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.
Key Theory | Real World Examples |
Taxes | Vaping Tax, Carbon Tax, Tobacco Tax, Red Meat Tax, Fish Tax, Fashion Tax, Aviation Fuel Tax |
Subsidies | Pre-School Subsidy, Agricultural Subsidy, Electric Car Subsidy, Vaccination Subsidy |
Price Floors | Alcohol Price Floor, Minimum Wage, Cabbage Price Floor, Milk Price Floor |
Price Ceilings | Energy Price Ceiling, Rent Price Ceiling, Petrol Price Ceiling |
B. Macroeconomic
#Advice: Assess the impact of policies on AD (Aggregate Demand), AS (Aggregate Supply), and unemployment or economic growth and sustainability
Use articles on fiscal/monetary policies during recessions or economic downturn. Explain the economic issue, analyze policies, and evaluate their effectiveness.
Key Theory | Real World Examples |
Demand-side Policies | Monetary Policy: Interest Rate Changes in the U.S., UK, Turkey, Sweden Fiscal Policy: Increased Government Spending in Italy, Sweden, and Singapore) Expansionary Policy: (Australia, Ghana) |
Supply-side Policies | Interventionist: Government Infrastructure Spending in India, UK, China Market-based: Tax Cuts in the US, Corporate Tax Reductions, Deregulation in South Korea |
Unemployment | U.S. Labor Market, India High Unemployment, Spain high Youth Unemployment |
C. The Global Economy
#Advice: Avoid more complex topics like Economic Integration and Development due to lack of diagram
Look for articles on trade conflict (e.g., US-China). Explain tariffs with a diagram, discuss pros and cons, and evaluate if protectionism is justified.
Key Theory | Real World Examples |
Trade Wars & Tariffs | China-US Trade War, India-US, US-EU Relations, China & Sugar, Japan & US |
Exchange Rates & Balance of Payments | Argentina & the Peso, US on Yuan ‘Manipulation’, Pound Volatility, Zimbabwe’s Foreign Currency Crisis |
2.2 WISE ChoICES Concept
Your IA must align with IB Economics syllabus units and include one of the nine Economic Key Concepts (WISE ChoICEs):
#Advice: Many WISE ChoICES concept may overlap depending on your article, pick out with specific WISE ChOICES concept you want to focus on and the importance of it.
Welfare: Focuses on the well-being of individuals and societies, assessing how economic decisions impact overall welfare.
Interdependence: Highlights global connections, showing how actions in one economy affect others.
Scarcity: Addresses the basic issue of limited resources vs. unlimited wants, leading to prioritization and choices.
Efficiency: Maximizes output with minimal resources, assessing optimal resource allocation.
Choice: Explores the trade-offs and opportunity costs in individual, firm, and government decisions.
Change: Examines the ongoing evolution of economies, including shifts in policies, technology, and global events.
Intervention: Analyze government actions to correct market failures or meet policy goals.
Equity: Examines fair distribution of resources and income, balancing fairness with efficiency.
Sustainability: Sustainability in economics ensures current needs are met without harming future generations by minimizing resource depletion, environmental damage, and pushing planetary boundaries.
3.2 Linking to Key Theory
Key economic concepts highlight how economic forces shape markets, influence
policy, and impact welfare and stability on both local and global scales.
Thesis Template |
The [adj] impact of [economic theory] on [WISE ChoICES concept]. |
The relationship between [economic theory] and [WISE ChoICES concept]. |
How [WISE ChoICES concept] influences [economic theory] in [context] |
The role of [economic theory] in addressing [WISES ChoICE concept]. |
WISE ChoICES
Key Theory
Thesis
Microeconomics
Intervention
Taxes
Increase in carbon pollution resulting in costs towards third-party (e.g. health, environment), the government intervenes to reduce these cost through market-based solutions or interventions
Scarcity
Subsidies
A shortage of affordable housing drives up rents, demonstrating scarcity and how it affects market prices and consumer choices.
Macroeconomics
Intervention
Demand-side policy or Supply-side policy
During economic downturns, governments may implement stimulus packages, showcasing interventions aimed at boosting economic activity and employment.
Efficiency
Supply-side policy
Improvements in productivity through technology lead to higher GDP growth, illustrating efficiency in resource allocation at a macro level.
Change
Unemployment
AI's impact on unemployment, through automation and new job creation, highlights the importance of adapting to change by reskilling workers, supporting transitions, and aligning with emerging economic demands.
The Global Economy
Interdependence
Trade
Global supply chain disruptions, like those seen during the pandemic, highlight how economies are interdependent each other for goods and services.
Change
Trade
The shift towards protectionism in various countries affects global trade dynamics, demonstrating change and its impact on international economic relationships.