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1.1 What is economics?

Economics as a social science

Economics = social science, because:
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It deals with human society and behavior(how societies organize their activities,how they behave to meet their needs and wants)
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Its approach to studying human society is based on the scientific method.
Due to the complexities within societies, economists build models so as to better understand certain interactions
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A model is a simplified version of reality
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All models make a range of assumptions. These are often generalized on behaviors, choices and outcomes

9 Central concepts

The problem of scarcity and choice

The basic economic problem is that resources are scarce
In economics, these resources are called the factors of production
There are finite resources available in relation to the infinite wants and needs that humans have
Needs are essential to human life e.g. shelter, food, clothing
1. Introduction to Economics
2. Microeconomics
3. Macroeconomic
4. The Global Economy
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5. Individual Commentary (IA)

1.1 Overview

The Internal Assessment (IA) is your opportunity to apply economic theory to real-world events, demonstrating your analytical skills through an economist’s lens. You’ll select articles and evaluate the relevant economic themes across Microeconomics, Macroeconomics, and The Global Economy units. Together, these three commentaries contribute 20% of your final grade. While each commentary is only 800 words, writing all three over the span of nearly a year can feel like a lengthy, ongoing process—so stay organized and on track!
Individual Work
You are responsible for selecting your own articles and preparing each commentary independently. While others may choose the same article, the work you produce must be your own and not collaboratively prepared.
Focus of Each Commentary
Each commentary must:
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Link the article to relevant economic theory from the syllabus section it covers.
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Show economic insights, demonstrating your ability to discuss the implications of the event as an economist.

1.2 Assessment Criteria for the IA

The IA is a significant part of your final grade, so approach it seriously. Many students fall short despite having ample time. Be clear on what a high-quality IA looks like, there’s no reason not to aim for a 6 or 7!
Criterion A: Diagrams
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Provide 2 relevant, labeled diagrams: Ensure each diagram directly relates to the article and is clearly labeled.
1. Essential Considerations

2.1 Key Theories by Unit

Choose topics with clear economic theories and room for detailed evaluation. Use the suggested list below to guide your topic selection and set yourself up for a high score.
Finding the right article can be challenging, so focus on these examples to help you stay on track.
Your IA journey will begin with Microeconomics, as it provides a solid foundation for understanding and applying economic theory. As you move from Microeconomics to Macroeconomics and The Global Economy, expect the difficulty to increase due to the depth of analysis required.
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Microeconomics: (say that you only have to talk about one market or one firm etc and which stakeholders and not as difficult)
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Macroeconomics: You’ll analyze policies affecting the entire country.. Instead of focusing on individual markets, you’ll need to evaluate broader issues like unemployment, inflation, economic growth, and sustainability. This requires connecting policies to national-level outcomes and assessing impacts on diverse stakeholders like households, businesses, and governments.
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The Global Economy: While diagrams for trade and exchange rates exist, this chapter demands more complex analysis. Topics like tariffs, trade balances, and currency fluctuations require evaluating impacts on multiple stakeholders, both domestic and international, such as exporters, importers, governments, and consumers. Balancing short-run and long-run effects adds to the challenge.
A. Microeconomic
#Advice: Avoid complex topics such as Theory of the Firm due to difficulty of diagram and calculations
Focus on demerit goods (e.g., negative externalities such as cigarettes, sugary drinks) and government intervention and policies. Explain the market failure, evaluate policies, and discuss the pros and cons.
B. Macroeconomic
2. Selecting ‘Your’ Topic

3.1 Selection Criteria

Too many students lower their IA score by picking a poor article. Avoid this by following these steps:
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Rely on reputable sources: Stick to BBC, CNN, or The Guardian. Avoid The Economist or Wall Street Journal, as they already include analysis.
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Prioritize recent sources: Ensure the article is from the last 12 months.
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Focus on policy-focused contents and limited economic analysis: Articles discussing policies (not just problems) allow for deeper analysis.

