What this resource is
This framework re-presents the Diploma Programme Economics Higher Level course as a single, prerequisite-ordered teaching sequence — not four syllabus units taught in numerical order, and not a Standard Level course with the Higher Level extensions bolted on wherever they happen to fall. It is built on three convictions: that topics should be taught in the order their dependencies require, that each should be taught to its full depth rather than its minimum, and that the connections between topics should be made explicit so that students see economics as one connected subject rather than thirty-six separate ones.
The intended outcome is a student taught deeply and connectedly enough to write three commentaries on real-world articles without being led, and to meet Paper 3 as a set of familiar calculations rather than as an unfamiliar paper — one who selects an article because they can already see the diagram inside it, rather than one who, never having been shown the depth, reaches for a summary.
Inside this document
- 01The design principle — how topics are classified and ordered
- 02The Teaching Spine — the full 36-topic flow, at a glance
- 03Why the Syntheses Come Last — the prerequisite feeder map
- 04The Sequence at a Glance — every topic with syllabus code, role and hours
- 05The 36 Topics in Depth — depth, interconnection and commentary angle for each
- 06Time Allocation & Pacing — reconciled to 240 hours, finishing by end of January
The design principle
Every topic is classified by the role it plays in the sequence:
- Foundational — self-contained, and a prerequisite for later topics.
- Developmental — extends one or more foundations.
- Synthesis — applied topics that draw several earlier strands together, taught once those strands are secure. Externalities, equity, monopolistic competition and oligopoly, the macroeconomic objectives, the Phillips curve, poverty and inequality, the evaluation of protection, the balance of payments, sustainability, the barriers to development and the development strategies all sit here.
Higher Level adds roughly ninety hours to the Standard Level course, and they are not distributed evenly. The theory of the firm is a self-contained block large enough to be its own phase, and it is placed after market failure so that perfect competition can serve as the efficiency benchmark rather than as an opening abstraction. The Keynesian multiplier and the Phillips curve are separated out as topics in their own right, because each is a mechanism that later evaluation depends on rather than a paragraph inside another topic. Everywhere else the extension is quantitative, and it is taught inside the topic it belongs to — which is what turns Paper 3 into a familiar set of calculations rather than a separate course taught in the spring of Year 2. The feeders of the synthesis topics cut straight across unit boundaries: oligopoly needs the whole cost toolkit; the balance of payments needs both exchange rates and the price elasticity of demand taught fifty hours earlier; the development strategies that close the course need trade theory, supply-side policy and inequality at once.
IB DEMYSTIFIEDExaminers · Moderators · Mentors
The Teaching Spine
Prerequisite-ordered flow · 36 topics · Economics HLTeach top to bottom — each phase is a prerequisite for the next. Colour shows each topic’s role; the pill shows the phase’s teaching hours.
PHASE A10 teaching hours
1Economic Problem
2Method & Models
▼
PHASE B26 teaching hours
3Demand
4Supply
5Equilibrium
6PED & YED
7PES
8Behavioural
▼
PHASE C24 teaching hours
9Intervention
10Externalities
11Public Goods
12Information
13Equity
▼
PHASE D20 teaching hours
14Costs & Revenue
15Perfect Competition
16Monopoly
17Imperfect Competition
▼
PHASE E53 teaching hours
18Measurement
19AD & AS
20Multiplier
21Objectives
22Phillips Curve
23Inequality
▼
PHASE F22 teaching hours
24Monetary Policy
25Fiscal Policy
26Supply-Side
▼
PHASE G65 teaching hours
27Gains from Trade
28Protection
29Free Trade Debate
30Integration
31Exchange Rates
32Balance of Payments
33Sustainability
34Development Measures
35Barriers
36Strategies
Role:
Foundational
Developmental
Synthesis — taught late
Total taught content: 220 h · + 20 h internal assessment portfolio = 240 h
The full 36-topic sequence. Teach top to bottom; each phase is a prerequisite for the next.
IB DEMYSTIFIEDExaminers · Moderators · Mentors
Why the Syntheses Come Last
The prerequisite feeder mapEach synthesis topic (right) can only be taught at depth once its feeders (left) are in place. A gold arrow means ‘is a prerequisite for’.
17. Monopolistic Competition & Oligopoly
14 · Costs, revenues & profit15 · Perfect competition — the benchmark16 · Monopoly — market power6 · PED — marginal revenue
➤
17 · Imperfect Competition
Four structures, one toolkit — built two topics earlier.
13. Markets, Fairness & Income Distribution
5 · Equilibrium — efficiency10 · Externalities9 · Intervention — redistribution tools12 · Asymmetric information
➤
13 · Markets & Income Distribution
Equity is only meaningful once efficiency has been defined.
22. The Phillips Curve
19 · AD & AS — both models20 · The multiplier21 · Macroeconomic objectives2 · Schools of economic thought
➤
22 · The Phillips Curve
A trade-off cannot be assessed before both objectives are secure.
32. The Balance of Payments
31 · Exchange rates6 · PED — Marshall–Lerner27 · Gains from trade19 · AD — net exports
➤
32 · The Balance of Payments
The elasticity work of Unit 2 finally pays off here.
36. Strategies for Growth & Development
35 · Barriers to development34 · Measuring development33 · Sustainability26 · Supply-side policy27 · Gains from trade
➤
36 · Growth & Development Strategies
The last topic because everything in the course feeds it.
How to read this
- Right-hand boxes are the five topics that draw the most strands together.
- Left-hand chips are the topics they depend on.
- A gold arrow means ‘is a prerequisite for’.
- Every feeder sits earlier in the spine, so by the time the topic is taught its feeders are done.
- The whole argument for the order in one image: sequence by dependency, not by unit number.
Each synthesis topic can be taught at depth only once its feeders are in place.
