BIS Istanbul

Teaching Syllabus for IB Economics

Higher and Standard Level

For first teaching from August 2008

Prepared by JNB
 BIS Teaching Syllabus for HL and SL Economics

IB Higher Level and Standard Level Economics

For first teaching August 2008 – Prepared by JNB

Aims of the course

1. To provide candidates with a critical understanding of the economic world in which

they live, by applying economic concepts to real world problems.

2. To provide candidates with a sound knowledge and understanding of economic

principles, theories, concepts, models and skills.

3. To prepare candidates for further study in economics, business and related subjects.

4. To prepare candidates for their future lives in:

(i) work,
(ii) personal finance,
(iii) politics.

5. The economics programme contributes to internationalism in the IB by encouraging

candidates and teachers to:
• appreciate the interdependence of countries
• understand the implications of the development of an open international economy
• have a critical awareness of the global economy and of its economic and cultural
implications
• recognise the universal acceptability of fundamental economic principles,
appreciating the need for different solutions in different circumstances
• pay special attention to the problems of economic development
• develop an interest in, empathy for, and awareness of other cultures and their
economic systems.

Aims of the teaching syllabus

1. To give a clear view of the material covered in the course.

2. To provide a structured programme in order to help the teacher to organise the

course.

3. To provide a structured programme in order to help the students and parents to

appreciate the scope and timing of the course.

About the course

1. The course follows the International Baccalaureate syllabus. It is a two-year

programme with terminal examination, although 20% (25% SL) of the assessment is
based upon an Economic Portfolio that is constructed over the course.

2. The course is taught using four teaching sessions per week. SL students will be
allowed to engage in alternate work when topics that are solely HL are being
covered.

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 BIS Teaching Syllabus for HL and SL Economics

3. Usually, the group will be set one piece of homework per week. The work would
normally be expected to take between one and two hours per piece. The type of
work set will vary according to the nature of the topic and the point of the course that
has been reached.

4. The text book used is Economics – A course companion by Jocelyn Blink and Ian
Dorton. Dictionary and diagram guides are also provided. However, a full set of
notes will be built up over the period of the course and it is to be hoped that the
textbook is used only for backup.

5. There are a number of assessment points on the course:

Year 1 End of Term Examination - December
End of Term Examination - June
Year 2 MOCK Examination - January
IB External Examination - May

6. The HL External Examination papers are as follows:

Paper Type Time Weighting Question Choice

Type
1 Essay 1 Hour 20% Two-part 1 from 4
Paper essays
2 Short 1 Hour 20% Short answer 3 from 6
Essays questions
3 Data 2 Hours 40% Data 3 from 5
Response response
4 Internal n/a 20% 4 Portfolio n/a
Assessmen commentaries
t

7. The SL External Examination papers are as follows:

Paper Type Time Weighting Question Choice

Type
1 Essay 1 Hour 25% Two-part 1 from 4
Paper essays
2 Data 2 Hours 50% Data 3 from 5
Response response
3 Internal n/a 25% 4 Portfolio n/a
Assessmen commentaries
t

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 BIS Teaching Syllabus for HL and SL Economics

Grading Policy for IB Economics

YEAR 1
Term 1
First half Homework 30%
End of Section 1 Test 10%
Second half Homework 30%
Demand and Supply Test 10%
• End of term Examination 1 20%

Term 2
First half Homework 30%
End of Section 2 Test 20%
Second half Homework 30%
National Income Test 20%

Term 3
• First half Homework 30%
End of Section Test 20%
• Second half Homework 30%
Examination 2 20%

YEAR 2
Term 1
First half Homework 20%
End of Section 3 Test 10%
Second half Homework 20%
End of Section 4 Test 10%
MOCK exams 40%

Term 2
First half Homework 30%
Micro Revision Test 10%
Second half Homework 30%
Macro Revision Test 10%

Homework
This will be a combination of preparation for class quizzes, project work, portfolio pieces,
short essays, long essays, and data response questions. All pieces will be marked
to match the school Grading System and an appropriate IB grade will be awarded.
(The system is shown on page 5.) Class quizzes will be graded in the same way.

