployment-v-inflation-trade-off-hl-only-1.html" title="Unemployment v inflation trade off (HL only)">Unemployment v inflation trade off (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../39133/macroeconomic-objectives-crossword-1.html" title="Macroeconomic objectives crossword">Macroeconomic objectives crossword</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../44511/unit-33-macroeconomic-indicators-revision-quiz-1.html" title="Unit 3.3: Macroeconomic indicators revision quiz">Unit 3.3: Macroeconomic indicators revision quiz</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20741/unit-34-economics-of-inequality-and-poverty-1.html" title="Unit 3.4: Economics of inequality and poverty">Unit 3.4: Economics of inequality and poverty</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32398/inequality-1.html" title="Inequality">Inequality</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21356/the-role-of-spending-and-taxation-on-inequality--1.html" title="The role of spending and taxation on inequality ">The role of spending and taxation on inequality </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21313/consequences-of-economic-growth-1.html" title="Consequences of economic growth">Consequences of economic growth</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30257/economic-growth-and-inequality-review-sheet-1.html" title="Economic growth and inequality review sheet">Economic growth and inequality review sheet</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20756/unit-33-34-multiple-choice-.html" title="Unit 3.3-3.4: Multiple choice ">Unit 3.3-3.4: Multiple choice </a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../21844/unit-4-global-economy.html" title="Unit 4: Global economy">Unit 4: Global economy</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../21367/unit-41-benefits-of-international-trade.html" title="Unit 4.1: Benefits of international trade">Unit 4.1: Benefits of international trade</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30529/benefits-of-international-trade.html" title="Benefits of international trade">Benefits of international trade</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20823/absolute-and-comparative-advantage-hl-only-1.html" title="Absolute and comparative advantage (HL only)">Absolute and comparative advantage (HL only)</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20845/unit-42-43-trade-protection-1.html" title="Unit 4.2-4.3: Trade protection">Unit 4.2-4.3: Trade protection</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32419/barriers-to-trade-calculations-are-hl-only-1.html" title="Barriers to trade (calculations are HL only)">Barriers to trade (calculations are HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21610/case-study-on-tata-steel-1.html" title="Case study on Tata Steel">Case study on Tata Steel</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../23455/the-defence-industry-1.html" title="The Defence industry">The Defence industry</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30610/unit-41-43-review-sheet-1.html" title="Unit 4.1-4.3: Review sheet">Unit 4.1-4.3: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20894/unit-44-economic-integration--1.html" title="Unit 4.4: Economic integration ">Unit 4.4: Economic integration </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30634/economic-integration-some-hl-tasks-1.html" title="Economic integration (some HL tasks)">Economic integration (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20840/world-trade-organisation-wto-1.html" title="World trade organisation (WTO)">World trade organisation (WTO)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30635/unit-44-review-sheet-1.html" title="Unit 4.4: Review sheet">Unit 4.4: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20853/unit-45-exchange-rates-1.html" title="Unit 4.5: Exchange rates">Unit 4.5: Exchange rates</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30611/floating-exchange-rates-1.html" title="Floating exchange rates">Floating exchange rates</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../31824/fixed-managed-exchange-rate-systems-some-hl-tasks-1.html" title="Fixed / managed exchange rate systems (some HL tasks)">Fixed / managed exchange rate systems (some HL tasks)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21624/the-market-for-foreign-exchange-1.html" title="The market for foreign exchange">The market for foreign exchange</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30614/unit-45-review-sheet-1.html" title="Unit 4.5: Review sheet">Unit 4.5: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20859/unit-46-balance-of-payments-1.html" title="Unit 4.6: Balance of payments">Unit 4.6: Balance of payments</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30624/balance-of-payments--1.html" title="Balance of payments ">Balance of payments </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21386/current-account-hl-only-1.html" title="Current account (HL only)">Current account (HL only)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20872/the-marshall-lerner-condition-j-curve-hl-only-1.html" title="The Marshall-Lerner condition / J curve (HL only)">The Marshall-Lerner condition / J curve (HL only)</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20899/units-41-46-multiple-choice-quiz--1.html" title="Units 4.1-4.6: Multiple choice quiz ">Units 4.1-4.6: Multiple choice quiz </a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../42989/unit-41-46-multiple-choice-quiz-ii-1.html" title="Unit 4.1-4.6: Multiple choice quiz II">Unit 4.1-4.6: Multiple choice quiz II</a></li><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../39438/unit-41-46-international-trade-crossword-1.html" title="Unit 4.1-4.6: International trade crossword">Unit 4.1-4.6: International trade crossword</a></li><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32423/unit-47-sustainable-development--1.html" title="Unit 4.7: Sustainable development ">Unit 4.7: Sustainable