LogoLogo
  • Welcome to the CP Subject Centre
  • Faria Education Group
  • Core
    • Service Learning
    • Language Development
    • Reflective Project
    • Personal and Professional Skills
  • Career-related Study
  • Studies in language and literature
    • Language and Literature
      • Aims & Objectives
      • Syllabus
        • Area of Exploration - Readers, Writers and Texts
        • Area of Exploration - Time and Space
        • Area of Exploration - Intertextuality: Connecting Texts
        • Development of Linguistic Skills
        • Conceptual Understanding
        • Non-Literary Texts
      • Assessment
    • Literature
      • Aims and Objectives
      • Syllabus
        • Areas of Exploration
        • Development of Linguistic Skills
        • Conceptual Understanding
      • Assessment
    • Classical Languages (Last Assessment 2023)
      • Aims & Objectives
      • Syllabus
        • Part 1: Study of Language
        • Part 2: Study of Literature
        • Part 3: Individual study
      • Assessment
    • Classical Languages (First Assessment 2024)
    • Literature and Performance (First Assessment 2024)
  • Language acquisition
    • Language Ab Initio
      • Aims & Objectives
      • Syllabus
        • Identities
        • Experiences
        • Human Ingenuity
        • Social Organization
        • Sharing the Planet
        • Texts
      • Assessment
    • Language B
      • Aims & Objectives
      • Syllabus
        • Identities
        • Experiences
        • Human Ingenuitiy
        • Social Organization
        • Sharing the Planet
        • Texts
      • Assessment
  • Individuals and societies
    • Business Management (Last Assessment 2023)
      • Aims & Objectives
      • Syllabus
        • Unit 1: Business Organization and Environment
        • Unit 2: Human Resource Management
        • Unit 3: Finance and Accounts
        • Unit 4: Marketing
        • Unit 5: Operations Management
      • Assessment
    • Business Management (First Assessment 2024)
    • Digital Society
    • Economics
      • Aims & Objectives
      • Syllabus
        • Unit 1: Introduction to Economics
        • Unit 2: Microeconomics
          • Real-world issue 1
          • Real-world issue 2
        • Unit 3: Macroeconomics
          • Real-world issue 1
          • Real-world issue 2
        • Unit 4: The Global Economy
          • Real-world issue 1
          • Real-world issue 2
      • Assessment
    • Geography
      • Aims & Objectives
      • Syllabus
        • Part one: Geographic themes (SL and HL options)
          • Option A: Freshwater
          • Option B: Oceans and coastal margins
          • Option C: Extreme environments
          • Option D: Geophysical hazards
          • Option E: Leisure, tourism and sport
          • Option F: Food and health
          • Option G: Urban environments
        • Part two: Geographic perspectives - global change (SL and HL core)
          • Unit 1: Changing population
          • Unit 2: Global climate - vulnerability and resilience
          • Unit 3: Global resource consumption and security
        • Part two: Geographic perspectives - global change (HL core extension)
          • Unit 4: Power, places and networks
          • Unit 5: Human development and diversity
          • Unit 6: Global risks and resilience
      • Assessment
    • Global Politics
      • Aims & Objectives
      • Syllabus
        • Engagement Activity
        • Core
        • Additional Higher Level
      • Assessment
    • History
      • Aims & Objectives
      • Syllabus
        • Prescribed Subjects
        • World History Topics
        • HL Options: Depth Studies - History of Africa and the Middle East
        • HL Options: Depth Studies - History of the Americas
        • HL Options: Depth Studies - History of Asia and Oceania
        • HL Options: Depth Studies - History of Europe
      • Assessment
    • Information Technology in a Global Society
      • Aims & Objectives
      • Syllabus
        • Strand 1: Social and Ethical Significance
        • Strand 2: Application to Specific Scenarios
        • Strand 3: IT Systems
        • The Project (practical application of IT skills)
      • Assessment
    • Philosophy
      • Aims & Objectives
      • Syllabus
        • Prescribed Texts
        • Core
