IB Questionbank

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Syllabus

Section name
Section 1: Microeconomics
1.1 Competitive markets: Demand and supply
Markets
The nature of markets
Demand
The law of demand
The demand curve
The non-price determinants of demand (factors that change demand or shift the demand curve)
Movements along and shifts of the demand curve
Linear demand functions (equations), demand schedules and graphs
Supply
The law of supply
The supply curve
The non-price determinants of supply (factors that change supply or shift the supply curve)
Movements along and shifts of the supply curve
Linear supply functions, equations and graphs
Market Equilibrium
Equilibrium and changes to equilibrium
Calculating and illustrating equilibrium using linear equations
The role of the price mechanism
Resource allocation
Market efficiency
Consumer surplus
Producer surplus
Allocative efficiency
1.2 Elasticity
Price elasticity of demand (PED)
Price elasticity of demand and its determinants
Applications of price elasticity of demand
Cross price elasticity of demand (XED)
Cross price elasticity of demand and its determinants
Applications of cross price elasticity of demand
Income elasticity of demand (YED)
Income elasticity of demand and its determinants
Applications of income elasticity of demand
Price elasticity of supply (PES)
Price elasticity of supply and its determinants
Applications of price elasticity of supply
1.3 Government intervention
Indirect taxes
Specific (fixed amount) taxes and ad valorem (percentage) taxes and their impact on markets
Tax incidence and price elasticity of demand and supply
Subsidies
Impact on markets
Price controls
Price ceilings (maximum prices): rationale, consequences and examples
Price floors (minimum prices): rationale, consequences and examples
1.4 Market failure
The meaning of market failure
Market failure as a failure to allocate resources efficiently
Types of market failure
The meaning of externalities
Negative externalities of production and consumption
Positive externalities of production and consumption
Lack of public goods
Common access resources and the threat to sustainability
Asymmetric information
Abuse of monopoly power
1.5 Theory of the firm and market structures (HL only)
Production and costs
Production in the short run: the law of diminishing returns
Costs of production: economic costs
Costs of production in the short run
Production in the long run: returns to scale
Costs of production in the long run
Revenues
Total revenue, average revenue and marginal revenue
Profit
Economic profit (sometimes known as abnormal profit) and normal profit (zero economic profit occurring at the breakeven point)
Goals of firms
Profit maximization
Alternative goals of firms
Perfect competition
Assumptions of the Model
Revenue curves
Profit maximization in the short run
Profit maximization in the long run
Shut-down price and break-even price
Efficiency
Monopoly
Assumptions of the Model
Barriers to entry
Revenue curves
Profit maximization
Revenue maximization
Natural monopoly
Monopoly and efficiency
Policies to regulate monopoly power
The advantages and disadvantages of monopoly compared with perfect competition
Monopolistic competition
Assumptions of the Model
Revenue curves
Profit maximization in the short run
Profit maximization in the long run
Non-price competition
Monopolistic competition and efficiency
Monopolistic competition compared with perfect competition and monopoly
Oligopoly