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 BIS Teaching Syllabus for HL and SL Economics

TESTS
All tests will be graded to match the school Grading System and an appropriate IB grade
will be awarded. (The system is shown on page 5.)

End of Section 1 Test (50 minutes)

This will be a 20 question multiple choice test.

Demand and Supply Test (50 minutes)

This will be a data response question, requiring definitions, analysis, and calculation.

End of Term Examination 1 (90 minutes)

Students will choose 1 data response question out of 2 and 3 short essay questions out
of 6.

End of Section 2 Test (50 minutes)

Students will attempt 2 short essay questions out of 4.

National Income Test (50 Minutes)

This will be a 20 question multiple choice test.

End of Section 3 Test (50 minutes)

Students will attempt 1 essay out of 3.

End of Section 4 Test (50 minutes)

Students will attempt 1 essay out of 3.

End of Term Examination (90 minutes)

Students will sit an IB Data Response Paper as preparation for their external
examinations.

Micro and Macro Revision Tests (50 minutes each)

These will be short essay and data response questions.

BIS GRADING SYSTEM

IB Economics
Grades and Values
1 2 3 4 5 6 7
0-16 17-30 31-40 41-52 53-63 64-74 75-100

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 BIS Teaching Syllabus for HL and SL Economics

Year 1 – 1st Term

Section 1 – Introduction to Economics – 5 Weeks
• Definitions of social science and economics. Social scientific method and ceteris
paribus. The difference between micro and macro economics. The distinction
between positive and normative economics. A simple circular flow model, showing
the measurement of National Income. Introduction to factors of production and the
payments to factors. Definitions of growth, development, and sustainable
development. A student introductory study of a developing country of the student’s
choice.

• The limitless range of human needs and wants, but limited means to satisfy them.
Rationing systems (introduction). Chocolate game. The economist’s approach to
scarcity and the concept of opportunity cost. The distinction between free and
economic goods.

• Production possibility curves(PPC’s). The meaning of economic efficiency.

Opportunity cost (revisited), actual and potential output. The need to increase the
supply of and/or the quality of, factors of production. PPC’s to show economic
growth and economic development.

• The basic economic questions. Rationing systems (re-joined). Alternative ways of

trying to solve the economic problem: the free market and the price mechanism;
planned and ‘mixed’ economies. The relative advantages and disadvantages of
each system. Transitional economies. Student study of a transitional economy.

END OF SECTION TEST

Section 2 – Microeconomics – 23½ weeks

2.1 Markets and 2.2 Elasticities combined - 11½ weeks

• Definitions and examples of local, national, and international markets. Introduction to
perfect competition, monopolistic competition, oligopoly and monopoly – the number
of buyers and sellers, type of product and barriers to entry. The importance of price
as an economic signal and allocator.

• Definition of demand. Demand for goods and services. The Law of demand. The
derivation of an individual’s demand curve using marginal utility analysis; the concept
of consumer surplus. The simple role of income and substitution effect in illustrating
the shape of the demand curve.

• Exceptions to the Law of Demand. [HL extension]

• Determinants of demand – other than price. The distinction between a shift of, and a
movement along, a demand curve. Market demand curves. Total, average and
marginal revenue.

• Defining, explaining and calculating price, income, and cross elasticity of demand.
The usage of each form of elasticity. The ‘Dorton’ diagram.

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 BIS Teaching Syllabus for HL and SL Economics

• Definition of supply. Supply of goods and services. The Law of Supply. Derivation
of the supply curve and the distinction between a shift in, and a movement along, the
supply curve. Joint and competitive supply. Elasticity of supply: definition,
explanation and calculation. Influence of time and costs on supply elasticity.
Elasticity of supply, an understanding of the significance of the concept and its
application to relevant situations. Examples should be given from the world
economy and in relation to particular markets.