        • Additional Higher Level
        • Options
      • Assessment
    • Psychology
      • Aims & Objectives
      • Syllabus
        • Core
          • Biological approach to understanding behaviour
          • Cognitive approach to understanding behaviour
          • Sociocultural approach to understanding behaviour
          • Approaches to researching behaviour
        • Options
          • Abnormal psychology
          • Developmental psychology
          • Health psychology
          • Psychology of human relationships
      • Assessment
    • Social and Cultural Anthropology
      • Aims & Objectives
      • Syllabus
        • Part 1: Engaging with Anthropology
          • The language of anthropology
          • The practice of anthropology
          • Anthropological thinking
        • Part 2: Engaging with Ethnography
          • Group 1
          • Group 2
          • Group 3
        • Part 3: Engaging with Anthropological Practice
      • Assessment
    • World Religions
      • Aims & Objectives
      • Syllabus
        • Part 1: Introduction to World Religions
        • Part 2: In-depth Studies
        • Part 3: Internal Assessment
      • Assessment
  • Sciences
    • Biology (FA 2025)
    • Biology (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Cell biology
          • 2. Molecular biology
          • 3. Genetics
          • 4. Ecology
          • 5. Evolution and biodiversity
          • 6. Human physiology
        • Additional Higher Level
          • 7. Nucleic acids
          • 8. Metabolism, cell respiration and photosynthesis
          • 9. Plant biology
          • 10. Genetics and evolution
          • 11. Animal physiology
        • Options
          • Option A: Neurobiology and behaviour
          • Option B: Biotechnology and bioinformatics
          • Option C: Ecology and conservation
          • Option D: Human physiology
      • Assessment
    • Chemistry (FA 2025)
    • Chemistry (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Stoichiometric relationships
          • 2. Atomic structure
          • 3. Periodicity
          • 4. Chemical bonding and structure
          • 5. Energetics/thermochemistry
          • 6. Chemical kinetics
          • 7. Equilibrium
          • 8. Acids and bases
          • 9. Redox processes
          • 10. Organic chemistry
          • 11. Measurement and data processing
        • Additional Higher Level
          • 12. Atomic structure
          • 13. The periodic table - the transition metals
          • 14. Chemical bonding and structure
          • 15. Energetics/thermochemistry
          • 16. Chemical kinetics
          • 17. Equilibrium
          • 18. Acids and bases
          • 19. Redox processes
          • 20. Organic chemistry
          • 21. Measurement and analysis
        • Options
          • A. Materials
          • B. Biochemistry
          • C. Energy
          • D. Medicinal chemistry
      • Assessment
    • Computer Science (FA 2025)
    • Computer Science (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • Topic 1 - System fundamentals
          • Topic 2 - Computer organization
          • Topic 3 - Networks
          • Topic 4 - Computational thinking, problem-solving and programming
        • Additional Higher Level
          • Topic 5 - Abstract data structures
          • Topic 6 - Resource management
          • Topic 7 - Control
        • Options
          • A - Databases
          • B - Modelling and simulation
          • C - Web science
          • D - Object-oriented programming
      • Assessment
    • Design Technology
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Human factors and ergonomics
          • 2. Resource management and sustainable production
          • 3. Modelling
          • 4. Final production
          • 5. Innovation and design
          • 6. Classic design
        • Additional Higher Level
          • 7. User-centred design (UCD)
          • 8. Sustainability
          • 9. Innovation and markets
          • 10. Commercial production
      • Assessment
    • Nature of Science
      • Aims & Objectives
      • Syllabus
        • Introduction
        • Part A - Concepts
        • Part B - The Quest for Understanding
        • Part C - The Impact of Science
        • Part D - Challenges and the Future