Assumptions of the Model
Game theory
Open/formal collusion
Tacit/informal collusion
Non-collusive oligopoly
Price discrimination
Necessary conditions for the practice of price discrimination
Section 2: Macroeconomics
2.1 The level of overall economic activity
Economic activity
The circular flow of income model
Measures of economic activity: gross domestic product (GDP), and gross national product (GNP) or gross national income (GNI)
The business cycle
Short-term fluctuations and long-term trend
2.2 Aggregate demand and aggregate supply
Aggregate demand (AD)
The AD curve
The components of AD
The determinants of AD or causes of shifts in the AD curve
Aggregate supply (AS)
The meaning of aggregate supply
Alternative views of aggregate supply
Shifting the aggregate supply curve over the long term
Equilibrium
Short-run equilibrium
Equilibrium in the monetarist/new classical model
Equilibrium in the Keynesian model
The Keynesian multiplier
The nature of the Keynesian multiplier
2.3 Macroeconomic objectives
Low unemployment
The meaning of unemployment
Consequences of unemployment
Types and causes of unemployment
Low and stable rate of inflation
The meaning of inflation, disinflation and deflation
Consequences of inflation
Consequences of deflation
Types and causes of inflation
Possible relationships between unemployment and inflation
Economic growth
The meaning of economic growth
Causes of economic growth
Consequences of economic growth
Equity in the distribution of income
The meaning of equity in the distribution of income
Indicators of income equality/inequality
Poverty
The role of taxation in promoting equity
Other measures to promote equity
The relationship between equity and efficiency
2.4 Fiscal policy
The government budget
Sources of government revenue
Types of government expenditures
The budget outcome
The role of fiscal policy
Fiscal policy and short-term demand management
The impact of automatic stabilizers
Fiscal policy and its impact on potential output
Evaluation of fiscal policy
2.5 Monetary policy
Interest rates
Interest rate determination and the role of a central bank
The role of monetary policy
Monetary policy and short-term demand management
Monetary policy and inflation targeting
Evaluation of monetary policy
2.6 Supply-side policies
The role of supply-side policies
Supply-side policies and the economy
Interventionist supply-side policies
Investment in human capital
Investment in new technology
Investment in infrastructure
Industrial policies
Market-based supply-side policies
Policies to encourage competition
Labour market reforms
Incentive-related policies
Evaluation of supply-side policies
The strengths and weaknesses of supply-side policies
Section 3: International economics
3.1 International trade
Free trade
The benefits of trade
Absolute and comparative advantage
The World Trade Organization (WTO)
Restrictions on free trade: Trade protection
Types of trade protection
Arguments for and against trade protection (arguments against and for free trade)
3.2 Exchange rates
Freely floating exchange rates
Determination of freely floating exchange rates
Causes of changes in the exchange rate
The effects of exchange rate changes
Government intervention
Fixed exchange rates
Managed exchange rates (managed float)
Evaluation of different exchange rate systems
3.3 The balance of payments
The structure of the balance of payments
The meaning of the balance of payments
The components of the balance of payments accounts
The relationships between the accounts
Current account deficits
The relationship between the current account and the exchange rate
Implications of a persistent current account deficit
Methods to correct a persistent current account deficit
The Marshall-Lerner condition and the J-curve effect
Current account surpluses
The relationship between the current account and the exchange rate
Implications of a persistent current account surplus
3.4 Economic integration
Forms of economic integration
Preferential trade agreements
Trading blocs
Monetary union
3.5 Terms of trade (HL only)
The meaning of the terms of trade
Measurement
Causes of changes in the terms of trade
Consequences of changes in the terms of trade
Section 4: Development economics
4.1 Economic development
The nature of economic growth and economic development
Economic growth and economic development
Common characteristics of economically less developed countries
Diversity among economically less developed nations
International development goals
4.2 Measuring development
Measurement methods
Single indicators
Composite indicators
4.3 The role of domestic factors
Domestic factors and economic development
Domestic factors
4.4 The role of international trade
International trade and economic development
Trade problems facing many economically less developed countries
Trade strategies for economic growth and economic development
4.5 The role of foreign direct investment (FDI)
Foreign direct investment and multinational corporations (MNCs)
The meaning of FDI and MNCs
Advantages and disadvantages of FDI for economically less developed countries
4.6 The roles of foreign aid and multilateral development assistance
Foreign aid
Classifications and types of aid
Evaluation of foreign aid
Multilateral development assistance
The roles of the International Monetary Fund (IMF) and the World Bank
4.7 The role of international debt
Foreign debt
Foreign debt and its consequences
4.8 The balance between markets and intervention
Strengths and weaknesses of market-oriented policies
Strengths
Weaknesses
Strengths and weaknesses of interventionist policies
Strengths
Weaknesses
Market with government intervention

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