Subject Guide

IB – ECONOMICS Subject Summary:

The study of economics is essentially about dealing with scarcity, resource allocation and the methods and processes by which choices are made in the satisfaction of human wants. As a social science, economics uses scientific methodologies that include quantitative and qualitative elements. The IB Diploma Programme economics course emphasizes the economic theories of microeconomics, which deal with economic variables affecting individuals, firms and markets, and the economic theories of macroeconomics, which deal with economic variables affecting countries, governments and societies. These economic theories are not to be studied in a vacuum—rather, they are to be applied to real-world issues. Prominent among these issues are fluctuations in economic activity, international trade, economic development and environmental sustainability.

Assessment Outline: Year 11:

• Internal Assessment 1 (Microeconomics) (Summative) (25 %) • Examination Paper 1 and 2: (Microeconomics) (Formative) (25 %) • Commentary 2 (Macroeconomics) (Summative) (25 %) • Examination – Paper 3 (Macroeconomics) (Formative) (25 %) Year 12: • Internal Assessment 3 (International Economics) (Summative) (20 %) • External Examinations November (Summative) (80%) - Paper 1 and 2 (HL and SL) - Paper 2 (HL only)

Subject Outline: Section 1: Microeconomics •

Scarcity, opportunity cost, production possibilities • Economic growth vs development • Demand, supply, Elasticity • Government intervention in the market • Market failure and market structures Section 2: Macroeconomics • Macroeconomic objectives • Aggregate demand and supply • Fiscal policy • Monetary policy • Supply side policies Section 3: International Economics • International Trade • Exchange rates • The balance of payments • Economic integration • Terms of trade Section 4: Development Economics • Measuring development • Domestic factors restricting development • International trade • Foreign direct investment • Foreign aid • Debt • Balance between markets and intervention

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