3.2 Common Reasons for Rejection

The first step in your IA is submitting a research proposal with a suitable article. Many students successfully meet the first two steps but fail at the third, leading to rejections.
Here are the common reasons for rejection:
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Lack of Economic Focus and Policy Discussion: Articles must center on specific economic concepts or policies and not just describe problems without proposing solutions, as this limits meaningful analysis.
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Too Broad or Inadequate Data: Avoid articles that cover overly general issues or lack sufficient quantitative data, as this makes it difficult to apply theories or discuss impacts effectively.
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Highly Analytical: Refrain from using articles that already include extensive economic analysis (e.g., The Economist), as they leave little room for your own interpretation and evaluation.
Bad Article Example
“India Faces Rising Unemployment and Economic Challenges”
3. Finding Quality Articles

4.1 Introduction

Start your introduction with a concise statement summarizing the article while linking to your WISE ChoICES concept.
For example:
In response to the economic challenges caused by the COVID-19 pandemic, the U.S. government introduced fiscal stimulus measures, including $1,200 direct payments to individuals and a $600 weekly unemployment boost. These demand-side policies were designed to stimulate aggregate demand (AD) and reduce unemployment, which peaked at 14.8% in April 2020. The article highlights how these interventions were crucial in stabilizing the economy and supporting welfare through fairer resource distribution and reduced financial hardships.
Criterion B (Terminology):
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The introduction effectively uses key economic terms like "fiscal stimulus," "aggregate demand," and "unemployment," demonstrating clear understanding of the concepts.
Criterion D (Key Concepts):
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It links the analysis to welfare (improving well-being).

4.2 Structuring Diagram & Analysis

Diagrams are crucial in IB Economics, and your IA is no exception. Here’s how to ensure they enhance your work:
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Size and Clarity: Make sure diagrams are large, clear, and well-labelled, especially axes.
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Presentation: Avoid drawing diagrams on paper and scanning them
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Connect Analysis: Link your analysis back to the diagram to show understanding.
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Incorporate Article Data: Add relevant article data to provide context
4. Analysis and Evaluation

5.1 Paraphrasing Introduction

Paraphrase the article into a concise summary, including direct quotes where relevant. Make sure to capture the main points in your own words while using direct quotes sparingly and only when they add value.
Quoted  Improved
Initial Writing
The article discusses the United States’ “CPI revealed a 3.5% annual increase” from “February's 3.2%”, and marks the highest rise in six months. High gas prices and housing costs are driving this inflation, which is prolonging Americans' financial strain. The Federal Reserve may keep interest rates high to address inflation to reduce aggregate demand and stabilize prices.
While the summary introduces contractionary monetary policy, it does not fully define the term or explain its effects on stakeholders. Key economic terminology is included but not used consistently.
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Criterion B: Level 1 Relevant economic terminology is present (e.g., contractionary monetary policy) but lacks consistent, appropriate use.
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Criterion C: Level 1 – Contractionary monetary policy is mentioned but not fully applied to analyze its effects or implications.
Improved Writing
The article discusses the United States’ “CPI revealed a 3.5% annual increase” from “February's 3.2%”' and marks the highest rise in six months. High gas prices and housing costs drove this increase, exacerbating financial pressure on households. To combat inflation, the Federal Reserve is likely to maintain 'punishing rates higher for longer,' showcasing its use of contractionary monetary policy to reduce aggregate demand by curbing consumer and business borrowing. This policy aims to shift aggregate demand leftward, alleviating price pressures, but risks slowing economic activity further, potentially affecting consumers and businesses differently.
This version clearly defines contractionary monetary policy and explains its effect on aggregate demand and stakeholders, integrating economic terminology appropriately throughout.
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Criterion B: Meets Level 2 – Terminology (e.g., contractionary monetary policy, aggregate demand) is consistently defined and applied throughout.
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Criterion C: Meets Level 2 – Economic theory is appropriately applied, explaining the policy's effects on aggregate demand and stakeholders.
5. Common Mistakes to Avoid

6.1 Microeconomics

6. Exemplar