• The use of demand and supply curves to illustrate the nature of, and changes in,
equilibrium price and output. The significance of elasticities of demand and supply.
Economic rent and transfer earnings.

• The effect of indirect taxes and subsidies on supply. The supply curve shifting
upward and downward, not left and right.

• The incidence of indirect taxes and subsidies on the producer and consumer.
Implication of elasticity of demand and supply for the incidence of taxation. [HL
extension]

• Price ceilings and floors. Buffer stocks. Commodity agreements, with special
reference to developing countries. Agricultural markets and the cobweb theorem.
Agricultural support policies. Cartels.

2.3 Theory of the firm – 7½ weeks

• The very short run. The short run. Total, average and marginal product. The law of
diminishing returns/variable proportions. Short run costs – fixed and variable.

December – END OF TERM EXAMINATION

Year 1 – 2nd TERM

[THE PRACTICE COMMENTARY FOR THE INTERNAL ASSESSMENT PORTFOLIO WILL BE
WRITTEN IN THIS TERM AND THEN THE FIRST ACTUAL COMMENTARY WILL ALSO BE
WRITTEN.]
• The long run. Returns to scale. Economies and diseconomies of scale. Long run
costs. The very long run.

• The meaning of marginal analysis. Marginal revenue and marginal cost. Marginal
cost and long run supply. The goals of the firm. The accountant’s definition of profit
v the economist’s definition. Normal (zero) and supernormal (abnormal) profit.

• Perfect competition.

• Imperfect competition. Monopolistic competition. Oligopolistic markets.

Measurement of market concentration. Advertising and non-price competition. Non-
collusive and collusive behaviour. Cartels and price leadership.

• Monopoly and price discrimination.

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 BIS Teaching Syllabus for HL and SL Economics

2.4 Market Failure – 4½ weeks

• Revision session for returning SL students [HL students private study].

• The concept of market failure; monopoly, externalities, public goods and merit goods
defined, explained and illustrated. Social/private and internal/external costs and
benefits distinguished. The role of cost/benefit analysis. [Social costs are defined as
private costs + externalities. Social benefits are defined as private benefits +
external benefits.]

Year 1 – 3RD TERM

[THE SECOND ACTUAL COMMENTARY WILL BE WRITTEN IN THIS QUARTER.]
• An examination of possible government action to remedy market failure, together
with awareness of possible ‘government failure’ by making an inappropriate
response. [Remedies for market failure: legislation; taxation; subsidies;
establishment and general significance of property rights. Students should be able
to show how government action may improve or reduce economic efficiency.]

END OF SECTION TEST

Section 3 – Macroeconomics - 13 weeks

Introduction - Objectives of Macroeconomic Policy – ½ week
• Full employment, price stability, balance of payments equilibrium, economic growth
and equity objectives defined and evaluated. Outline discussion of conflicts between
these objectives. Internal and external balance. Introduce demand and supply side
policies.

3.1 Measuring National Income - 4 weeks

• Circular flow of income. Basic national income concepts and their use. Limitations
of these data as a guide to comparative living standards between countries and over
time.

• Determination of the level of national income – Keynesian analysis. The Keynesian

multiplier and accelerator.

• Determination of the level of national income – Monetarist /Classical analysis.

Monetary theory. Supply of money. Crowding out.

June – END OF TERM EXAMINATION

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 BIS Teaching Syllabus for HL and SL Economics

Year 2 – 1st TERM

[THE THIRD ACTUAL COMMENTARY WILL BE WRITTEN IN THIS TERM.]

3.2 Introduction to development - ½ week

• Economic growth and economic development revisited. GDP v GNP. Purchasing
Power Parity. Alternative methods of measurement. Problems of measuring
development.

3.3 and 3.4 Macroeconomic models and demand-side and supply-side

policies - 3 weeks
• The determination of aggregate demand. Shifts of and movements along the
aggregate demand curve.

• The determination of aggregate supply. The shape of the short and long run
aggregate supply curves under different assumptions: Keynesian, Monetarist, and
neo-classical. Shifts of and movements along the aggregate supply curve.