      • Assessment
    • Physics (FA 2025)
    • Physics (LA 2024)
      • Aims & Objectives
      • Syllabus
        • Core
          • 1. Measurements and uncertainties
          • 2. Mechanics
          • 3. Thermal physics
          • 4. Waves
          • 5. Electricity and magnetism
          • 6. Circular motion and gravitation
          • 7. Atomic, nuclear and particle physics
          • 8. Energy production
        • Additional Higher Level
          • 9. Wave phenomena
          • 10. Fields
          • 11. Electromagnetic induction
          • 12. Quantum and nuclear physics
        • Options
          • A. Relativity
          • B. Engineering physics
          • C. Imaging
          • D. Astrophysics
      • Assessment
    • Sports, Exercise and Health Science
      • Aims & Objectives
      • Syllabus
        • Core
          • Topic 1: Anatomy
          • Topic 2: Exercise physiology
          • Topic 3: Energy systems
          • Topic 4: Movement analysis
          • Topic 5: Skill in sports
          • Topic 6: Measurement and evaluation of human performance
        • Additional Higher Level
          • Topic 7: Further anatomy
          • Topic 8: The endocrine system
          • Topic 9: Fatigue
          • Topic 10: Friction and drag
          • Topic 11: Skill acquisition and analysis
          • Topic 12: Genetics and athletic performance
          • Topic 13: Exercise and immunity
        • Options
          • Option A: Optimizing physiological performance
          • Option B: Psychology of sports
          • Option C: Physical activity and health
          • Option D: Nutrition for sports, exercise and health
      • Assessment
  • Mathematics
    • Mathematics: analysis and approaches
      • Aims & Objectives
      • Syllabus
        • Topic 1: Numbers and Algebra
        • Topic 2: Functions
        • Topic 3: Geometry and Trigonometry
        • Topic 4: Statistics and Probability
        • Topic 5: Calculus
      • Assessment
    • Mathematics: applications and interpretation
      • Aims & Objectives
      • Syllabus
        • Topic 1: Number and Algebra
        • Topic 2: Functions
        • Topic 3: Geometry and Trigonometry
        • Topic 4: Statistics and Probability
        • Topic 5: Calculus
      • Assessment
  • The arts
    • Dance
      • Aims & Objectives
      • Syllabus
        • Composition and Analysis
        • World Dance Studies
        • Performance
      • Assessment
    • Film
      • Aims & Objectives
      • Syllabus
        • Reading Film
        • Contextualizing Film
        • Exploring Film Production Roles
        • Collaboratively Producing Film (HL only)
      • Assessment
    • Music
      • Aims & Objectives
      • Syllabus
        • Areas of Inquiry
        • Contexts
        • Musical Processes
        • Musical Roles
        • Exploring Music in Context
        • Experimenting with Music
        • Presenting Music
      • Assessment
    • Theatre (Last Assessment 2023)
      • Aims & Objectives
      • Syllabus
        • Theatre in Context
        • Theatre Processes
        • Presenting Theatre
      • Assessment
    • Theatre (First assessment 2024)
    • Visual Arts
      • Aims & Objectives
      • Syllabus
        • Visual Arts in Context
        • Visual Arts Methods
        • Communicating Visual Arts
        • The Visual Arts Journal
        • Art-making Forms
        • Research
      • Assessment
  • Interdisciplinary courses
    • Literature and Performance
      • Aims and Objectives
      • Syllabus
        • Part 1: Critical Study of Texts
        • Part 2: Exploration of the Chose Approach to the Text
        • Part 3: Realization of Texts in Performance
        • Prescribed Literature in Translation
      • Assessment
    • Environmental Systems & Societies
      • Aims & Objectives
      • Syllabus
        • Topic 1: Foundations of environmental systems and societies
        • Topic 2: Ecosystems and ecology
        • Topic 3: Biodiversity and conservation
        • Topic 4: Water and aquatic food production systems and societies
        • Topic 5: Soil systems and terrestrial food production systems and societies
        • Topic 6: Atmospheric systems and societies
        • Topic 7: Climate change and energy production
        • Topic 8: Human systems and resource use