The sequence at a glance
Every topic in teaching order, with its syllabus code, its role and its teaching hours. Codes marked ‘HL’ are Higher Level content taught inside the unit it belongs to. The suggested Year 1 / Year 2 boundary falls at the end of Phase E and is adjustable.
| # | Topic | Syllabus | Role | Hours |
|---|---|---|---|---|
| Phase A — Foundations of Economic Reasoning (10 h) | ||||
| 1 | Understanding the Economic Problem | 1.1 | Foundational | 6 h |
| 2 | How Economists Analyse the World | 1.2 | Foundational | 4 h |
| Phase B — How Markets Work (26 h) | ||||
| 3 | Understanding Demand | 2.1 | Foundational | 4 h |
| 4 | Understanding Supply | 2.2 | Foundational | 4 h |
| 5 | Market Equilibrium and the Price Mechanism | 2.3 | Developmental | 6 h |
| 6 | Responsiveness of Demand | 2.5 | Developmental | 5 h |
| 7 | Responsiveness of Supply | 2.6 | Developmental | 3 h |
| 8 | Consumer and Producer Decision-Making | 2.4 | Developmental | 4 h |
| Phase C — Market Failure and Government (24 h) | ||||
| 9 | Government Intervention in Markets | 2.7 | Developmental | 8 h |
| 10 | Externalities and Shared Resources | 2.8 | Synthesis | 7 h |
| 11 | Public Goods and Market Provision | 2.9 | Developmental | 3 h |
| 12 | Information Gaps in Markets | 2.10 | Developmental | 3 h |
| 13 | Markets, Fairness and Income Distribution | 2.12 | Synthesis | 3 h |
| Phase D — The Firm and Market Structures (20 h) | ||||
| 14 | Costs, Revenues and Profit | 2.11 HL | Foundational | 6 h |
| 15 | Perfect Competition | 2.11 HL | Developmental | 5 h |
| 16 | Monopoly and Market Power | 2.11 HL | Developmental | 5 h |
| 17 | Monopolistic Competition and Oligopoly | 2.11 HL | Synthesis | 4 h |
| Phase E — The National Economy (53 h) | ||||
| 18 | Measuring Economic Performance | 3.1 | Foundational | 10 h |
| 19 | Aggregate Demand and Aggregate Supply | 3.2 | Developmental | 12 h |
| 20 | The Keynesian Multiplier | 3.2 HL | Developmental | 6 h |
| 21 | Key Macroeconomic Goals | 3.3 | Synthesis | 12 h |
| 22 | The Phillips Curve and Policy Trade-offs | 3.3 HL | Synthesis | 5 h |
| 23 | Poverty and Income Inequality | 3.4 | Synthesis | 8 h |
| Phase F — Macroeconomic Policy (22 h) | ||||
| 24 | Managing the Economy Through Monetary Policy | 3.5 | Developmental | 9 h |
| 25 | Managing the Economy Through Fiscal Policy | 3.6 | Developmental | 8 h |
| 26 | Improving Long-Run Productive Capacity | 3.7 | Developmental | 5 h |
| Phase G — The Global Economy and Development (65 h) | ||||
| 27 | Gains from International Trade | 4.1 | Foundational | 7 h |
| 28 | Methods of Restricting Trade | 4.2 | Developmental | 6 h |
| 29 | Evaluating Trade Protection | 4.3 | Synthesis | 6 h |
| 30 | Economic Integration Between Countries | 4.4 | Developmental | 7 h |
| 31 | Understanding Exchange Rates | 4.5 | Developmental | 8 h |
| 32 | The Balance of Payments | 4.6 | Synthesis | 8 h |
| 33 | Sustainable Economic Development | 4.7 | Synthesis | 6 h |
| 34 | Measuring Development | 4.8 | Developmental | 6 h |
| 35 | Obstacles to Growth and Development | 4.9 | Synthesis | 5 h |
| 36 | Strategies for Economic Growth and Development | 4.10 | Synthesis | 6 h |
| Total taught content | 220 h | |||
Scroll the table sideways on narrow screens.
The 36 topics in depth
Each topic carries its teaching depth, its interconnections with other topics, and the commentary angle through which it prepares a student for the internal assessment portfolio. The quantitative content Paper 3 draws on is named inside the topic it belongs to rather than gathered into an appendix.
Filter by role
Showing all 36 topics in teaching order.
Phase A — Foundations of Economic Reasoning
Nothing in this phase depends on later material, so it is taught first. Scarcity, choice and opportunity cost are the vocabulary in which every market, every policy and every development strategy in the rest of the course is described, and the methodology topic settles in advance why economists disagree — which is what makes the contested aggregate supply curve in Unit 3 intelligible rather than confusing.
1. Understanding the Economic Problem
- Teach to this depth
- Scarcity established first as the condition that makes economics necessary at all — unlimited wants against finite factors of production — with choice and opportunity cost then derived from it rather than defined alongside it. The production possibilities curve built up point by point so students can read attainable and unattainable combinations, actual against potential output, opportunity cost as the slope, and growth as an outward shift; the concave shape argued from the imperfect substitutability of resources rather than asserted. Economics located as a social science, with free market, planned and mixed systems compared on the three allocation questions. The nine key concepts introduced here as analytical tools to be returned to in every unit, not as a list to be recited.
- Connects to
- Opportunity cost reappears in comparative advantage, in every fiscal choice between spending and debt, and in the evaluation of every policy in the course; the production possibilities curve becomes the microfoundation of long-run aggregate supply and of economic growth in Unit 3.
- Commentary & real-world angle
- The framing of a real allocation decision — a public spending choice, a land-use dispute, a rationing problem — as scarcity, choice and opportunity cost, which is where most commentary introductions are won or lost.
2. How Economists Analyse the World
- Teach to this depth
- Economic methodology handled honestly: models as deliberate simplifications, the assumptions that make them tractable, ceteris paribus, and the positive/normative distinction applied to real ministerial claims rather than to invented sentences. The major schools — classical, Keynesian, monetarist and new classical, and the behavioural turn — introduced as competing answers to the same questions rather than as history, so that when the aggregate supply curve is contested in Unit 3 students already know why. Diagram conventions established now: axes, labelling, and the difference between a movement and a shift.
- Connects to
- Sets the terms for every model that follows. The classical–Keynesian disagreement is the whole substance of the aggregate supply topic, and the positive/normative distinction is the basis of the evaluation marks in every paper.
