Student Resources

Unit 1: Markets and models

In Unit 1, students understand how the fundamental economic concepts of scarcity, choice and opportunity cost compel individuals, businesses and governments to make decisions about how best to allocate resources among competing needs. The nature of the basic economic problem is examined, and the consequences of scarcity are expressed in the production possibility curve and through the choices made by modern economic systems. Students analyse the factors that impact on the economy through the circular flow of income model and investigate the price mechanism as a model for the efficient allocation of resources.

Unit 1 Topic 1: The basic economic problem

In Topic 1, students understand the foundations of the subject in terms of scarcity and choices.

Students learn key terminology as they consider the different stakeholders involved in the economy, and the basic economic problem of satisfying needs and wants.

The first economic model presented in the course is the production possibility curve, which enables students to identify and examine relationships between resources and production.

This topic allows students to consider finite resources and how these require choices to be made at an individual and at a national level.

Unit 1 Topic 2: Economic Flows

In Topic 2, students explore the economic idea of the economy as a system of real and monetary connections between the five key sectors, using the circular flow of income model.

They analyse:

the forces that affect flows to and from the household, business, financial, government and overseas sectors,
the effect of government decisions on the economy, and
the interrelationships between each sector.

This topic enables students to see links and connections in the economic system that they experience every day.

Unit 1 Topic 3: Market Forces

In Topic 3, students examine the forces of demand and supply that underlie the operation of the price mechanism in the economy.

Important concepts of shortages, surpluses and elasticities are scrutinised.

This topic is studied through the lens of the economic problem in a specific current Australian context and market, for example: agricultural (e.g. wool, wheat and beef); other commodities (e.g. minerals and energy); community; financial; share; labour; property/housing and health.

This topic develops students’ comprehension of market forces, and how they can use these to their advantage when understanding and predicting prices.

Unit 2: Modified Markets

Unit 2 Topic 1: Markets and efficiency

In Topic 1, students understand that markets can fail when the price mechanism results in a sub-optimal allocation of resources.

They examine market failure and explore traditional and innovative measures and strategies using economic criteria, for example socially optimal and/or efficient outcomes.

This topic analyses how markets may not always work efficiently and effectively, and the different choices and opportunities that exist when this phenomenon occurs.

Unit 2 Topic 2: Case options of market measures and strategies

In Topic 2, students study a choice of two of the three case options listed below of market measures and strategies to apply the economic concepts and economic ideas developed in Topic 1.

Students analyse different situations to explain the causes and effects of the market failure and the need for intervention.

They evaluate strategies and/or interventions to achieve socially desirable and/or optimal outcomes.

Case option A: Market Concentration

Case option B: Environmental Economics

Case option C: Inequality

Unit 3: International Economics

In Unit 3, students focus on the complex ideas and relationships underlying the international economy and the impact that these have on Australia’s domestic economy and decision-making. Students consider Australia’s engagement in international trade and the global economy, including the theories behind trade and exchange rates. They examine the balance of payments in depth, considering elements of the current and capital accounts. In Global economic issues, students explain the factors that contribute to and have an impact on globalisation. Trade barriers and trade agreements are investigated from a theoretical and contemporary viewpoint and form the basis of student-led research.

Current economic events and economic measurements will be used to support and develop understanding in this unit. Longer term international trends may be considered in an analysis to see structural changes over time. However, the emphasis must be on a current situation and not on an event in the economic history of Australia. Students will understand measurements of economic data and how to calculate changes in percentages.

Unit 3 Topic 1: International trade

In Topic 1, students understand the dynamic nature and extent of Australia’s international trade interconnections.

They examine the reasons for international trade and Australia’s place in the global economy.

Current statistics are analysed to reveal relationships, patterns and trends that cause and affect Australia’s economic growth.

Economic models are used to analyse movements in exchange rates over time and evaluate the consequent impacts on the domestic economy.

Trends in the balance of payments are analysed to evaluate the implications for the Australian economy.

Unit 3 Topic 2: Global economic issues

In Topic 2, students study three major factors affecting Australia’s trade relationships with the rest of the world.

Firstly, the factors that have contributed to globalisation are explored from Australia’s viewpoint.

Secondly, economic ideas and models are used to examine the impacts of different barriers to trade, and the economic tensions they create.

Finally, the impacts of international trading agreements are considered.

Unit 4: Contemporary macroeconomics

In Unit 4, students concentrate on the practical application of the Australian Government’s domestic macroeconomic objectives. They investigate the performance of the economy by focusing on the economic cycle and analysing a variety of economic indicators to evaluate economic performance and budget stances. Students examine aggregate demand and supply to model the level of output in the economy and its relationship to the government’s current macroeconomic objectives.

Available policy instruments are analysed and evaluated to make decisions about the relevant policy mix with reference to the current economic climate. Current economic events and economic measurements will be used to support and develop understanding in this unit. Students will understand measurements of data, how different economic indicators are measured, and basis point or percentage point movements.