Pearson Edexcel International GCSE (9-1) Economics Student Book PDF

Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 EDEXCEL INTERNATIONAL GCSE (9 –1) ECONOMICS...

Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 EDEXCEL INTERNATIONAL GCSE (9 –1) ECONOMICS EDEXCEL INTERNATIONAL GCSE (9 –1) Student Book Rob Jones Pearson Edexcel International GCSE (9–1) Economics provides comprehensive BUSINESS coverage of the specification and is designed to supply students with the best Student Book ISBN: 9780435188634 preparation possible for the examination: ECONOMICS Student Book Written by a highly experienced Economics author Content is mapped to the specification to provide comprehensive coverage Learning is embedded with differentiated exercises and exam practice throughout Signposted transferable skills Reviewed by a language specialist to ensure the book is written in a clear and accessible style Glossary of key Economics terminology eBook included Online Teacher Resource Pack (ISBN 9780435191344) also available, EDEXCEL INTERNATIONAL GCSE (9 –1) eBook ECONOMICS providing further planning, teaching and assessment support included ACCOUNTING For Pearson Edexcel International GCSE Economics specification (4EC1) for Student Book first teaching 2017. ISBN: 9780435189655 Student Book Rob Jones www.pearsonglobalschools.com  Online access to your ActiveBook Thank you for buying this Pearson Edexcel International GCSE (9—1) Economics Student Book. Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 It comes with three years’ access* to your ActiveBook – an online, digital version of your textbook. You can personalise your ActiveBook with notes, highlights and links to your wider reading. It is perfect for supporting your coursework and revision activities. *For new purchases only. If this access code has already been revealed, it may no longer be valid. If you have bought this textbook second hand, the code may already have been used by the first owner of the book. How to access your ActiveBook Scratch off the panel with a coin to reveal your unique access code. Do not use a knife or other sharp object 1 as it may damage the code. 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Petrov 12br, Pixel1962 232b, Andrey Popov 174, Lee Prince 232t, Iryna Rasko 36, vibr, RossHelen 55, smereka 4tr, Sklep Spozywczy 33, vii, James Steidl 122, Stripped Pixel 60, Konstantin Sutyagin 67, svetlovskiy 32t, Valentyn Volkov 4tc (right), withGod 4tc (left); The Bolt www.thebolt.club:142. All other images © Pearson Education  CONTENTS iii Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 ABOUT THIS BOOK VI ASSESSMENT OVERVIEW VIII 1.1 THE MARKET SYSTEM 2 1.2 BUSINESS ECONOMICS 98 2.1 GOVERNMENT AND THE ECONOMY 192 2.2 THE GLOBAL ECONOMY 284 EXAM PREPARATION 348 COMMAND WORDS 356 GLOSSARY 357 INDEX 363  iv COURSE STRUCTURE Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 1.1 THE MARKET 1.2 B  USINESS 2.1 GOVERNMENT SYSTEM2 ECONOMICS98 AND THE ECONOMY192 1 THE ECONOMIC PROBLEM  4 14 THE FACTORS OF 25 ECONOMIC GROWTH194 PRODUCTION AND SECTORS 2 ECONOMIC ASSUMPTIONS  12 OF THE ECONOMY  100 26 INFLATION203 3 THE DEMAND CURVE  18 15 PRODUCTIVITY AND DIVISION 27 UNEMPLOYMENT  211 4 F ACTORS THAT MAY SHIFT OF LABOUR108 28 BALANCE OF PAYMENTS THE DEMAND CURVE  23 16 BUSINESS COSTS, REVENUES ON THE CURRENT AND PROFIT117 ACCOUNT220 5 THE SUPPLY CURVE  29 17 ECONOMIES AND 29 PROTECTION OF THE 6 F ACTORS THAT MAY SHIFT ENVIRONMENT  228 THE SUPPLY CURVE  34 DISECONOMIES OF SCALE124 30 REDISTRIBUTION OF 7 MARKET EQUILIBRIUM  40 INCOME 240 18 COMPETIVE MARKETS132 8 P RICE ELASTICITY OF 31 FISCAL POLICY  250 DEMAND  48 19 ADVANTAGES AND DISADVANTAGES OF 32 MONETARY POLICY259 9 P RICE ELASTICITY OF LARGE AND SMALL SUPPLY  56 FIRMS139 33 SUPPLY SIDE POLICIES AND GOVERNMENT 10 INCOME ELASTICITY  63 20 MONOPOLY 148 CONTROLS266 11 THE MIXED ECONOMY  70 21 OLIGOPOLY155 34 RELATIONSHIPS BETWEEN 12 PRIVATISATION  81 22 THE LABOUR MARKET163 OBJECTIVES AND POLICIES  274 13 EXTERNALITIES  89 23 THE IMPACT OF CHANGES IN THE SUPPLY AND DEMAND FOR LABOUR AND TRADE UNION ACTIVITY IN LABOUR MARKETS173 24 GOVERNMENT