- Commentary & real-world angle
- Separating what an article’s author asserts from what economic theory actually predicts — the habit the commentary rubric rewards most and the one students acquire last.
Phase B — How Markets Work
The market mechanism is built once, carefully, and then reused for the rest of the course. Demand and supply are established separately before they are allowed to meet, so equilibrium arrives as a result rather than as a picture; elasticity follows immediately because it answers the ‘by how much?’ question the first three topics leave open. Higher Level takes each of these topics algebraically as well as diagrammatically, which is why the phase carries twenty-six hours rather than seventeen. The critique of maximising behaviour closes the phase, once there is a model rigorous enough to be worth criticising.
3. Understanding Demand
- Teach to this depth
- The law of demand explained through the income and substitution effects and diminishing marginal utility, not asserted as a downward slope. The demand schedule and curve constructed from data. The movement-along against shift distinction drilled until it is automatic, because it is the single most common error in Paper 2. Non-price determinants — income with the normal and inferior distinction, the prices of substitutes and complements, tastes, expectations, the number of consumers — each taken through to a specific directional prediction rather than a list entry.
- Connects to
- Half of every market diagram for the next two units. The determinants return as the components of aggregate demand, and the normal/inferior distinction becomes income elasticity three topics later.
- Commentary & real-world angle
- Almost any article reporting a price or quantity change in a named market; the discipline is choosing the one determinant the article actually supports.
4. Understanding Supply
- Teach to this depth
- The law of supply derived from rising marginal cost and the profit motive, which quietly lays the foundation the theory of the firm builds on in Phase D. Movements along the curve separated from shifts with the same rigour applied to demand. Determinants — factor costs, technology, indirect taxes and subsidies, prices of related goods, producer expectations, the number of firms, supply shocks — each argued through to a direction and, where the data allow, a magnitude.
- Connects to
- Meets demand in the next topic. Indirect taxes and subsidies return as the government’s main microeconomic instruments, and the cost determinants become the short-run aggregate supply shifters in Unit 3.
- Commentary & real-world angle
- Supply shocks — energy prices, harvests, freight and shipping rates — are the most commentary-friendly articles in the whole unit.
5. Market Equilibrium and the Price Mechanism
- Teach to this depth
- Equilibrium taught as a process: from a disequilibrium price, through the resulting shortage or surplus, to the price signal that clears it. The three functions of price — signalling, incentive and rationing — stated explicitly and then used as the argument for allocative efficiency. Consumer and producer surplus calculated as areas rather than merely shaded, and social surplus established as the welfare measure against which every later intervention and market failure will be judged. Shifts in one and in both curves worked through, with the indeterminate cases treated honestly rather than avoided. Higher Level adds the algebra: linear demand and supply functions solved simultaneously for equilibrium price and quantity, the curves plotted from those functions, and consumer and producer surplus computed as areas rather than estimated by eye — the first of the quantitative skills Paper 3 assumes throughout.
- Connects to
- The welfare benchmark for the whole of Unit 2 — every tax, subsidy, price control, externality and market structure is assessed as a deviation from it — and the surplus areas reappear in the gains-from-trade and tariff analysis of Unit 4.
- Commentary & real-world angle
- Any market clearing or failing to clear — housing, energy, tickets, agricultural produce — analysed with a labelled surplus change rather than a description of the price move.
6. Responsiveness of Demand
- Teach to this depth
- Price elasticity of demand calculated with the sign convention handled properly and interpreted against the total revenue rule, which is the point of the concept rather than an appendix to it. The determinants of PED reasoned through — availability of substitutes, necessity, proportion of income, time — and the variation of elasticity along a straight-line demand curve shown rather than claimed. Income elasticity with normal, inferior and luxury goods distinguished numerically and the sectoral-change argument drawn out. Cross elasticity as the measure of the relationship between markets. Higher Level adds the calculations: PED, YED and XED computed from raw data and from linear demand functions, with the elasticity result carried straight into the tax incidence and revenue work of the intervention topic.
- Connects to
- PED determines who bears an indirect tax, whether a depreciation improves the trade balance, and why primary producers face volatile incomes; YED underlies the structural change argument in the development topics.
- Commentary & real-world angle
- Pricing decisions and tax changes where the revenue consequence turns on an elasticity the article implies but never states.
7. Responsiveness of Supply
- Teach to this depth
- Price elasticity of supply calculated and interpreted, with the determinants — spare capacity, stock levels, factor mobility and, above all, time — argued rather than listed. The short-run against long-run distinction made concrete with named industries, and perfectly elastic and perfectly inelastic supply treated as limiting cases with real examples rather than as curiosities. Higher Level adds the calculation: PES computed from data and from linear supply functions, then combined with PED to work out the split of a tax burden numerically rather than to describe it as ‘mostly the consumer’.
- Connects to
- Combines with PED to determine tax incidence and the size of any price effect; low PES in primary commodities is the foundation of the price-volatility argument in the development topics.
- Commentary & real-world angle
- Supply bottlenecks — semiconductors, housing completions, shipping capacity — where the time dimension of PES explains why prices moved as far as they did.
8. Consumer and Producer Decision-Making
- Teach to this depth
- The assumptions of the standard model stated plainly — rationality, perfect information, utility maximisation — and then tested against evidence. Bounded rationality, bounded self-control and bounded selfishness; biases and rules of thumb; choice architecture and nudge, with real policy cases such as default enrolment. On the producer side, the alternatives to profit maximisation: market share, satisficing, corporate social responsibility. The point is not that the standard model is wrong but that students can say precisely where it holds and where it does not. The alternative firm objectives introduced here are picked up again in the theory of the firm, where profit maximisation is derived from marginal analysis rather than assumed — which is what makes the critique bite.
- Connects to
- Qualifies every demand and supply prediction made so far, supplies a distinct evaluation line for market-failure interventions, and connects directly to the behavioural instruments in the government intervention topic.
- Commentary & real-world angle
- Nudge-style interventions and pricing psychology, where the evaluation depends on knowing what the standard model would have predicted instead.
