Complete summary notes covering all topics from the OCR GCSE Economics J205 specification. These comprehensive notes include key definitions, diagrams, examples and evaluation tables for easier and quicker revision. Over 8x faster than reading through the textbook.
,Topic 1: Introduction to Economics 2
(1.1) Main Economic Groups and Factors of Production 3
(1.2) The Basic Economic Problem 3
Topic 2: The Role of Markets and Money 4
(2.1) The Role of Markets 5
(2.2) Demand 6
(2.3) Supply 8
(2.4) Price 10
(2.5) Competition 11
(2.6) Production 12
(2.7) The Labour Market 15
(2.8) The Role of Money and Financial Markets 17
Topic 3: Economic Objectives and the Role of Government 18
(3.1) Economic Growth 19
(3.2) Unemployment 20
(3.3) Income Distribution 21
(3.4) Price Stability 22
(3.5) Fiscal Policy 23
(3.6) Monetary Policy 25
(3.7) Supply-side Policies 26
(3.8) Limitations of Markets 27
Topic 4: International Trade and the Global Economy 28
(4.1) Importance of International Trade 29
(4.2) Balance of Payments 30
(4.3) Exchange Rates 31
(4.4) Globalisation 33
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,Topic 1: Introduction to Economics
2
, (1.1) Main Economic Groups and Factors of Production
There are three main economic groups:
● Consumer - A person or organisation that directly uses a good or service.
● Producer - A person, company or country that makes, grows or supplies goods and
services.
● Government - A political authority that decides how a country is run and manages its
operation.
There are two types of products:
● Good - A tangible product i.e. a product that can be seen or touched.
● Service - An intangible product i.e. a product that cannot be seen or touched.
Factors of production are the resources in an economy that can be used to make goods
and services. There are four factors of production:
● Land - the FoP concerned with all the natural resources of an economy, such as
farmland or mineral deposits.
● Labour - the FoP concerned with the workforce of an economy in terms of both
physical and mental effort involved in production.
● Capital - the FoP concerned with the human-made aids to production.
● Enterprise - the FoP that involves the risk in managing the other three FoPs.
(1.2) The Basic Economic Problem
The economic problem concerns how best to use limited resources to satisfy unlimited
wants. Choices are made by considering:
● What should be produced?
● How should it be produced?
● Who should it be produced for?
Also, there are distinctions between needs and wants:
● Needs - Something a consumer has to have to survive.
● Wants - Something a consumer would like to have, but is not essential for survival.
When allocating resources, there is always an opportunity cost to making a choice.
Opportunity cost is the next best alternative given up when making a choice.
Also, there are considerations around sustainability when choosing between economic
choices, which can be split into three categories:
● Economic sustainability - The best use of resources in order to create responsible
development or growth, now and into the future.
● Social sustainability - The impact of development or growth that promotes an
improvement in quality of life for all, now and into the future.
● Environmental sustainability - The impact of development or growth where the
effect on the environment is small and possible to manage, now and into the future.
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