INTERVENTION181  COURSE STRUCTURE v Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 2.2 THE GLOBAL EXAM ECONOMY284 PREPARATION348 35 GLOBALISATION286 PAPER 1: MICROECONOMICS AND BUSINESS ECONOMICS348 36 MULTINATIONAL COMPANIES (MNCs) AND FOREIGN PAPER 2: MACROECONOMICS DIRECT INVESTMENT295 AND THE GLOBAL ECONOMY352 37 INTERNATIONAL TRADE304 COMMAND WORDS356 38 PROTECTIONISM312 GLOSSARY  357 39 TRADING BLOCS319 INDEX  363 40 THE WORLD TRADE ORGANIZATION AND WORLD TRADE PATTERNS325 41 EXCHANGE RATES AND THEIR DETERMINATION333 42 IMPACT OF CHANGING EXCHANGE RATES340  vi ABOUT THIS BOOK ABOUT THIS BOOK Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 This book is written for students following the Edexcel International GCSE (9–1) Economics specification and covers both years of the course. The course has been structured so that teaching and learning can take place in any order, both in the classroom and in any independent learning. The book contains four units that match the four areas of content in the specification: The Market System, Business Economics, Government and the Economy and The Global Economy. Each unit is split into multiple chapters to break down content into manageable chunks and to ensure full coverage of the specification. Each chapter features a mix of learning and activities. Global case studies are embedded throughout to show a range of situations and businesses within the context of the chapter. Summary questions at the end of each chapter help you to put learning into practice. Paper 1 is Microeconomics and Business Economics and will test the information in the first two units. Paper 2 is Macroeconomics and the Global Economy and will test the information in the last two units. Knowing how to apply your learning will be critical for your success in the exam. To help with this, there are exam-style questions at the end of each unit and two full practice exam papers at the end of the book. Learning objectives Getting started Each chapter starts with a list of An introduction to the chapter, letting you think what you will learn from it. They are about the concepts you will be introduced to. Activity carefully tailored to address key Questions are designed to stimulate discussion Each chapter includes activities assessment objectives central to and use of prior knowledge. These can be tackled to embed understanding through the course. as individuals, pairs, groups or the whole class. case studies and questions. Case study Did you know? Getting started, Chapter review and Activities are all based around case Interesting facts to encourage wider studies. They are drawn from around the world and will help you see learning thought and stimulate discussion. applied to real-world contexts.  ABOUT THIS BOOK vii Subject vocabulary and General vocabulary Multiple-choice questions Useful words and phrases are colour coded within the main text Each chapter features multiple-choice Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 and picked out in the margin with concise and simple definitions. questions to test your knowledge and These help understanding of key subject terms and support prepare you for similar questions in the students whose first language is not English. exam. Key facts Economics in practice and Chapter questions Easy to understand, useful information A summary case study and associated questions at the to contextualise learning. end of each chapter to consolidate your learning. Exam practice These exam-style questions are found at the end of each unit. They are tailored to the Pearson Edexcel specification to allow for practice and development of exam writing technique. They also allow for practice responding to the command words used in the exams. Assessment objectives Questions are tagged with the relevant assessment objectives that are being examined. Skills Preparing for your International GCSE Economics Relevant exam questions have been assigned the key skills that you will gain from examination undertaking them, allowing for a strong focus on particular academic qualities. These A full practice exam for both Paper 1 and Paper 2 at the transferable skills are highly valued in further study and the workplace. back of the book helps you prepare for the real thing.  