Phase C — Market Failure and Government
Only once the market’s efficiency case has been built can its failure be assessed. Government intervention is taught first, because its instruments — taxes, subsidies, price controls, regulation, nudges — are the tools every later failure is corrected with, and each of them has to be quantified as well as drawn. The failures then follow, ending with equity, which is not an efficiency failure at all and which leads straight into the macroeconomics of poverty and inequality. Market power is held back to the next phase, where it belongs with the theory of the firm.
9. Government Intervention in Markets
- Teach to this depth
- Each instrument taken through to a labelled diagram and a full welfare account. Specific and ad valorem indirect taxes with the incidence split between consumer and producer derived from relative elasticities rather than assumed equal; subsidies with the cost to government shown as an area and its opportunity cost stated; price ceilings and price floors with the resulting shortage or surplus, parallel markets, allocative inefficiency, and the government responses to each; direct provision, command-and-control regulation, and behavioural nudges. Consequences worked through for consumers, producers, government and society every time, not only for whichever group the question happens to name. Higher Level makes the whole analysis quantitative: consumer expenditure, producer revenue, government revenue or expenditure, the incidence split and the welfare loss are calculated from linear functions or from diagram data, and the shortage or surplus created by a price control is measured rather than described.
- Connects to
- These instruments are the response to every market failure in the next four topics, and the tax and subsidy analysis is reused directly in the tariff and export-subsidy diagrams of Unit 4.
- Commentary & real-world angle
- Budget measures, sugar and carbon taxes, rent controls and minimum wages — the richest source of microeconomic commentary articles in the course.
10. Externalities and Shared Resources
- Teach to this depth
- Market failure defined as allocative inefficiency measured against the social optimum, so the concept rests on the surplus analysis already built rather than on a definition. Negative and positive externalities of both production and consumption drawn as four distinct diagrams with MPB, MSB, MPC and MSC labelled and the welfare loss identified and explained rather than shaded. Common pool resources and the mechanism of their over-extraction, with sustainability applied to fisheries, forests and the atmosphere. Corrective measures — Pigouvian taxes, subsidies, tradable permits, regulation, education, collective self-governance — each evaluated on effectiveness, cost, and the information a government would actually need to have.
- Connects to
- Uses the surplus analysis from equilibrium and the whole intervention toolkit from the previous topic; carbon pricing and permit trading return at global scale in the sustainable development topic.
- Commentary & real-world angle
- Emissions pricing, congestion charging, vaccination programmes and fisheries disputes — where a correctly labelled externality diagram carries most of the analysis marks on its own.
11. Public Goods and Market Provision
- Teach to this depth
- Non-rivalry and non-excludability defined and then used to derive the free-rider problem, so that under-provision is reached as a conclusion rather than announced as a fact. The distinction between public goods, merit goods and private goods argued through contested cases rather than assigned. Direct provision funded from taxation as the standard response, with its opportunity cost and its allocative difficulty — how does a government know how much to provide — taken seriously.
- Connects to
- Shares the intervention toolkit with the surrounding topics and feeds government spending in the fiscal policy topic; merit good provision returns as a development strategy in Unit 4.
- Commentary & real-world angle
- Public infrastructure, flood defence, street lighting, and public health or open-data provision debates.
12. Information Gaps in Markets
- Teach to this depth
- Asymmetric information split cleanly into adverse selection and moral hazard, each with a worked case — used cars and insurance for the first, insurance and banking for the second — and each traced to a specific inefficiency rather than to a general sense of unfairness. Responses evaluated: regulation, licensing, screening and signalling, warranties, and the limits of each. The point that the failure is informational rather than a shortage of goods is made explicitly, because students routinely conflate the two.
- Connects to
- Draws on the assumptions examined in the behavioural topic; feeds financial regulation in the macroeconomic policy phase and the institutional quality argument in the development topics.
- Commentary & real-world angle
- Insurance pricing, food and product labelling, financial mis-selling and second-hand markets.
13. Markets, Fairness and Income Distribution
- Teach to this depth
- The distinction between efficiency and equity established first, so that an efficient outcome can be shown to be an unacceptable one — which is the whole point of the topic. How competitive markets generate unequal outcomes through differences in factor endowments, skills, bargaining power and inherited wealth; why that inequality persists across generations; and why the market contains no mechanism for correcting it. The limits of markets as allocators of merit goods and basic needs, which is the transition into the macroeconomic treatment of poverty.
- Connects to
- Closes the microeconomics unit and opens the macroeconomic inequality topic directly; the same argument returns as the equity case for progressive taxation and as the distributional critique of growth in Unit 4.
- Commentary & real-world angle
- Wage dispersion, housing affordability and access to healthcare or education, argued as an equity failure rather than an efficiency one.
Phase D — The Firm and Market Structures
The Higher Level theory of the firm is a self-contained analytical block and it is taught as one. Costs, revenues and profit come first as a single toolkit; each market structure is then a different set of constraints applied to that same toolkit rather than a new diagram to be memorised. Perfect competition is taught before monopoly so that it can serve as the efficiency benchmark, and the imperfectly competitive structures come last because they are judged against both. This phase is the largest single difference between the Higher and Standard Level courses.
14. Costs, Revenues and Profit
- Teach to this depth
- The production function with the law of diminishing marginal returns derived, and then used to explain the shape of the short-run cost curves rather than asserted alongside them. Total, average and marginal cost; the fixed and variable distinction and the reason fixed costs disappear in the long run; economies and diseconomies of scale and the long-run average cost envelope. Total, average and marginal revenue derived separately for a price taker and a price maker, with the relationship between marginal revenue and price elasticity of demand made explicit. Economic against accounting profit, normal profit treated as a cost, and the MC = MR profit-maximising rule proved rather than stated. The shut-down and break-even conditions established in both time frames.
- Connects to
- The toolkit every market structure that follows is built from. These cost curves are also where the supply curve of Unit 2 actually comes from, and marginal analysis is the backbone of Paper 3 calculation questions.
- Commentary & real-world angle
- Firm-level cost and margin reporting, and any article in which a pricing or closure decision is explained by a cost structure.