      • Assessment
  • School-based syllabuses
    • Art History
      • Aims & Objectives
      • Syllabus
        • Topic 1: The Art and Architecture of Ancient Greece
        • Topic 2: Rome - Republic and Empire
        • Topic 3: The Middle Ages
        • Topic 4: Romanesque and Gothic Art and Architecture
        • Topic 5: The Art of the Renaissance
        • Topic 6: The Baroque Age - Art and the Architecture of 17th-century Europe
        • Topic 7: The 'Age of Reason' to 'Romanticism'
        • Topic 8: Experiments in the 19th- and 20th-century Art
      • Assessment
    • Astronomy
      • Aims & Objectives
      • Syllabus
        • Topic 1: The Stars
        • Topic 2: The Planets
        • Topic 3: Galaxies
        • Topic 4: Cosmology
      • Assessment
    • Brazilian Social Studies
      • Aims & Objectives
      • Syllabus
        • Topic 1: The Construction of Brazilian Geographical Space
        • Topic 2: Brazil in the Globalization Era - Core Topic
        • Topic 3: The Demographic and Urban Dynamics of Contemporary Brazil
        • Topic 4: Environment and Society
        • Topic 5: From Discovery to the End of the Colonial Era (1500-1822)
        • Topic 6: The Monarchical Experience (1822-1889)
        • Topic 7: Early Republican Brazil (1889-1945) - Core Topic
        • Topic 8: Contemporary Brazil (1945 - )
      • Assessment
    • Classical Greek and Roman Studies
      • Aims & Objectives
      • Syllabus
        • Part A - Two Topics from the Following Four Options
        • Part B - Two Topics from the Following Four Options
      • Assessment
    • Food Science and Technology
      • Aims & Objectives
      • Syllabus
        • 1. Nutrition
        • 2. Materials, Component and Their Application
        • 3. Food Quality and Safety
        • 4. Food Process Engineering
      • Assessment
    • Marine Science
      • Aims & Objectives
      • Syllabus
        • Core
          • Topic 1 Origin and Structure of Oceans
          • Topic 2 Dynamics of Earth's Crust
          • Topic 3 Patterns of Water Movement
          • Topic 4 Properties of Ocean Water
          • Topic 5 Life in Oceans
        • Options
          • A. Marine ecosystems and conservation
          • B. Atmosphere, ocean and climate
          • C. Geology of ocean basins
      • Assessment
    • Modern History of Kazakhstan
      • Aims & Objectives
      • Syllabus
        • Topic 1. Kazakhstan at the Beginning of the 20th Century
        • Topic 2. Kazakhstan During the Civil Confrontation (1917-1920)
        • Topic 3. The Formation of the Soviet Union and Kazakhstan (1920-1940)
        • Topic 4. The Great Patriotic War and Kazakhstan (1941-1945)
        • Topic 5. Kazakhstan and the Socialism (1946-1985)
        • Topic 6. Kazakhstan: from Perestroika to independence
      • Assessment
    • Political Thought
      • Aims & Objectives
      • Syllabus
        • Topic 1: Political Thinkers
        • Topic 2: Political Concepts
      • Assessment
    • Turkey in the 20th Century
      • Aims & Objectives
      • Syllabus
        • Turkey at the Beginning of the 20th Century
        • Topic 2: The Foundations of the Turkish Republic 1923-1945
        • Topic 3: The Global Changes Between the World Wars and Their Effect on Turkey 1918-1939
        • Topic 4: Turkey under pressure during World War II
        • Topic 5: Reconstruction, democracy and developments in the region 1945-1985
        • Topic 6: The Effects of Globalization and the Dialogue with Europe 1985-2000
      • Assessment
    • World Arts and Cultures
      • Aims & Objectives
      • Syllabus
        • Part 1: Prescribed Topics
        • Part 2: Intercultural Studies
        • Part 3: Regional Study
      • Assessment
Powered by GitBook
On this page
  • Real-world issue 1 - Who are the winners and losers of the integration of the world’s economies?
  • Conceptual understandings
  • 4.1 Benefits of international trade
  • 4.2 Types of trade protection
  • 4.3 Arguments for and against trade control/protection
  • 4.4 Economic integration
  • 4.5 Exchange rates
  • 4.6 Balance of payments
  • Inquiry—possible areas to explore (not an exhaustive list)
  • Theory of knowledge questions
  1. Individuals and societies
  2. Economics
  3. Syllabus
  4. Unit 4: The Global Economy

