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IB Economics›Economics HL
Revision Notes

IB Economics HL

Clear, student-friendly revision notes for every sub-topic of the IB Economics course — microeconomics, macroeconomics and the global economy — with the diagrams, definitions and evaluation points Papers 1, 2 and 3 actually ask for.

Economics HL · Revision Notes

Table of Contents

109 notes across 5 units. Click a unit to expand it, then open a sub-topic to see its notes. Notes marked HL are higher level only.

1

Introduction to Economics

The economic problem, the models economists use, and how they think.

6 notesâ–¾
1.1

What Economics Studies

4â–¾
Why Economics Is a Social Science→ Scarcity, Choice and Opportunity Cost→ The Production Possibilities Curve→ Building and Using Economic Models→
1.2

How Economists Think

2â–¾
Positive and Normative Statements→ Where Economic Ideas Came From→
2

Microeconomics

How individual markets work, and what happens when they fail.

34 notesâ–¾
2.1

Demand

2â–¾
The Law of Demand and the Demand Curve→ What Shifts a Demand Curve→
2.2

Supply

2â–¾
The Law of Supply and the Supply Curve→ What Shifts a Supply Curve→
2.3

Competitive Market Equilibrium

3â–¾
Reaching and Losing Market Equilibrium→ How Prices Signal, Ration and Motivate→ Consumer and Producer Surplus→
2.4

Limits of Maximising Behaviour

3â–¾
HLRational Consumer Choice and Its Limits→ HLBehavioural Economics and Nudges→ HLBusiness Objectives Beyond Profit→
2.5

Elasticities of Demand

3â–¾
Price Elasticity of Demand→ Why PED Matters for Revenue and Policy→ Income Elasticity of Demand→
2.6

Elasticity of Supply

1â–¾
Price Elasticity of Supply→
2.7

Government Intervention in Markets

4â–¾
Why Governments Intervene in Markets→ Indirect Taxes and Subsidies→ Price Ceilings and Price Floors→ Direct Provision, Regulation and Nudges→
2.8

Externalities and Common Pool Resources

6â–¾
What Market Failure Means→ Negative Externalities and Demerit Goods→ Positive Externalities and Merit Goods→ Common Pool Resources and the Tragedy of the Commons→ Government Responses to Market Failure→ Collective and International Responses→
2.9

Public Goods

1â–¾
Public Goods and the Free Rider Problem→
2.10

Asymmetric Information

1â–¾
HLAdverse Selection, Moral Hazard and the Response→
2.11

Market Power and Market Structures

7â–¾
HLAn Overview of Market Structures→ HLProfit Maximisation and the Rational Producer→ HLPerfect Competition→ HLMonopoly and Natural Monopoly→ HLOligopoly, Collusion and Game Theory→ HLMonopolistic Competition→ HLGovernment Responses to Market Power→
2.12

Markets and Equity

1â–¾
HLWhy Free Markets Produce Unequal Outcomes→
3

Macroeconomics

Measuring the whole economy, and the policies used to steer it.

27 notesâ–¾
3.1

Measuring Economic Activity

5â–¾
The Circular Flow of Income→ National Income Terms and Calculations→ Booms, Recessions and the Business Cycle→ Does GDP or GNI Capture Well-being?→ Alternative Measures of Living Standards→
3.2

Aggregate Demand and Aggregate Supply

5â–¾
Aggregate Demand and Its Components→ Short-Run Aggregate Supply→ Competing Views of Aggregate Supply→ What Shifts Long-Run Aggregate Supply→ Macroeconomic Equilibrium and Output Gaps→
3.3

Macroeconomic Objectives

6â–¾
The Government’s Macroeconomic Aims→ Economic Growth as an Objective→ Low Unemployment as an Objective→ Low and Stable Inflation as an Objective→ Keeping Government Debt Sustainable→ Conflicts Between Macroeconomic Objectives→
3.4

Inequality and Poverty

4â–¾
Measuring Inequality and Poverty→ What Causes Inequality and Poverty→ Using Taxation to Redistribute Income→ Other Policies That Reduce Inequality→
3.5

Monetary Policy

2â–¾
How Monetary Policy Works→ The Central Bank’s Policy Toolkit→
3.6

Fiscal Policy

3â–¾
How Fiscal Policy Works→ HLThe Keynesian Multiplier→ How Effective Is Fiscal Policy?→
3.7

Supply-Side Policies

2â–¾
What Supply-Side Policies Try to Do→ How Effective Are Supply-Side Policies?→
4

The Global Economy

Trade, exchange rates, and what makes economies develop.

32 notesâ–¾
4.1

Benefits of International Trade

2â–¾
Why Free Trade Benefits Countries→ HLAbsolute and Comparative Advantage→
4.2

Types of Trade Protection

4â–¾
Tariffs→ Quotas→ Export Subsidies→ Administrative Barriers→
4.3

Arguments For and Against Protection

1â–¾
Weighing Protectionism Against Free Trade→
4.4

Economic Integration

3â–¾
What Economic Integration Means→ Types of Trading Bloc→ The World Trade Organization→
4.5

Exchange Rates

3â–¾
Types of Exchange Rate System→ Causes and Consequences of Currency Movements→ Fixed Versus Floating Exchange Rates→
4.6

Balance of Payments

5â–¾
The Components of the Balance of Payments→ Exchange Rates and the Balance of Payments→ Living With a Current Account Deficit→ HLThe Marshall-Lerner Condition and the J-Curve→ Living With a Current Account Surplus→
4.7

Sustainable Development

2â–¾
The Sustainable Development Goals→ How Poverty and Sustainability Are Linked→
4.8

Measuring Development

3â–¾
Single Indicators of Development→ Composite Indicators of Development→ Comparing the Different Approaches→
4.9

Barriers to Growth and Development

2â–¾
Poverty Traps→ Economic, Political and Social Barriers→
4.10

Growth and Development Strategies

7â–¾
Trade Strategies, Diversification and Social Enterprise→ Market-Based and Interventionist Policies→ Merit Goods and Inward Foreign Direct Investment→ Foreign Aid and Development Assistance→ Institutional Change→ Market Approaches Versus Government Intervention→ Progress Towards the Sustainable Development Goals→
5

Exam Skills and Assessment

What each paper asks for, and how to write answers that score.

10 notesâ–¾
5.1

The Three Papers

3â–¾
What Paper 1 Asks For→ What Paper 2 Asks For→ HLWhat Paper 3 Asks For→
5.2

Assessment Objectives

1â–¾
The Economic Skills Examiners Reward→
5.3

Answering Each Question Type

6â–¾
Scoring Full Marks on 2-Mark Questions→ Scoring Full Marks on 4-Mark Questions→ Working Through Calculation Questions→ Structuring a Paper 1 Essay→ Structuring the Paper 2 Extended Response→ HLWorking Through Paper 3 Questions→

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