15. Perfect Competition
- Teach to this depth
- The assumptions stated and their consequences derived rather than listed: why the firm is a price taker, why its demand curve is horizontal, and why average revenue, marginal revenue and price coincide. Short-run equilibrium with abnormal profit or loss, and then the entry-and-exit process traced through to long-run normal profit — taught as a mechanism unfolding over time, not as two diagrams side by side. Allocative efficiency at P = MC and productive efficiency at minimum average cost established here, because they are the benchmarks every other structure is measured against for the rest of the course.
- Connects to
- Uses the cost and revenue toolkit directly and supplies the efficiency benchmark for monopoly, monopolistic competition and oligopoly; it also validates the competitive market assumption used throughout Unit 2.
- Commentary & real-world angle
- Agricultural and commodity markets, and any market in which entry has visibly competed a margin away.
16. Monopoly and Market Power
- Teach to this depth
- Barriers to entry established as the source of monopoly power, with natural monopoly derived from economies of scale rather than defined separately. The profit-maximising output found at MC = MR with the price read off the demand curve, and the absence of a monopoly supply curve explained rather than glossed. Efficiency assessed against the competitive benchmark, with the welfare loss identified and quantified wherever the data allow. The case for monopoly put fairly — scale economies, research and development, natural monopoly — before the case against it. Price discrimination with its three conditions and the first, second and third degree cases. Government responses: competition law, price and profit regulation, and public ownership.
- Connects to
- Measured throughout against the perfect competition benchmark; the regulation discussion applies the intervention toolkit from Unit 2, and the analysis feeds both the equity topic and the multinational debate in Unit 4.
- Commentary & real-world angle
- Competition rulings, utility regulation, pharmaceutical pricing and platform market investigations.
17. Monopolistic Competition and Oligopoly
- Teach to this depth
- Monopolistic competition worked through in both time frames, with product differentiation established as the source of the downward-sloping demand curve and the long-run tangency outcome derived rather than drawn; excess capacity identified and its welfare significance argued. Oligopoly approached through concentration ratios and interdependence: collusive and non-collusive behaviour, formal and tacit collusion, cartels and the reasons they are unstable, the kinked demand curve with its assumptions stated openly, and non-price competition. A simple two-firm game with a dominant strategy and a prisoner’s dilemma outcome, used to explain both why cartels form and why they fail.
- Connects to
- The synthesis of the firm-theory block: it applies the cost toolkit and both efficiency benchmarks at once. Strategic interdependence also anticipates the behaviour of states in the trade protection topic.
- Commentary & real-world angle
- Airline and telecoms pricing, cartel investigations, and price wars in a visibly concentrated market.
Phase E — The National Economy
Macroeconomics begins with measurement, because every model that follows is a model of something measured and every objective is a target for a number. The circular flow and the national accounts come first, then the AD/AS framework as the single diagram the rest of the unit is drawn in, then the multiplier as the mechanism that determines how far a demand shift travels. The objectives follow, the Phillips curve formalises the conflict between them, and poverty and inequality close the phase — answering at national scale the equity question left open at the end of the microeconomics unit.
18. Measuring Economic Performance
- Teach to this depth
- The circular flow of income built up from the two-sector model through injections and leakages to the full open economy, so the national income identities are derived rather than memorised. GDP by output, income and expenditure; nominal against real and the role of the deflator; GDP against GNI and the cases where they diverge sharply; per capita and PPP-adjusted comparisons. The business cycle with its phases, the output gap and the trend line. Then the limitations, taken seriously: the informal economy, unpaid work, externalities, distribution — and the alternative measures, including the OECD Better Life Index, the Happiness Index and the Happy Planet Index. Higher Level adds the calculations in full: nominal and real GDP and GNI, GDP and GNI per capita, the GDP deflator, and the conversion between nominal and real series using a price index.
- Connects to
- Every macroeconomic objective, policy and international comparison in the rest of the course rests on these numbers; the limitations argument returns in full as the measuring-development topic in Unit 4.
- Commentary & real-world angle
- Quarterly GDP releases and their revisions, and any article treating a growth figure as a statement about welfare.
19. Aggregate Demand and Aggregate Supply
- Teach to this depth
- Aggregate demand built component by component — consumption, investment, government spending and net exports — with the determinants of each identified so that shifts can be justified rather than asserted, and the reasons for the downward slope given properly. Short-run aggregate supply and its shifters. Then the two views of long-run aggregate supply taught side by side and both taken seriously: the vertical monetarist and new classical LRAS at full employment, and the Keynesian AS curve with its three sections. Short-run and long-run equilibrium, inflationary and deflationary gaps, and shifts in LRAS as increases in productive capacity linked explicitly back to the production possibilities curve from the opening topic. The magnified effect of a change in an injection is then taught as a topic in its own right, immediately after this one, because the size of the real output response depends on which of the two aggregate supply models is in use.
- Connects to
- The diagram in which every macroeconomic objective and every policy in the remaining topics is analysed. Teaching both models is what makes genuine evaluation of fiscal and supply-side policy possible rather than formulaic.
- Commentary & real-world angle
- Almost any macroeconomic news article can be rendered as an AD or AS shift; the discipline is choosing the right one, in the right model, and defending the choice.
20. The Keynesian Multiplier
- Teach to this depth
- The multiplier taught as a process before it is taught as a formula: an initial injection traced round the circular flow, spent and respent, each round smaller than the last because of leakages. The marginal propensities to consume, save, tax and import defined, the multiplier derived from them in both of its forms, and then calculated from data. The effect shown as a magnified shift in aggregate demand, with the size of the real output response dependent on where the economy sits on the aggregate supply curve — which is precisely why this topic is taught after both AS models rather than before them. The reasons published estimates differ so widely: import propensity, spare capacity, expectations and crowding out.
- Connects to
- Uses the circular flow leakages from the measurement topic and both aggregate supply models; it is the quantitative core of fiscal policy evaluation two topics later and a standing Paper 3 calculation.
- Commentary & real-world angle
- Stimulus packages and public investment programmes in which a multiplier figure is claimed — the commentary writes itself once the leakages are identified.