Real-world issue 1

Real-world issue 1 - Who are the winners and losers of the integration of the world’s economies?

Conceptual understandings

The increased interdependence of economies has benefits and costs.

  • Increased economic integration may result in efficiency, welfare gains and improvements in economic well-being but the benefits may not result in equity.

  • Key concepts: scarcity, choice, efficiency, equity, economic well-being, sustainability, change, interdependence, intervention.

4.1 Benefits of international trade

  • Benefits of international trade, including:

    • increased competition

    • lower prices

    • greater choice

    • acquisition of resources

    • more foreign exchange earnings

    • access to larger markets

    • economies of scale

    • more efficient resource allocation

    • more efficient production

    • Diagram: free trade illustrating exports when world price is above domestic price

    • Diagram: free trade illustrating imports when world price is below domestic price

    • Calculation (HL only): from a diagram, the quantity of exports, quantity of imports, import expenditure, export revenue

  • Absolute and comparative advantage (HL only)

    • Gains from trade

    • Sources of comparative advantage

    • Opportunity costs

    • Diagram (HL only): linear PPC showing differing opportunity costs and the potential gains from specialization and trade as a result of comparative advantage

    • Calculation (HL only): opportunity costs from a set of data in order to identify comparative advantage

  • Limitations of the theory of comparative advantage (HL only)

4.2 Types of trade protection

  • Tariffs

    • Effects on markets and stakeholders

    • Diagram: showing the effect of a tariff on price, production, consumption, expenditures, revenues, welfare

    • Calculation (HL only): from a diagram, the effects on stakeholders of tariffs

  • Quota

    • Effects on markets and stakeholders

    • Diagram: showing the effect of a quota on price, production, consumption, expenditures, revenues, welfare

    • Calculation (HL only): from a diagram, the effects on stakeholders of quotas

  • Subsidy/export subsidy

    • Effects on markets and stakeholders

    • Diagram: showing the effect of a subsidy on price, production, consumption, expenditures, revenues, welfare

    • Calculation (HL only): from a diagram, the effects on stakeholders of subsidies

  • Administrative barriers

    • Standards and regulations

4.3 Arguments for and against trade control/protection

  • Arguments for trade protection/advantages of trade protection, including:

    • protection of infant (sunrise) industries

    • national security

    • health and safety

    • environmental standards

    • anti-dumping

    • unfair competition

    • balance of payments correction

    • government revenue

    • protection of jobs

    • Economically least developed country (ELDC) diversification

  • Arguments against trade protection/disadvantages of trade protection, including:

    • misallocation of resources

    • retaliation

    • increased costs

    • higher prices

    • less choice

    • domestic firms lack incentive to become more efficient

    • reduced export competitiveness

  • Free trade versus trade protection

4.4 Economic integration

  • Preferential trade agreements

    • Bilateral

    • Regional

    • Multilateral (the World Trade Organization)

  • Trading blocs

    • Free trade areas/agreements

    • Customs unions

    • Common markets

  • Advantages and disadvantages of trading blocs

  • Advantages, including:

    • trade creation (HL only)

    • greater access to markets offer potential for economies of scale

    • with freedom of labour, there are greater employment opportunities

    • membership in a trading bloc may allow for stronger bargaining power in multilateral negotiations

    • greater political stability and cooperation

  • Disadvantages, including:

    • trade diversion (HL only)

    • loss of sovereignty

    • challenge to multilateral trading negotiations

  • Monetary union

  • Advantages and disadvantages of monetary union (HL only)

  • The World Trade Organization (WTO)

