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This simply means, 'the next best alternative foregone'. We can explain this by saying if I only had £5 to buy lunch, I could either buy a sandwich or half a pizza. The opportunity cost of me buying a san...

The Neo-Classical school of thought is built under the assumption of prices being flexible in both directions(upwards or downwards). On the other hand, Keynes suggested that wages are inflexible downwards...

A particular economy can go through many downturns and upturns in what is called the business cycle. A central bank may wish to dampen these fluctuations by using one of two tools. The first one is changi...

The Philips curve charts unemployment against the change in rate of inflation. There is an inverse relationship between the two, therefore when unemployment rises, the change in rate of inflation falls. C...

This is a fairly common a) question on Economics HL paper one. It is a 10 mark question, so a maximum of 20 minutes should be spent on it in order to leave time for question b). It concerns the workings o...