21. Key Macroeconomic Goals
- Teach to this depth
- Each objective taught to its own depth and then set against the others. Economic growth: actual against potential, its sources, and its costs as well as its benefits. Unemployment: how it is measured and where the measure fails, structural, frictional, seasonal and cyclical types distinguished by cause and therefore by remedy, and the real economic and social costs. Inflation: measurement by CPI and its limitations, demand-pull and cost-push causes drawn in AD/AS, deflation and disinflation distinguished, and the costs of each. Sustainable public debt and the deficit–debt relationship. Then the conflicts — growth against inflation, unemployment against inflation, growth against sustainability, efficiency against equity — treated as the central evaluative content of the unit rather than as a closing remark. Higher Level adds the arithmetic: the unemployment rate, a weighted CPI basket and the inflation rate all calculated from raw data rather than quoted from a headline.
- Connects to
- Draws on measurement and the AD/AS framework at once; the conflicts established here are what every policy topic that follows is evaluated against, and they are formalised in the Phillips curve topic that comes immediately after this one.
- Commentary & real-world angle
- Inflation and labour market releases, central bank commentary, and any article in which one objective is quietly being traded against another.
22. The Phillips Curve and Policy Trade-offs
- Teach to this depth
- The short-run Phillips curve presented first as the empirical relationship it originally was, and then derived from the AD/AS model so that students can see the two diagrams are describing one economy. The breakdown of the relationship in the stagflation of the 1970s taught as a case study in a model failing against evidence, which is the best nature-of-the-subject lesson the course offers. The long-run vertical Phillips curve at the natural rate of unemployment, adaptive expectations, and the resulting claim that demand-side policy cannot buy a permanent reduction in unemployment. NAIRU, and the supply-side argument for shifting it.
- Connects to
- Formalises the objectives conflict raised in the macroeconomic goals topic; it is the strongest evaluation tool available for monetary and fiscal policy, and it is where the classical–Keynesian disagreement introduced in Unit 1 finally becomes decidable against data.
- Commentary & real-world angle
- Inflation and unemployment data released together, where the article assumes a trade-off that may no longer hold.
23. Poverty and Income Inequality
- Teach to this depth
- Absolute and relative poverty distinguished and measured, with the difficulty of the poverty line treated as a real methodological problem. The Lorenz curve constructed from decile data and the Gini coefficient read off it rather than quoted from a table. The causes of inequality traced through factor endowments, education, discrimination, the tax system and inherited wealth. Then policy: progressive, proportional and regressive taxation compared with the incidence argued in each case, transfer payments, and government provision of merit goods — each evaluated on effectiveness, incentive effects and fiscal cost. Higher Level adds the calculations: the Gini coefficient computed from the Lorenz curve, and tax liabilities, average tax rates and marginal tax rates from a progressive rate schedule.
- Connects to
- Answers at national scale the equity question raised at the end of Unit 2. The same measures return in the development topics of Unit 4, and the taxation analysis feeds fiscal policy directly.
- Commentary & real-world angle
- Budget distributional analyses, minimum wage changes, and published Gini or poverty-line data.
Phase F — Macroeconomic Policy
Policy is taught only once there is something to measure, a framework to draw it in, objectives to judge it against and a multiplier to size it with. Monetary policy comes first because it works through a single instrument and the clearest transmission chain; fiscal policy follows, now quantified with the multiplier already in hand; supply-side policy comes last, because its entire claim concerns the long-run capacity curve the other two cannot move.
24. Managing the Economy Through Monetary Policy
- Teach to this depth
- Central bank independence, the inflation-targeting mandate, and the reasons for both. The transmission mechanism traced step by step from the policy rate through borrowing and saving, investment, the exchange rate and asset prices to aggregate demand, so that a rate change becomes a chain of consequences rather than an arrow on a diagram. Expansionary and contractionary policy shown in both AS models. Quantitative easing in outline. Then the real constraints: time lags, the effective lower bound, the weakness of monetary policy against cost-push inflation, and the liquidity trap.
- Connects to
- Applies the AD/AS framework directly and is judged against the objectives topic; the exchange rate channel connects forward to Unit 4, and the interaction with fiscal policy is a standing evaluation point.
- Commentary & real-world angle
- Central bank decisions and published minutes — the most reliably available macroeconomic commentary source in any news cycle.
25. Managing the Economy Through Fiscal Policy
- Teach to this depth
- Government spending and taxation treated as instruments rather than as accounting. The budget outcome, the difference between a deficit and a debt, and automatic stabilisers distinguished from discretionary action. Crowding out stated as the classical objection and then evaluated rather than dismissed, using the two aggregate supply models to show why the objection has force in one and much less in the other. Strengths and limitations: targeting, time lags, political constraints and debt sustainability. The multiplier taught two topics earlier is now applied numerically to a named fiscal change, and the budget balance and debt ratio are calculated from data.
- Connects to
- Uses the circular flow from the measurement topic, both AS models, and the multiplier topic directly; the debt constraint links to the objectives topic and to the development strategies of Unit 4.
- Commentary & real-world angle
- Budgets and fiscal statements, stimulus packages, and debt-sustainability debates.
26. Improving Long-Run Productive Capacity
- Teach to this depth
- Supply-side policy separated cleanly into market-based measures — labour and product market reform, incentive-related tax cuts, deregulation, privatisation, trade liberalisation — and interventionist measures — education and training, health, infrastructure, research and development, industrial policy. Each analysed as a rightward shift of long-run aggregate supply with the mechanism named, and each evaluated on time lag, cost, distributional consequence and the actual evidence. The claim that supply-side policy alone delivers non-inflationary growth is examined rather than repeated.
- Connects to
- The only policy family that moves the long-run capacity curve derived from the opening production possibilities curve; it is also the bridge into the growth and development strategies that close the course.
- Commentary & real-world angle
- Infrastructure programmes, skills and immigration policy, deregulation packages and industrial strategy announcements.
Phase G — The Global Economy and Development
The largest phase, placed last by design: every topic in it applies apparatus already built. Trade theory needs opportunity cost; protection analysis needs surplus areas and the indirect tax diagram; exchange rates need demand and supply; the balance of payments needs elasticity and the Marshall–Lerner condition; and the development topics at the end draw on inequality, market failure, supply-side policy and sustainability simultaneously. The final topic is the one every earlier topic feeds.