development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../26092/water-scarcity-activity-1.html" title="Water scarcity activity">Water scarcity activity</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../32426/sustainable-development.html" title="Sustainable development">Sustainable development</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../20928/unit-48-measuring-development--1.html" title="Unit 4.8: Measuring development ">Unit 4.8: Measuring development </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30686/measuring-development-1.html" title="Measuring development">Measuring development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21627/economic-development--1.html" title="Economic development ">Economic development </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30679/unit-47-48-review-sheet.html" title="Unit 4.7-4.8: Review sheet">Unit 4.7-4.8: Review sheet</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Unit 4.9: Barriers to development">Unit 4.9: Barriers to development</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30727/barriers-to-development-in-international-trade-1.html" title="Barriers to development in International trade">Barriers to development in International trade</a></li></ul><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32430/unit-410-economic-growth-andor-economic-development-strategies-1.html" title="Unit 4.10: Economic growth and/or economic development strategies">Unit 4.10: Economic growth and/or economic development strategies</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30687/the-role-of-domestic-factors-1.html" title="The role of domestic factors">The role of domestic factors</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30688/the-role-of-international-trade-and-development-1.html" title="The role of international trade and development">The role of international trade and development</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30689/the-role-of-foreign-direct-investment-fdi-1.html" title="The role of foreign direct investment (FDI)">The role of foreign direct investment (FDI)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../25240/the-role-of-foreign-aid--1.html" title="The role of foreign aid ">The role of foreign aid </a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30819/multilateral-development-assistance-1.html" title="Multilateral development assistance">Multilateral development assistance</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21632/the-role-of-international-debt-1.html" title="The role of international debt">The role of international debt</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../25242/the-balance-between-markets-and-intervention-1.html" title="The balance between markets and intervention">The balance between markets and intervention</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../30926/unit-49-410-review-sheet.html" title="Unit 4.9 - 4.10: Review sheet">Unit 4.9 - 4.10: Review sheet</a></li></ul></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../21380/assessment.html" title="Assessment">Assessment</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Internal assessment ">Internal assessment </a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../20608/how-to-write-your-ia-student-handout.html" title="How to write your IA? (student handout)">How to write your IA? (student handout)</a></li><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../21428/how-to-interpret-the-assessment-criteria-1.html" title="How to interpret the assessment criteria?">How to interpret the assessment criteria?</a></li><li class=" parent" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Grading practise ">Grading practise </a></li><ul class="level-3 "><li class=" parent" style="padding-left: 42px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Sample 3a">Sample 3a</a></li><ul class="level-4 "><li class="" style="padding-left: 56px"><i class="expander fa fa-caret-right "></i><a class="" href="../32083/sample-3b-1.html" title="Sample 3b">Sample 3b</a></li></ul></ul></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../32022/assessment-markbands-1.html" title="Assessment markbands">Assessment markbands</a></li></ul><li class=" parent std-toplevel" style="padding-left: 4px"><i class="expander fa fa-caret-right "></i><a class="" href="../4332/exam-style-questions.html" title="Exam style questions">Exam style questions</a></li><ul class="level-1 "><li class=" parent" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="std-disabled" href="#" title="Paper 1 style examination questions">Paper 1 style examination questions</a></li><ul class="level-2 "><li class="" style="padding-left: 28px"><i class="expander fa fa-caret-right "></i><a class="" href="../40100/unit-211-212-questions.html" title="Unit 2.11-2.12 questions">Unit 2.11-2.12 questions</a></li></ul><li class="" style="padding-left: 14px"><i class="expander fa fa-caret-right "></i><a class="" href="../45102/paper-1-guidance-on-essay-writing-1.html" title="Paper 1 guidance on essay writing">Paper 1 guidance on essay writing</a></li></ul></ul></nav> </div> </div> </div> </div><div style="margin-top: 20px;"><style type="text/css">
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<div id="main-column" class="span9"> <article id="unit-372-interventionist-supply-side-policies-" style="margin-top: 16px;">
<h1 class="section-title">Unit 3.7(2) Interventionist supply-side policies </h1>
<ul class="breadcrumb"><li><a title="Home" href="../../../economics.html"><i class="fa fa-home"></i></a><span class="divider">/</span></li><li><span class="gray">Textbook</span><span class="divider">/</span></li><li><span class="gray">Chapter 3: Macroeconomics</span><span class="divider">/</span></li><li><span class="active">Unit 3.7(2) Interventionist supply-side policies </span></li></ul>
