Economics

First Assessment 2022

Nature of the Subject

Economics is an exciting, dynamic subject that allows students to develop an understanding of the complexities and interdependence of economic activities in a rapidly changing world.

At the heart of economic theory is the problem of scarcity. While the world’s population has unlimited needs and wants, there are limited resources to satisfy these needs and wants. As a result of this scarcity, choices have to be made. The economics course, at both SL and HL, uses economic theories to examine the ways in which these choices are made:

• at the level of producers and consumers in individual markets (microeconomics)

• at the level of the government and the national economy (macroeconomics)

• at an international level where countries are becoming increasingly interdependent through international trade and the movement of labour and capital (the global economy).

The choices made by economic agents (consumers, producers and governments) generate positive and negative outcomes and these outcomes affect the relative well-being of individuals and societies. As a social science, economics examines these choices through the use of models and theories. The Diploma Programme (DP) economics course allows students to explore these models and theories, and apply them, using empirical data, through the examination of the following six real-world issues which are posed as economic questions:

• How do consumers and producers make choices in trying to meet their economic objectives

• When are markets unable to satisfy important economic objectives—and does government intervention help?

• Why does economic activity vary over time and why does this matter?

• How do governments manage their economy and how effective are their policies?

• Who are the winners and losers of the integration of the world’s economies?

• Why is economic development uneven?

Economic theory suggests that the material well-being of societies is related to the quantity of goods and services that are available to that society. As a result, economic growth and increased efficiency have become prominent goals. However, there are two important global economic issues related to these goals and the choices made by economic agents. These are the ways in which economic activity impacts the environment, and the challenges facing the world in terms of fair access to resources, goods and services. When exploring these significant global issues, sustainability and equity become key concepts for DP economics students to understand.

In all areas of economic activity, the economic agents can be divided up into the private sector (consumers and producers) and the public sector (governments). To different extents and with different outcomes, the public sector in any economy assumes some responsibility for monitoring and regulating the behaviour of the private sector. This government intervention is a significant concept that appears throughout the course and students are expected to critically evaluate the balance between the market forces of the private sector and intervention by governments.

Given the rapidly changing world, economic activity and its outcomes are constantly in flux. Therefore, students are encouraged, throughout the course, to research current real-world issues. Through their own inquiry, it is expected that students will be able to appreciate both the values and limitations of economic models in explaining real-world economic behaviour and outcomes.

By focusing on the six real-world issues through the nine key concepts (scarcity, choice, efficiency, equity, economic well-being, sustainability, change, interdependence and intervention), students of the economics course will develop the knowledge, skills, values and attitudes that will encourage them to act responsibly as global citizens.