Economics for Business (FECB)

Syllabus overview

This syllabus is designed to enable students to acquire a knowledge and understanding of the fundamental economic concepts necessary for the work of the Chartered Management Accountant.

Aims

This syllabus aims to test the student’s ability to:

• identify how a market economy functions and the role of government within it;
• explain the economic environment within which businesses operate;
• identify the economic factors which influence the behaviour and performance of firms and industries;
• prepare the economic analysis that informs and guides the advice given to business decision-makers.

There will be a written paper of two hours. Initially, objective testing will account for a minimum of 50% of the marks awarded on this paper.

On completion of their studies students should be able to:

• explain the principal issues related to economic welfare and its growth;
• explain the main trends in the rate and structure of economic growth in recent years;
• explain the central economic problem and the concepts of scarcity and opportunity cost;
• explain the main factors determining the rate of economic growth;
• explain the main elements of government policy towards economic growth.

• The concept of economic welfare.
• Economic growth: trends in economic growth; factors in economic growth.
• Economic welfare and sustainable growth.
• Issues in economic growth and growth policy.

On completion of their studies students should be able to:

• explain the functioning of a market economy;
• explain how the price system works by applying appropriate economic concepts and principles;
• explain and illustrate how product and factor markets operate;
• apply basic economic analysis to explain economic and business issues;
• explain the behaviour of business costs in both the short and the long run;
• explain the economic factors which affect the structure, behaviour and performance of individual businesses and industries;
• analyse the process of competition in different market structures;
• identify the public issues that are raised by business activity;
• explain how governments might respond to the effects of business on the environment.

• The business environment and the structure of economic activity.
• Business firms: legal, economic and organisational features; entrepreneurship and profit.
• Business functions: production and costs, finance and marketing.
• The market process: supply and demand and their determinants.
• The price mechanism: the demand and supply model and its applications.
• Forms of market structure: competition and economic welfare; competition policy; regulation and deregulation; the public sector and privatisation.
• Business and the environment; externalities and public policy.

On completion of their studies students should be able to:

• identify the appropriate macroeconomic concepts to explain the measurement and determination of national income;
• explain macroeconomic phenomena by demonstrating a simple circular flow of income model;
• identify the main indicators of macroeconomic performance and demonstrate their significance;
• identify the main elements of the monetary and financial system;
• explain the importance of the monetary environment to the business sector;
• explain the economic role of government through fiscal and monetary policy and demonstrate the impact of such policies on the business sector;
• explain the nature of the trade cycle, its causes and consequences;
• explain the debates concerning the nature of the macro economy and appropriate government policy.

• National income: its measurement and determination; the circular flow of income and a simple aggregate demand and supply model; unemployment and the price level.
• The monetary environment: inflation and the money supply; the banking and financial system; interest rates and monetary policy.
• The fiscal environment: taxation and public spending; the budget and government borrowing; demand management and supply-side policy.
• Macroeconomic stability; economic fluctuations and their causes; macroeconomic forecasting and stabilisation policy.

On completion of their studies students should be able to:

• explain patterns of international trade and the sources of international specialisation;
• identify the international movement of factors of production and the role of transnational companies in this process;
• identify and explain the concept and consequences of globalisation for businesses and national economies;
• explain the concept of the balance of payments and its determinants;
• distinguish between different exchange rate regimes and explain their implications for the business sector;
• identify the main elements of national policy with respect to external economic relations, especially in the context of regional trading blocs.

• Patterns of international trade and trade policy; regional trading blocs; the globalisation of production.
• International factor movements; international capital markets; international investment flows; the movement of labour and technology; the nature and role of transnational companies.
• The balance of payments; structure and determinants of the balance of payments; foreign exchange markets and exchange rate regimes; European Monetary Union.