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<div class="intro-card"><div class="bg-cover" style="background-image: url("/media/ib/economics/images/textbook/macro-policies/engineer-being-trained.jpg");"></div><img src="../../../ib/economics/images/textbook/macro-policies/engineer-being-trained.jpg" style="display: none"><div class="content"><p class="text">An interventionist supply-side is where the government becomes more actively involved in the supply side of the economy to achieve its macroeconomic objectives. The government can intervene through policies such as education and training, access to healthcare, research and development, provision of infrastructure and industrial policies.</p></div></div><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>What you should know by the end of this chapter:</strong></h4></div></div></div><ul><li>Explanation of interventionist supply-side policies<img alt="" src="../../../ib/economics/images/textbook/macro-objectives/interventiionist-suppy-side.jpg" style="float: right; width: 400px; height: 243px;" title="https://www.imeche.org/news/news-article/virtual-training-for-engineers-enters-a-new-reality-at-vr-world"></li><li>Types of interventionist supply-side policies include education and training, access to healthcare, research and development, provision of infrastructure and industrial policies</li><li>How interventionist supply-side policies increase long-run aggregate supply and the production possibility curve</li><li>The application of interventionist supply-side policies to increase long-run economic growth, reduce unemployment and achieve price stability</li><li>Evaluation of interventionist supply-side policies<hr class="hidden"></li></ul><div class="greyBg"><h3>Revision material</h3><p><img alt="" src="../../../ib/economics/images/textbook/revision-material/logo.jpg" style="width: 200px; height: 95px; float: left;">The link to the attached pdf is revision material from Unit 3.7(2) Interventionist supply-side policies. The revision material can be downloaded as a student handout.</p><p><a href="../../../media/ib/economics/images/textbook/macro-policies/supply-side-policies/interventionist-supply-side-revision-notes.pdf.html" target="_blank" title="Revision"><img class="ico" src="../../../thinkib/icons/revision.png"> Revision notes</a></p></div><div class="blueBg"><h3><strong>What are interventionist supply-side policies?</strong><img alt="" height="312" src="../../../ib/economics/images/textbook/macro-policies/interventionist-impact-on-lras(1).jpg" style="float: right;" width="423"></h3><p>An interventionist supply-side policy is where the government becomes more actively involved on the supply side of the economy to achieve its macroeconomic objectives. Diagram 3.46 shows how the application of interventionist supply-side policies can increase the long-run aggregate supply curve from LRAS to LRAS1 through, for example, government investment in infrastructure.</p><hr class="hidden"><h3><strong>Methods of supply-side intervention to increase long-run economic growth</strong></h3><p><img alt="" height="254" src="../../../ib/economics/images/textbook/macro-policies/ppc-and-interventionist-supply-side-policies.jpg" style="float: left;" width="387">The following methods are used as part of interventionist supply-side policies that can increase potential output in the economy and cause the production possibility curve in diagram 3.47 to increase from PPC to PPC1 increasing the potential output.</p><hr class="hidden"><h4><strong>Education and training </strong></h4><p>Education is a crucial part of government intervention in the economy as an interventionist supply-side policy because it affects the productive potential of the labour force. This is also true of government-provided and funded training schemes. More skilled workers can achieve higher levels of productivity in their work which increases the overall productivity of the economy and increases potential output.</p><h4><strong>Healthcare</strong></h4><p>State involvement in healthcare is important in a similar way to education. A healthy population is likely to be more productive in employment because employees are less likely to be absent from work. In addition, physically and mentally healthier workers are likely to be more efficient when they are doing their jobs. There is also the effect of health on families where family members have to be carers when there is no effective healthcare. Family members who become carers are either taken away from the labour market or their productivity at work is reduced. Many governments invest a high proportion of their total expenditure in healthcare services to make sure the population has access to high-quality, low cost or free healthcare.</p><h4><strong>Infrastructure</strong></h4><p>State provision and funding for effective infrastructure are crucial to the supply side of the economy. Infrastructure is the capital and systems that support the overall functioning of a country's economy. Infrastructure can be in the following forms:</p><ul><li>Transport systems like roads, bridges, ports, airports and rail services</li><li>Utility provision in the form of electricity, gas and water supplies</li><li>Communication networks such as mobile communications, broadband, digital services and postal services.</li></ul><p>Countries where governments have provided well-funded and planned infrastructure create the conditions for long-term economic growth. Good infrastructure means businesses can achieve higher levels of productivity, communicate efficiently, easily move their goods around and effectively access labour.</p><h4><strong>Research and development </strong></h4><p>Governments often use a supply-side approach to facilitate innovation and the development of new technology. This can be done through grants, subsidies and tax incentives for research and development. Innovation in production systems is very important in leading long-run economic growth on the supply side. Many economists regard government support for the development of information technology and communications as important in providing the conditions for significant advances on the supply side leading to long-term economic growth. For example, many governments are now providing large-scale support for the development of renewable energy to make economic growth more sustainable.