viii ASSESSMENT OVERVIEW ASSESSMENT OVERVIEW Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 The following tables give an overview of the assessment for this course. You should study this information closely to help ensure that you are fully prepared for this course and know exactly what to expect in each part of the assessment. PAPER 1 PERCENTAGE MARK TIME AVAILABILITY MICROECONOMICS AND 50% 80 1 hour 30 minutes January and June examination BUSINESS ECONOMICS series Written exam paper First assessment June 2019 Paper code 4EC1/01 Externally set and assessed by Pearson Edexcel Single tier of entry PAPER 2 PERCENTAGE MARK TIME AVAILABILITY MACROECONOMICS AND THE 50% 80 1 hour 30 minutes January and June examination GLOBAL ECONOMY series Written examination paper First assessment June 2019 Paper code 4EC1/02 Externally set and assessed by Pearson Edexcel Single tier of entry ASSESSMENT OBJECTIVES AND WEIGHTINGS ASSESSMENT OBJECTIVE DESCRIPTION % IN INTERNATIONAL GCSE Recall, select and communicate knowledge of economic terms, A01 14–15% concepts and issues Demonstrate understanding and apply economic knowledge using A02 48–49% appropriate terms, concepts, theories and calculations effectively in specific contexts Select, organise and interpret information from sources to investigate A03 23–24% and analyse economic issues Evaluate economic information to make reasoned judgements and A04 12–13% draw conclusions  ASSESSMENT OVERVIEW ix Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 RELATIONSHIP OF ASSESSMENT OBJECTIVES TO UNITS ASSESSMENT OBJECTIVE UNIT NUMBER A01 A02 A03 A04 PAPER 1 7.5% 24.4% 11.8% 6.3% PAPER 2 7.5% 24.4% 11.8% 6.3% TOTAL FOR INTERNATIONAL GCSE 14–15% 48–49% 23–24% 12–13% ASSESSMENT SUMMARY ASSESSMENT PAPER 1 DESCRIPTION MARKS OBJECTIVES Structure Paper 1 assesses 50% of the total Economics qualification. There will be four questions on the paper, each worth 20 marks. Students must answer all questions. The sub-questions are a mixture of multiple-choice, short answer, data-response and Questions will open-ended questions. test the following MICROECONOMICS AND BUSINESS The total Assessment Content summary number Objectives ECONOMICS Each question will be based on a particular topic from the subject content related to of marks A01 – 7.5% PAPER CODE microeconomics and business economics. available A02 – 24.4% 4EC1/01 Owing to the nature of economics, there is some interrelation between topics. is 80 A03 – 11.8% A04 – 6.3% Assessment This is a single-tier exam paper and all questions cover the full ranges of grades from 9–1. The assessment duration is 1 hour 30 minutes. Calculators may be used in the examination. ASSESSMENT PAPER 2 DESCRIPTION MARKS OBJECTIVES Structure Paper 2 assesses 50% of the total Economics qualification. There will be four questions on the paper, each worth 20 marks. Students must answer all questions. The sub-questions are a mixture of multiple-choice, short answer, data-response and Questions will open-ended questions. MACROECONOMICS test the following The total Assessment AND THE GLOBAL Content summary number Objectives ECONOMY of marks Each question will be based on a particular topic from the subject content related to A01 – 7.5% PAPER CODE available microeconomics and business economics. A02 – 24.4% 4EC1/01 is 80 Owing to the nature of economics, there is some interrelation between topics. A03 – 11.8% A04 – 6.3% Assessment This is a single-tier exam paper and all questions cover the full ranges of grades from 9–1. The assessment duration is 1 hour 30 minutes. Calculators may be used in the examination. Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019  3 1.1 Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 THE MARKET SYSTEM Assessment Objective AO1 This section looks at the basic economic problem, which is to do with the allocation of scarce resources. The section focuses on the Recall, select and way consumers, firms and the government make choices between communicate knowledge of different alternatives when faced with a limited budget. It also studies economic terms, concepts the underlying assumptions behind the behaviour of producers and and issues consumers and the possible reasons why they may fail to maximise their profit or benefit, respectively. Assessment Objective AO2 Microeconomics is the study of individual markets. Therefore, Demonstrate understanding this section looks at the way prices are determined in markets by and apply economic the forces of supply and demand. It covers the factors that might knowledge using appropriate influence supply and demand, and how supply and demand responds terms, concepts, theories to changes in prices. Finally, the chapter addresses the ways in which and calculations effectively market forces help to allocate resources in an economy, and what in specific contexts happens when markets fail. Assessment Objective AO3 Select, organise and interpret information from sources to investigate and analyse economic issues Assessment Objective AO4 Evaluate economic information to make reasoned judgements and draw conclusions  4 THE MARKET SYSTEM 1 THE ECONOMIC PROBLEM Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 1 THE ECONOMIC PROBLEM LEARNING OBJECTIVES ◼ Understand the problem of scarcity ◼ Understand opportunity cost ◼ Understand production possibility curves ◼ Understand causes of positive and negative economic growth GETTING STARTED The planet we live on contains many resources that are used to SUBJECT VOCABULARY produce goods we like to consume. However, there is a problem. goods things that are produced in order to be sold Look at the images below. CASE STUDY: RESOURCES AND NEEDS ▲▲ Figure 1.1 Valuable resources ▲▲ Figure 1.2 Needs 1 Describe the resources shown in Figure 1.1. 2 Are there enough of these resources in the world? Explain your answer with reference to the images in Figure 1.2. 3 In groups, discuss whether your country has enough resources. Draw up a list of measures that your government might take to increase the quantity of resources available. Present your ideas to the rest of the class.  THE MARKET SYSTEM 1 THE ECONOMIC PROBLEM 5 Uncorrected proof, all content subject to change at publisher discretion. Not for resale, circulation or distribution in whole or in part. ©Pearson 2019 THE PROBLEM OF SCARCITY FINITE RESOURCES All countries have resources, such as water, minerals, soil, plants, animals and people. However, in any country there is a finite quantity of these resources, SUBJECT VOCABULARY which means that the quantity available is limited. As there is only a limited finite having an end or a limit quantity, economists say that resources are scarce. These resources are often referred to as the four factors of production: land, labour, capital and enterprise (see Chapter 14). GENERAL VOCABULARY Resources are scarcer in some countries than others. For example, in some African countries there are serious shortages of fertile soil and water. This means that fertile soil ground that is capable of food production is inadequate. Even where resources exist, a country may not be producing crops capable of exploiting them. For example, Ethiopia struggles to produce enough food for its population because only about 4 per cent of its fertile land is irrigated. The problem is not a shortage of water but the failure to exploit some of its huge rivers, such as the Awash and the Blue Nile. The country does not have the financial resources to invest in projects that would make use of the water for agriculture. UNLIMITED WANTS Economists distinguish between needs and wants. Needs are the basic requirements for human survival. Some of these needs are physical and GENERAL VOCABULARY include water, food, warmth, shelter and clothing. If these needs cannot be health care activity of looking after satisfied, eventually humans would cease to exist. In some countries in the people’s health, considered to be an world people do die because such needs cannot be met. industry needs basic requirements for human In addition to basic needs, humans also have other desires. These are called