    • Objectives and functions

    • Factors affecting the influence of the WTO, including:

      • difficulties of reaching agreement on services/primary products

      • unequal bargaining power of members

4.5 Exchange rates

  • Floating exchange rates

    • Determination

      • Depreciation and appreciation of a currency

    • Diagram: showing the exchange rate determination and changes in equilibrium in a floating exchange rate system

    • Calculation: using exchange rates, the price of a good in different currencies

  • Changes in demand and supply for a currency—factors including:

    • foreign demand for exports

    • domestic demand for imports

    • inward/outward foreign direct investment

    • inward/outward portfolio investment

    • remittances

    • speculation

    • relative inflation rates

    • relative interest rates

    • relative growth rates

    • central bank intervention

    • Calculation: changes in the value of a currency from a set of data

  • Consequences of changes in the exchange rate on economic indicators, such as:

    • the inflation rate

    • economic growth

    • unemployment

    • the current account balance

    • living standards

    • Diagram: AD/AS curves to show potential consequences of changes in the exchange rate on the economy

  • Fixed exchange rate

    • Devaluation and revaluation of a currency

    • How fixed exchange rates are maintained

    • Diagram: showing how a fixed exchange rate is maintained

  • Managed exchange rates

    • Overvalued currencies

    • Undervalued currencies

    • Diagram: showing the exchange rate determination and changes in equilibrium in a managed exchange rate system

  • Fixed versus floating exchange rate systems (HL only)

4.6 Balance of payments

  • Balance of payments

    • Credit and debit items

    • Surplus or deficit on an account

    • Calculation: elements of the balance of payments from a set of data

  • Components of the balance of payments

    • Current account

      • Balance of trade in goods

      • Balance of trade in services

      • Income

      • Current transfers

    • Capital Account

      • Capital transfers

      • Transaction in non-produced, non-financial assets

    • Financial account

      • Foreign direct investment (FDI)

      • Portfolio investment

      • Reserve assets

      • Official borrowing

  • Interdependence between the accounts

    • Zero balance in the balance of payments

    • Credits matched by debits

    • Deficits matched by surpluses

  • Relationship between the current account and the exchange rate (HL only)

    • Diagram (HL only): on exchange rate showing the relationship between the current account balance and the exchange rate

  • Relationship between the financial account and the exchange rate (HL only)

  • Implications of a persistent current account deficit in terms of: (HL only)

    • exchange rates

    • interest rates

    • foreign ownership of domestic assets

    • debt

    • credit ratings

    • demand management

    • economic growth

  • Methods to correct a persistent current account deficit (HL only)

    • Expenditure switching

    • Expenditure reducing

    • Supply-side policies

  • Effectiveness of measures to correct a persistent current account deficit (HL only).

  • The Marshall-Lerner condition and the J-curve effect (HL only)

    • Diagram (HL only): J- curve with reference to the Marshall Lerner condition

  • Implications of a persistent current account surplus in terms of (HL only):

    • domestic consumption and investment

    • exchange rates

    • inflation

    • employment

    • export competitiveness

Inquiry—possible areas to explore (not an exhaustive list)

  • The impacts of changes in the exchange rate on different stakeholders and the economy, for a chosen country.

  • Why a government chooses to manage the exchange rate, for a chosen country.

  • Methods a government uses to manage its exchange rate and why, for a chosen country.

  • The patterns of current account deficits/current account surpluses for different countries.

Theory of knowledge questions

  • Free trade is advocated on the grounds that it leads to greater efficiency. Yet it results in both winners and losers. Do economists have a moral responsibility toward the losers when they advocate free trade?

  • To what extent would increased economic integration ever be considered undesirable?

  • Is it ethically sound for economically developed countries to demand that less developed countries remove their trade barriers in the interests of free trade when they continue to provide income support to their farmers? Can one country know what is right for another to do?

  • To what extent does possession of knowledge carry with it an ethical responsibility?

PreviousUnit 4: The Global EconomyNextReal-world issue 2

Last updated 2 years ago