</p><h4><strong>Industrial policies</strong></h4><p>As part of an interventionist, supply-side policy governments can use a targeted industrial policy as a strategic approach to certain industries to achieve long-run economic growth. Governments often try to change the structure of production in the economy and target industries that are the most likely to facilitate economic growth. For example, China and South Korea used a set of industrial policies in the 1980s and 1990s to focus on their manufacturing sectors so they could target growing export markets. The government are now looking to use industrial policies to support industries involved in artificial intelligence, robotics and automated vehicles.</p></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - The internet in South Korea</strong></h4></div></div></div><p><strong><img alt="" src="../../../ib/economics/images/textbook/macro-policies/korea.jpg" style="float: right; width: 400px; height: 224px;" title="https://www.thenational.ae/business/south-korea-s-path-to-internet-mastery-1.291780"></strong>South Korea has the world’s fastest internet and it is getting increasingly quicker. SK Broadband is the country’s main internet provider and it has just introduced an internet running speed of 52 megabits per second. This is a country ‘obsessed’ with super-fast internet. South Korea was also the first country in the world to launch a 5G network.</p><hr class="hidden"><p>Advances in IT are seen as crucial to long-run economic growth in South Korea and the government has provided significant support to its development. In the 1990s the South Korean government saw the importance of high-speed internet infrastructure and has continuously provided funding for its development. The economic benefits of such effective internet infrastructure are significant for businesses who want to communicate effectively with each other, provide the best streaming services and efficiently download software. With government support for its broadband service and 5G communications, the South Korean government clearly sees the benefits of this to the supply side of the economy.</p><p><a href="../../../media/ib/economics/images/textbook/macro-policies/supply-side-policies/south-korea-it.pdf.html" target="_blank" title="Questions"><img class="ico" src="../../../thinkib/icons/question.png"> Worksheet questions</a></p><h5>Questions</h5><p><strong>a. Define the term interventionist supply-side policy. [2]</strong></p><section class="tib-hiddenbox"><p>An interventionist supply-side policy is where the government becomes more actively involved on the supply-side of the economy to affect aggregate supply and achieve its macroeconomic objectives.</p></section><p><strong>b. Outline two ways high-speed internet might improve business efficiency in South Korea. [4]</strong></p><section class="tib-hiddenbox"><p>South Korean businesses will be able to:</p><ul><li>Transfer information more quickly which will increase their productivity.</li><li>Use more sophisticated online software which helps them to perform tasks more efficiently. </li></ul></section><p><strong>c. Using a PPC diagram, explain how the South Korean government's support for investment in high-speed internet can increase the country's potential output. [4]</strong></p><section class="tib-hiddenbox"><p><img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/ppc-supply-side-policy.jpg" style="float: right; width: 400px; height: 269px;">Government funding to support investment in high-speed internet can increase the productive capacity of businesses and increase the potential output of the economy. This will shift PPC to PPC1 in the diagram.</p></section><h5><strong>Investigation</strong></h5><p><strong>Research the benefits to consumers and businesses in South Korea of having such effective broadband and 5G service. </strong></p></div><div class="blueBg"><h4><strong>Evaluation of interventionist supply side to increase economic growth</strong></h4><h5><strong>Strengths </strong></h5><ul><li>Interventionist supply-side policies to increase economic growth can be targeted at areas of the economy in a way demand-side policies cannot. For example, demand-side policies cannot effectively deal with the problem of a shortage of skilled labour that is holding back economic growth, but a training and education policy can.</li><li>Expansionary monetary and fiscal policy used to increase economic growth often have the trade-off of increasing the rate of inflation. Supply-side policies do not have this as a disadvantage and can even lead to lower prices in certain sectors of the economy.</li><li>Demand-side policies increase the actual rate of economic growth whereas interventionist supply-side policies increase potential growth which is more likely to deliver economic growth in the long run.</li><li>There can be significant social benefits associated with an interventionist approach to increasing economic growth. Improving the provision and quality of healthcare and education brings with it external benefits and enhanced economic development as well as economic growth.</li></ul><h5><strong>Weaknesses </strong></h5><ul><li>Interventionist policies can come at a significant opportunity cost to the government in terms of government expenditure in other areas and also the increased tax revenue needed to fund the policy.</li><li>Government intervention is often criticised for inefficiency and bureaucracy. State-managed enterprises and services often suffer from diseconomies of scale which reduces their efficiency.</li><li>All government involvement in the economy is subject to some political influence which might conflict with the economic benefits of the supply-side policy. For example, a government might provide funding for infrastructure projects in an area of the country where it needs to encourage support from voters.