27. Gains from International Trade
- Teach to this depth
- The case for trade built from opportunity cost rather than from assertion. Absolute and comparative advantage worked numerically from output and input tables, with the range of terms of trade at which both parties gain identified, and the production possibilities curve used to show the consumption possibilities that open up. The assumptions the model needs — constant costs, no transport, factor immobility, full employment — stated and then relaxed, so students can say precisely where the argument weakens. Wider benefits: specialisation, economies of scale, competition, choice and access to resources. Higher Level adds the calculations: comparative advantage computed from output and input tables, the opportunity cost ratios derived in both directions, and the range of mutually acceptable terms of trade worked out rather than asserted.
- Connects to
- Applies opportunity cost from the first topic of the course; it is the benchmark against which every protectionist argument in the next two topics is measured.
- Commentary & real-world angle
- Trade agreements and shifting specialisation patterns, with a worked comparative advantage calculation wherever the data allow one.
28. Methods of Restricting Trade
- Teach to this depth
- Tariffs, import quotas, export subsidies, and administrative and technical barriers, each with a fully labelled diagram: the world price line, the change in domestic production and consumption, the import volume, the government revenue or cost, and the welfare loss triangles identified and explained rather than shaded. The tariff is deliberately taught as the indirect tax diagram from Unit 2 applied to an open economy, so students recognise the machinery instead of learning it twice. Higher Level quantifies the tariff diagram in full: domestic production and consumption before and after, the import volume, the government revenue, the changes in consumer and producer surplus, and both welfare loss triangles are calculated from the diagram data.
- Connects to
- Reuses the indirect tax and subsidy analysis from government intervention and the surplus areas from equilibrium; feeds the evaluation topic that follows it immediately.
- Commentary & real-world angle
- Tariff announcements, anti-dumping actions and non-tariff barrier disputes.
29. Evaluating Trade Protection
- Teach to this depth
- The arguments for protection taken seriously before they are assessed: infant industry, strategic industries, national security, dumping, employment, the terms of trade, and environmental or labour standards. Each set against the free trade case and against the evidence, with the distributional question — which domestic group gains, which loses, and by how much — made explicit every time. The political economy of protection, in which concentrated benefits outweigh dispersed costs, is taught as the explanation for why inefficient protection survives.
- Connects to
- Depends on the gains-from-trade argument and on the welfare diagrams of the two previous topics; it is the model for the market-led against interventionist debate in the final topic of the course.
- Commentary & real-world angle
- Trade disputes and retaliation, where the evaluation must separate producer, consumer, government and net welfare effects rather than reporting a winner.
30. Economic Integration Between Countries
- Teach to this depth
- The forms of integration built as a ladder of increasing commitment — preferential agreement, free trade area, customs union, common market, monetary union — with the sovereignty surrendered at each step made explicit. Trade creation and trade diversion distinguished properly, since it is that distinction which determines whether a bloc raises welfare at all. Monetary union assessed on the loss of independent monetary and exchange-rate policy. The functions of the World Trade Organization, and the reasons its dispute-settlement role is contested.
- Connects to
- Applies the trade and protection analysis to blocs rather than to single countries; monetary union connects directly to the monetary policy and exchange rate topics.
- Commentary & real-world angle
- Bloc enlargement, exit or renegotiation, and WTO rulings.
31. Understanding Exchange Rates
- Teach to this depth
- The exchange rate as a price determined in a market, so that the entire demand and supply apparatus transfers directly: the determinants of currency demand and supply — trade flows, investment flows, interest rate differentials, speculation, remittances — each traced to a shift and a direction. Appreciation and depreciation distinguished from revaluation and devaluation, and the terms used correctly. Floating, fixed and managed systems compared on adjustment, credibility and policy independence, with central bank intervention through reserves and interest rates. Consequences for inflation, growth, employment and the trade balance worked through in both directions. Higher Level handles the arithmetic explicitly: conversion between currencies at a quoted rate, the construction and reading of a simple exchange rate index, and appreciation or depreciation expressed as a percentage change.
- Connects to
- Applies demand and supply from Unit 2 and the interest rate channel from monetary policy; it is the direct prerequisite for the balance of payments topic that follows.
- Commentary & real-world angle
- Currency moves and central bank intervention, where the consequence chain matters far more than the movement itself.
32. The Balance of Payments
- Teach to this depth
- The accounts built properly — current, capital and financial — with the identity that the whole must balance derived rather than stated, and the relationship between a current account deficit and a financial account surplus made concrete. The causes and consequences of persistent deficits and surpluses for exchange rates, external debt, investment and future income. Then the Marshall–Lerner condition as the elasticity test for whether a depreciation improves the current account, and the J-curve as its short-run consequence — taught here as the point at which the elasticity work of Unit 2 finally pays off. Higher Level completes the accounts numerically from incomplete data, and applies the Marshall–Lerner condition as an explicit elasticity test rather than quoting it as a name.
- Connects to
- Requires exchange rates, price elasticity of demand from Unit 2, and the aggregate demand components from Unit 3; the external constraint identified here reappears as a barrier to development in the closing topics.
- Commentary & real-world angle
- Trade balance releases and currency depreciations, where the Marshall–Lerner condition converts a description into an analysis.
33. Sustainable Economic Development
- Teach to this depth
- Growth, development and sustainability distinguished from one another with care, since conflating them is the most common weakness in this unit. The Sustainable Development Goals used as an organising framework rather than recited as a list; the poverty–environment relationship traced in both directions; the intergenerational equity argument stated openly as a value judgement rather than smuggled in. The externality and common pool analysis from Unit 2 is brought back here at global scale, so that sustainability is treated as an economic problem with economic instruments rather than as a moral coda to the course.
- Connects to
- Applies externalities, common pool resources and the limitations of GDP; it frames the strategies evaluated in the final topic and gives the sustainability key concept its fullest treatment.
- Commentary & real-world angle
- Climate finance, resource extraction and the environmental consequences of a named growth episode.