• The interaction of aggregate demand and aggregate supply to determine the

equilibrium level of output. The full employment level of output. Inflationary and
deflationary gaps. The trade/business cycle.

• Demand side and supply side policies. Strengths and weaknesses.

3.5 Inflation and Unemployment – 3 weeks

• Inflation. Definitions, consequences, causes and cures.

• Unemployment. Definitions, consequences, causes (types) and cures.

• RPI. The limitations of the RPI. The Phillips Curve, short run and long run. The
natural rate of unemployment and the non-accelerating inflation rate of
unemployment. (NAIRU).

3.6 Distribution of Income – 2 weeks

• Types of taxation (Direct and indirect; progressive; proportional; regressive.)
Transfer payments.

• The Laffer curve. The Lorenz curve and the Gini Coefficient.

END OF SECTION TEST

Section 4 – International Economics – 6½ weeks

4.1 and 4.8 Reasons for Trade and The Terms of Trade – 2½ weeks
• Differences in factor endowments. Variety and quality of goods. Gains from
specialization. Political reasons.

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 BIS Teaching Syllabus for HL and SL Economics

• Absolute and comparative advantage. Opportunity cost. The limitations of the

theory.

• Definition of the Terms of Trade. Consequences of a change in the terms of trade –

especially deterioration for developing countries.

• Measurement of the Terms of Trade. Short and long run causes of changes in a
country’s Terms of Trade. Elasticity of demand for exports and imports.

4.2 Free Trade and Protectionism – 2 weeks

• Definition of free trade. Arguments for protectionism. Arguments against
protectionism.
January – MOCK EXAMS

Year 2 – 2nd TERM

[THE FOURTH ACTUAL COMMENTARY WILL BE WRITTEN IN THIS TERM.]
• Types of protectionism.

4.3 and 4.4 Economic integration and the World Trade Organization – ½
week
• Globalization. Trading blocs – free trade areas; customs unions; common markets.

• Trade creation and trade diversion. Obstacles to achieving integration.

4.5 and 4.7 Balance of Payments and Balance of Payment Problems - ¾

week
• Measurement of the Balance of Payments.

• Consequences of a deficit or surplus in current or capital accounts. Methods of

correction.

• The Marshall-Lerner condition and the J-curve.

4.6 Exchange Rates - ¾ week

• Fixed, floating and managed exchange rates. Depreciation v devaluation and
appreciation v revaluation. Factors affecting exchange rates.

• Advantages and disadvantages of different exchange rate systems. Advantages

and disadvantages of single currencies/monetary integration. Purchasing Power
Parity (PPP).

END OF SECTION TEST

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 BIS Teaching Syllabus for HL and SL Economics

Section 5 - Development Economics – 4 weeks

5.1 and 5.2 Sources of Economic Growth and/or Development and
Consequences of Growth – ½ week
• Natural factors; human factors; physical capital and technological factors; institutional
factors. Externalities, income distribution and sustainability.

5.3 Barriers to Economic Growth and/or Development – ½ week

• The poverty cycle. Institutional and political factors. International trade barriers.
International financial barriers. Social and cultural factors acting as barriers.

5.4 Growth and Development Strategies – 2 weeks

• The Harrod-Domar growth model. Structural change/dual sector model.

• Aid – types of aid (bilateral; multilateral; grant aid; soft loans; official aid; tied aid)

• Export led growth/outward-oriented strategies. Import substitution/inward-oriented

strategies/protectionism.

• Commercial loans. Foreign direct investment. Micro-credit schemes. Fair trade

organizations.

• Sustainable development.

5.5 Evaluation of growth and development strategies – 1 week

• Evaluation of trade v aid and market-led v interventionist strategies.

• Evaluation of the role of international financial institutions (the IMF; the World Bank;
private sector banks; non-government organisations; multinational
corporations/transnational corporations; commodity agreements).

END OF SECTION TEST

Revision past paper

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