</li></ul><h3><strong>Methods of supply-side intervention to reduce unemployment</strong></h3><p>Many of the policies used to achieve economic growth may also create employment, but there are also interventionist supply-side policies that are aimed specifically at reducing unemployment.</p><h4><strong>Education and training</strong></h4><div class="polaroid-left"><img src="../../../ib/economics/images/textbook/macro-policies/engineer-being-trained.jpg" style="margin: 8px 0px; height: 301px; width: 400px;"><div class="caption">Importance of training on the supply side</div></div><p>Governments often use education and training to reduce structural unemployment. Where workers need to re-skill to find work, government-funded and managed training schemes can support unemployed workers as they try to transfer to new types of employment.</p><hr class="hidden"><h4><strong>Trade protectionism</strong></h4><p>Countries sometimes resort to trade barriers to reduce foreign competition for domestic firms which protects domestic employment. This has been a key policy of Donald Trump’s administration. The US government has used tariffs on many manufactured goods such as steel and cars to try and protect American workers.</p><h4><strong>Employment agency</strong></h4><p>Government-financed and run employment agencies to improve information flows in the labour market can particularly target frictional unemployment, although it can reduce all types of unemployment. Many government services in this area take place through the Internet. For example, the Indian government has an employment service portal where potential employees can register for work and be matched with potential employers.</p><h4><strong>Direct government employment</strong></h4><p>Governments can try to reduce unemployment by directly employing workers in the public sector. This can be in state-owned and managed enterprises such as transport, postal services and healthcare. For example, over 40 per cent of China's and Russia’s working populations are employed by the state.</p><h4><strong>Employment subsidies</strong><img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/wage-subsidy(1).jpg" style="float: right; width: 400px; height: 285px;"></h4><p>Employment subsidies involve the state paying part of the wages of workers employed by private-sector employers. This reduces the cost for firms of taking on employees and acts as an incentive for them to take on new workers. The impact of a wage subsidy is shown in diagram 3.47(1). The subsidy paid by the government in the labour market cause the labour supply curve to shift from SL to SL1. For businesses, this reduces the cost of employing workers and leads to an increase in employment from QL to QL1.</p><hr class="hidden"><p>The German government, for example, operates a scheme called Kurzarbeit. This is an employee subsidy scheme where the government pays up to 60 per cent of the wages of a worker who has had their working hours reduced. This means workers are not made redundant but employed for fewer hours by their employer. This subsidy prevents unemployment from rising in a recession and was used extensively during the recession in Germany caused by the Covid19 pandemic.</p><h4><strong>Evaluation of interventionist supply side to reduce unemployment</strong></h4><h5><strong>Strengths </strong></h5><ul><li>Interventionist supply-side policies are effective at specifically targeting frictional and structural unemployment. Training and education and employment agencies are particularly good at doing this.</li><li>Supply-side policies can also have some impact on demand-deficient unemployment in a recession. Employment subsidies and direct state employment can be used to target certain sectors of the economy when there is a recession.</li></ul><h5><strong>Weaknesses </strong></h5><ul><li>Government training and employment agencies cost money to set up and operate and represent an opportunity cost in terms of other areas of government expenditure.</li><li>Government training schemes and employment agencies also cost money and can be bureaucratic and inefficient.</li><li>Trade protectionism often leads to retaliation from other countries so protecting jobs in one industry can lead to unemployment in another.</li><li>Employment subsidies cost the government money and can be abused by employers who take on workers with the subsidy rather than paying workers themselves.</li><li>On their own, interventionist supply-side struggle to deal with a significant rise in unemployment caused by a recession.</li></ul><h5></h5><ul></ul></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - Employment subsidies in France</strong></h4></div></div></div><h4><img alt="" src="../../../ib/economics/images/textbook/macro-policies/employment-subsidy.jpg" style="float: right; width: 400px; height: 296px;" title=" https://www.euronews.com/2020/05/04/availability-of-masks-in-french-supermarkets-sparks-suspicions-about-shortage"></h4><p>The French government is currently in the process of extending its temporary employment scheme to avert mass unemployment that might result from Covid19. The scheme is now planned to last for up to two years said Muriel Pénicaud the country’s labour minister.</p><hr class="hidden"><p>Many of Europe’s biggest economies are putting in place similar schemes. Around 8 million employees in France were benefiting from the scheme where the state uses a subsidy to pay the salaries of those people prevented from working by the coronavirus. Without the subsidy, it is feared that many workers in certain industries will lose their jobs and suffer a period of unemployment. The subsidy does, however, come at a huge cost to the French government.