34. Measuring Development
- Teach to this depth
- Single indicators — income, health, education, energy access, connectivity — and what each does and does not capture. Composite indices built and interrogated rather than quoted: the HDI component by component, the Inequality-adjusted HDI, the Gender Inequality Index, and multidimensional poverty measures. Countries deliberately compared where income rank and development rank diverge, so that students argue from the divergence instead of merely asserting that GDP is insufficient. Higher Level calculates HDI values from their component indices rather than reading them off a published table, which is what makes the critique of the index credible.
- Connects to
- Extends the limitations of GDP raised in the measurement topic and applies the inequality measures from Unit 3; it supplies the evidence base for judging the strategies in the final topic.
- Commentary & real-world angle
- Annual HDI and multidimensional poverty releases, and any article ranking countries on a single measure.
35. Obstacles to Growth and Development
- Teach to this depth
- The poverty trap modelled as a self-reinforcing cycle of low income, low saving, low investment and low productivity, so that the barriers can be located inside it rather than listed beside it. Economic barriers: primary product dependence and price volatility, the external debt burden, capital flight, the size of the informal economy, weak infrastructure and human capital. Political and institutional barriers: insecure property rights, corruption, conflict, and the quality of legal and financial institutions. Social and environmental barriers, including health, gender inequality and resource degradation.
- Connects to
- Draws on price volatility from the elasticity topics, on inequality from Unit 3, and on the institutional argument from asymmetric information; every strategy in the final topic is an attempted answer to a barrier named here.
- Commentary & real-world angle
- Commodity price shocks, debt distress, and governance or institutional reform in a named economy.
36. Strategies for Economic Growth and Development
- Teach to this depth
- The strategies grouped by the mechanism they claim to use rather than by their label. Trade-based approaches — import substitution against export promotion, with the historical evidence for each — diversification, and social enterprise. Market-led measures: liberalisation, privatisation, deregulation and the removal of price distortions. Interventionist measures: merit good provision in health and education, infrastructure, industrial policy and redistribution. External sources: foreign direct investment with its costs as well as its benefits, aid by type with the conditionality debate, debt relief, remittances and microfinance. Institutional reform as the argument that none of the above works without it. The whole is then assessed against the Sustainable Development Goals, with the honest conclusion that the right mix is country-specific.
- Connects to
- The closing synthesis of the course: trade theory, market failure, supply-side policy, inequality and sustainability all bear on it at once, which is exactly why it is taught last.
- Commentary & real-world angle
- The full commentary — an aid, FDI or reform programme evaluated against a named barrier and a named development indicator, with a judgement actually reached.
Time allocation & two-year pacing
The IB recommends 240 teaching hours for Higher Level Economics. This framework allocates 220 of them to taught content and reserves 20 for the internal assessment portfolio of three commentaries. The allocations in the sequence table above distribute the 220 content hours across all 36 topics; below they are reconciled to the recommended per-unit totals and paced so that teaching is complete by the end of January in Year 2.
Reconciliation to the recommended IB allocation
| Syllabus unit | Recommended IB hours | Allocated here |
|---|---|---|
| Unit 1 — Introduction to economics | 10 h | 10 h |
| Unit 2 — Microeconomics (incl. theory of the firm) | 70 h | 70 h |
| Unit 3 — Macroeconomics (incl. multiplier and Phillips curve) | 75 h | 75 h |
| Unit 4 — The global economy | 65 h | 65 h |
| Taught content subtotal | 220 h | 220 h |
| Internal assessment (portfolio of three commentaries) | 20 h | 20 h |
| HL course total | 240 h | 240 h |
Because this framework re-sequences topics across unit boundaries, a phase’s hours will not match a unit’s — Phase D, for instance, is drawn entirely from Unit 2. The reconciliation above proves that nothing has been added or lost: every topic still carries the hours its unit is entitled to.
The two-year pacing plan
Built on roughly four to five teaching hours per week across the two years, with the commentary portfolio woven through the terms rather than bolted on at the end. The cumulative column tracks progress toward the 240-hour total; the gold rows fall outside the teaching budget.
| Period | Focus | Hours | Cumul. |
|---|---|---|---|
| YEAR 1 | |||
| Autumn term | Phase A — Foundations · Phase B — How Markets Work, algebraically as well as diagrammatically · open Phase C with government intervention · commentary induction | 48 | 48 |
| Spring term | Finish Phase C — externalities, public goods, information, equity · Phase D — The Firm and Market Structures in full · Commentary 1 (microeconomics) | 42 | 90 |
| Summer term | Phase E — measurement, AD/AS, the multiplier, the macroeconomic objectives and the Phillips curve · first Paper 3 calculation practice | 45 | 135 |
| YEAR 2 (to end January) | |||
| Autumn term | Poverty and inequality · Phase F — monetary, fiscal and supply-side policy · Phase G to exchange rates — trade, protection, integration · Commentary 2 (macroeconomics) | 70 | 205 |
| To end of January | Phase G completed — balance of payments, sustainability, measuring development, barriers and development strategies · Commentary 3 (the global economy) and portfolio finalised | 35 | 240 |
| FEBRUARY – APRIL | Dedicated revision: past papers, Paper 1 essay, Paper 2 data-response and Paper 3 quantitative drills, diagram practice and timed mocks (additional to the 240 teaching hours) | — | — |
| MAY | IB examinations | — | — |
A note on the internal assessment and Paper 3. The 20 internal assessment hours are not a separate course: they cover article selection, the diagram and analysis workshop preceding each commentary, drafting and feedback — one commentary per unit, written as that unit finishes rather than retrofitted in Year 2. Paper 3 is handled the same way. There is no separate quantitative module in this framework, because every calculation it asks for belongs to a topic: elasticity and surplus in Phase B, tax incidence and welfare loss in Phase C, marginal analysis in Phase D, deflators and the multiplier in Phase E, tariff areas and terms of trade in Phase G. Taught that way, the Year 2 Paper 3 practice is revision of something already known rather than an introduction to something new.
Revision time (February–April) is deliberately additional to the 240 teaching hours, in line with the subject guide’s reminder that adequate time must be set aside for examination revision.