</p><p><a href="../../../media/ib/economics/images/textbook/macro-policies/supply-side-policies/france-supply-side(1).pdf.html" target="_blank" title="Questions"><img class="ico" src="../../../thinkib/icons/question.png"> Worksheet questions</a></p><p><a href="../../../media/ib/economics/images/textbook/macro-policies/supply-side-policies/france-supply-side.pdf.html" target="_blank" title="Questions"><strong>Questions</strong></a></p><p><strong>a. Using a diagram explain how the employment subsidies used in France can reduce unemployment. [4]</strong></p><section class="tib-hiddenbox"><p><img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/wage-subsidy1(1).jpg" style="float: right; width: 400px; height: 285px;">An employment subsidy paid by the government in a labour market such as catering in France reduces the cost for businesses of employing workers. This causes the labour supply curve to shift from SL to SL1 and increases the numbers employed in the catering labour market from QL to QL1 in the diagram.</p></section><p><strong>b. Explain how government-financed education and training and employment exchanges can reduce the level rate of unemployment. [10]</strong></p><section class="tib-hiddenbox"><p><img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/training-labour.jpg" style="float: right; width: 400px; height: 289px;">Answers might include:</p><ul><li>Definitions of education and training, employment exchange and rate of unemployment.</li><li>A diagram to show how education and training can increase the number of skilled workers who can be employed in a labour market. This is shown in the diagram where the supply of labour shifts from SL to SL1.</li><li>An explanation that government-funded education and training can reduce structural unemployment in a labour market such as the French catering market as more people have the skills to work in the industry.</li><li>An explanation that a government-funded employment exchange can reduce frictional unemployment because the flow of information about available employees and jobs is improved.</li></ul></section><h5><strong>Investigation</strong></h5><p><strong>Research other employment subsidy programmes used by countries around the world to prevent a rise in unemployment caused by the Covid19 crisis. </strong></p></div><div class="blueBg"><h3><strong>Methods of intervention to reduce inflation</strong></h3><h4><strong>Incomes policy</strong></h4><p><img alt="" height="294" src="../../../ib/economics/images/textbook/macro-policies/interventionist-on-sras.jpg" style="float: left;" width="407">An incomes policy involves the government setting a limit on wage increases to try and break a wage-price spiral. Diagram 3.48 shows how the application of an incomes policy reduces the rate at which short-run aggregate supply falls when there is cost-push inflation. With the incomes policy, SRAS only shift to SRAS1 rather than SRAS2 and the price level only reaches P1 rather than P2. This approach reduces the impact of cost-push inflation.</p><hr class="hidden"><h4><strong>Evaluation of interventionist supply side to reduce inflation</strong></h4><h5><strong>Strengths </strong></h5><ul><li>Incomes and price controls can be used to directly target cost-push inflation in a way monetary and fiscal policy cannot.</li><li>One of the main problems of applying contractionary fiscal and monetary policy is the way both policies reduce aggregate demand and economic growth. Interventionist supply-side policies do not reduce aggregate demand in the same way.</li></ul><h5><strong>Weaknesses</strong></h5><ul><li>Controlling wages increases for workers when there is high inflation can reduce real incomes and can lead to poverty.</li><li>An incomes policy can lead to conflict and unrest where workers take industrial action such as going on strike because they cannot get a wage rise to cover inflation.</li><li>Firms can find their way around wage controls by changing job titles or offering fringe benefits like company cars.</li><li>Wage restrictions distort the operation of the labour market and can lead to labour shortages.</li><li>Firms can find their way around the price controls by changing the goods they sell such as altering the size or name of a product they sell.</li><li>Maximum prices distort the operation of the goods market leading to shortages and parallel markets.</li></ul><h5></h5><ul></ul><hr class="hidden"></div><div class="pinkBg"><div class="panel panel-has-footer" style="box-shadow: rgba(17, 34, 51, 0.3) 0px 10px 30px -15px; border-color: rgb(39, 45, 105);"><div class="panel-heading" style="background-color: rgb(39, 45, 105);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><h4><strong>Inquiry case example - Kenyan fuel price controls </strong></h4></div></div></div><p><img alt="" src="../../../ib/economics/images/textbook/macro-policies/kenyan-price-controls.jpg" style="width: 400px; height: 266px; float: left;" title="https://twitter.com/vivoenergykenya/status/762610011587698688">Nine years ago, the Kenyan government put price controls in place to prevent the price of petrol/gas from rising to protect consumers and businesses and to reduce cost-push inflation pressures. The Energy Regulatory Commission (ERC) used fuel price ceilings at a time when the price of crude oil had increased dramatically and was over $100 per barrel. </p><hr class="hidden"><p>The Kenyan government was keen to target fuel prices for controls because they account for a relatively high weighting in the consumer price index and because fuel costs are a significant part of business costs. Whilst Kenya has not had the most extreme inflationary conditions in Africa its inflation rate over the last 10 years has averaged well over 5%</p><h5><a href="../../../media/ib/economics/images/textbook/macro-policies/supply-side-policies/petrol-prices.pdf.html" target="_blank" title="Questions"><img class="ico" src="../../../thinkib/icons/question.png"> Worksheet questions</a></h5><h5><strong>Question</strong></h5><p><strong>Using a real-world example, evaluate the use of maximum prices (price ceilings) in certain markets to reduce the rate of inflation. [15]</strong></p><section class="tib-hiddenbox"><p>Answers might include:<img alt="" src="../../../ib/economics/images/textbook/inquiry-case-example-questions/maximum-price---inflation(1).jpg" style="float: right; width: 400px; height: 287px;"></p><ul><li>Definitions of maximum price (price ceiling) and inflation.</li><li>A diagram to show the effect of a price ceiling in, for example, the fuel market. This is shown in the diagram opposite.</li><li>An explanation that a maximum price in key markets which account for a high percentage of consumer expenditure and business costs can reduce cost-push inflation.</li><li>An example to show the application of a maximum price to control inflation. In this case, Kenya's price controls on fuel could be used.</li></ul><hr class="hidden"><ul><li>Evaluation might include discussion of the problems of using price controls such as shortages in the markets affected develop as the rationing function of price no longer works; parallel markets and corruption might develop; the producer surplus of firms falls which could lead to unemployment, and there might be a decline in long term investment in the markets affected. There could also be a discussion of other policy options such as fiscal and monetary policy.</li></ul></section><h5>Investigation</h5><p><strong>Investigate another country that has used price controls on necessity goods. </strong></p></div><div class="panel" style="box-shadow: rgba(38, 0, 0, 0.3) 0px 10px 30px -15px; border-color: rgb(124, 7, 21);"><div class="panel-heading" style="background-color: rgb(124, 7, 21);"><a class="expander pull-right" href="#"><span class="fa fa-plus"></span></a><div><p>Thinking about a key concept - Choice</p></div></div><div class="panel-body" style="background-color: inherit;"><div><p>Many interventionist supply-side policies require significant government expenditure to try and achieve the policy aims they set out to achieve. This could be wage subsidies to reduce unemployment, investment in infrastructure to facilitate long term economic growth or grants to businesses to rejuvenate a declining region. But every expenditure decision is a choice for governments who have to decide their priorities with limited funds. Higher spending in one area may mean spending less in another.</p><p><strong>To what extent do you think these interventionist supply-side choice decisions are influenced by political factors?</strong></p></div></div><div class="panel-footer" style="background-color: rgba(124, 7, 21, 0.1);"><div><p>text</p></div></div></div><div class="tib-quiz" data-quiz-id="1399" data-structure="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" data-score-answers="6d4a526a457a48584f763758344a7649472f76324c53614b78524c393439595570496d5a5971374b38686f3d"><div class="exercise"><div class="q-question"><p>Using the diagram, which of the following is most likely to be the result of an interventionist supply-side policy to increase potential output?</p><p><img alt="" height="247" src="../../../ib/economics/images/textbook/mc-questions/potential-output.jpg" width="353"></p></div><div class="q-answer"><p><label class="radio" data-answer="86634aece613a771527e3f60c45ca8a0"><input type="radio"><span> Potential output increases from L to M</span></label></p><p><label class="radio" data-answer="fbefc864e5e25d855727c3c772522142"><input type="radio"><span> Potential output increases from F to G</span></label></p><p><label class="radio" data-answer="a3840d5ae4837a50c0d786e00a3d98ac"><input type="radio"><span> Potential output increases from J to K</span></label></p><p><label class="radio" data-answer="3da01e38170a47a579f2f73948bf1577"><input type="radio"><span> Potential output increases from H to I</span></label></p></div><div class="q-explanation"><p>Interventionist supply-side policies that increase potential output cause the PPC to shift outwards.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is least likely to be a benefit of increased government expenditure on healthcare?<br> </p></div><div class="q-answer"><p><label class="radio" data-answer="7d490de829887a0a76f4ffec66697bce"><input type="radio"><span> More people could work if they were not carers</span></label></p><p><label class="radio" data-answer="fff43e068eca562b97a92cbedb6e430c"><input type="radio"><span> Less absenteeism at work</span></label></p><p><label class="radio" data-answer="cf6c18b14accb950c0b60740c6ad33b0"><input type="radio"><span> Opportunity cost of spending on healthcare</span></label></p><p><label class="radio" data-answer="8002ca5eed744fdd2dbe9a52eeee8601"><input type="radio"><span> Healthy workers are more productive</span></label></p></div><div class="q-explanation"><p>Reduced government spending in other areas to fund healthcare spending would not be a benefit.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following would not be considered infrastructure spending by the government?</p></div><div class="q-answer"><p><label class="radio" data-answer="8c58fcdca242221f5605ebea9c3429f4"><input type="radio"><span> Investment in high-speed broadband</span></label></p><p><label class="radio" data-answer="0e72c805856d4d6fca634443b8b27a05"><input type="radio"><span> Road building</span></label></p><p><label class="radio" data-answer="f246d225c5abb93acadc13a749370566"><input type="radio"><span> Expenditure on new drugs for hospitals</span></label></p><p><label class="radio" data-answer="ec4deb9a62978ba0854df99ee684f050"><input type="radio"><span> A new airport</span></label></p><p> </p></div><div class="q-explanation"><p>Government spending on new drugs is not physical capital.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is least likely to be a benefit of interventionist supply-side policies to increase economic growth?<br> </p></div><div class="q-answer"><p><label class="radio" data-answer="73f5b852192780db0ed59c65c23ef52b"><input type="radio"><span> More likely to achieve sustainable economic growth</span></label></p><p><label class="radio" data-answer="18d380a5b3c99530f0eebf4cb5db2f0b"><input type="radio"><span> Associated with positive externalities</span></label></p><p><label class="radio" data-answer="6309c5aeb1964fce380a0f09a04b7ee6"><input type="radio"><span> Less likely to cause inflation</span></label></p><p><label class="radio" data-answer="a11f3d906dd2dbc2f26f003806a8a7ec"><input type="radio"><span> Subject to political influence</span></label></p><p> </p></div><div class="q-explanation"><p>Political influence on supply-side decision-making may not achieve the best economic outcomes.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which type of unemployment is most likely to be reduced by government-funded education and training schemes?</p></div><div class="q-answer"><p><label class="radio" data-answer="a9a0f8e36e7dcc2b446c20be15322dc9"><input type="radio"><span> Structural</span></label></p><p><label class="radio" data-answer="4a2d6935bb146811af0490c94b14ace7"><input type="radio"><span> Frictional</span></label></p><p><label class="radio" data-answer="3a15e79af04eac4dc6c9a8b6c970f78c"><input type="radio"><span> Demand deficient</span></label></p><p><label class="radio" data-answer="00522a8dbe7e743d872e250a26fae115"><input type="radio"><span> Seasonal</span></label></p></div><div class="q-explanation"><p> </p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following is least likely to be a problem of using maximum price controls to reduce inflation?</p></div><div class="q-answer"><p><label class="radio" data-answer="fddd8c2411b71084b6eb7a62c0f453e4"><input type="radio"><span> Targets a cost-push factor</span></label></p><p><label class="radio" data-answer="7b01f480f8393d2f5e13235d7cefd1fc"><input type="radio"><span> Parallel markets develop</span></label></p><p><label class="radio" data-answer="9cda0819bb24bee54462313a3a5f5b73"><input type="radio"><span> Shortages of goods</span></label></p><p><label class="radio" data-answer="3530311ff1120e886821df4292fccc7f"><input type="radio"><span> The price mechanism cannot function efficiently</span></label></p></div><div class="q-explanation"><p>Price controls target cost-push inflation.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Using the PPC diagram which of the following is the most likely consequence of an interventionist supply-side policy?</p><p><img alt="" height="213" src="../../../ib/economics/images/textbook/mc-questions/interventionist-supply-side.jpg" width="322"></p></div><div class="q-answer"><p><label class="radio" data-answer="168b246dcfa2f957baf1c43dc1b51fb0"><input type="radio"><span> The shift from PPC to PPC1 could be caused by a fall in unemployment</span></label></p><p><label class="radio" data-answer="e51e186b6d258fbe14f9100485fdc962"><input type="radio"><span> Increasing output from X to Y could be caused by improvements in infrastructure</span></label></p><p><label class="radio" data-answer="bd0cc0f093a94c434d74538465be7558"><input type="radio"><span> Actual output has not increased</span></label></p><p><label class="radio" data-answer="4e2eb95573950da1852a60f8a23e9f8a"><input type="radio"><span> The opportunity cost of producing increasing the output of good B by 300 units is 500 units of good A</span></label></p><p> </p></div><div class="q-explanation"><p>An infrastructure improvement is most likely to increase potential output so the economy will move from point X to point Y. </p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><p> </p><div class="exercise"><div class="q-question"><p>Which of the following policies is most likely to increase potential output?</p></div><div class="q-answer"><p><label class="radio" data-answer="62851047c7ca835cf5648d7da0e2bfd9"><input type="radio"><span> Decreased government expenditure on infrastructure</span></label></p><p><label class="radio" data-answer="e14115a3ffeb1437e5c47eca0641b3be"><input type="radio"><span> Increased government expenditure on education</span></label></p><p><label class="radio" data-answer="e5355bcbd7faf005b220c7cfe76dc891"><input type="radio"><span> Increasing direct taxation</span></label></p><p><label class="radio" data-answer="f14fabec9a8e6cb4f107ce411586d0fa"><input type="radio"><span> Decreasing interest rates</span></label></p></div><div class="q-explanation"><p>Increased expenditure on education could increase LRAS which increases potential output.</p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><div class="exercise"><div class="q-question"><p>Which of the following interventionist supply-side policies are most likely to reduce income inequality?</p></div><div class="q-answer"><p><label class="radio" data-answer="d75b4bb1a43e6cfb63ffa52a3ba25a50"><input type="radio"><span> An increase in indirect tax</span></label></p><p><label class="radio" data-answer="057f1911f9d66d12462a7c9c50830d34"><input type="radio"><span> A decrease in direct tax</span></label></p><p><label class="radio" data-answer="ff011745793b4f12bd1c0b9dc00605fe"><input type="radio"><span> Introducing a more regressive tax</span></label></p><p><label class="radio" data-answer="0b5884d6016293c3bdb5e656ffa1a115"><input type="radio"><span> Introducing a more progressive tax </span></label></p><p> </p></div><div class="q-explanation"><p>A more progressive tax means the tax rate increases as income increases and this would reduce income inequality. </p></div><div class="actions"><span class="score" data-score="0"></span><button class="btn check"><i class="fa fa-check-square-o"></i> Check</button></div></div><div class="exercise"><div class="q-question"><p>Which of the following interventionist supply-side policies is least likely to improve equity in a country?</p></div><div class="q-answer"><p><label class="radio" data-answer="148d6036ca590bf39309e1be1de2ce35"><input type="radio"><span> Increased government spending on defence</span></label></p><p><label class="radio" data-answer="9e6e9f20d76e95227b77f925e9712ba3"><input type="radio"><span> Increased government spending on public transport</span></label></p><p><label class="radio" data-answer="5ea64058f55f116084bbfb7f01881147"><input type="radio"><span> Increased government spending on healthcare</span></label></p><p><label class="radio" 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