IB Economics: Aggregate Demand & Aggregate Supply — What Do You Actually Need to Know?

You need the AD curve (C+I+G+(X-M)) and its determinants, the SRAS curve and what shifts it (costs, not price level), and — critically — the difference between monetarist/new classical LRAS (vertical, at full employment) and Keynesian LRAS (with a spare-capacity flat section). Diagrams must be fully labelled and used to explain real shocks.

The monetarist/new classical LRAS curve is vertical at the full employment level of output — it assumes the economy always self-corrects. The Keynesian AS curve is horizontal at low output, upward-sloping in the middle, then vertical at full capacity — reflecting spare capacity and sticky wages. Examiners expect you to choose the right one for the question context.

Label both axes (real GDP/national output on the x-axis, average price level on the y-axis), draw AD sloping down and SRAS sloping up, mark the equilibrium point, then show any shift with a clearly labelled new curve and new equilibrium. Examiners mark diagrams against specific assessment objectives — unlabelled axes lose marks every time.

The most common mistake I see marking mocks is confusing a movement along a curve with a shift of the curve — students shift AD when a price change should just move you along it. The second is forgetting to redraw and relabel the new equilibrium point after a shift, which examiners specifically check for.

The core AD/AS model is identical at SL and HL — both study the same curves, shifts and multiplier logic. HL students go further with quantitative multiplier calculations and deeper application in Paper 3's data-response questions, which SL students don't sit.

HL students do — Paper 3 often asks you to calculate the multiplier (1 ÷ MPW, where MPW is the marginal propensity to withdraw) and then use it to predict the change in real GDP following a shift in AD. SL students should understand the concept but aren't tested on the calculation.

Practise past Paper 1 essay questions that ask you to 'explain, using an AD/AS diagram' — timing yourself to draw a clean diagram in under three minutes. Pair each diagram with one real-world example (a named country or event) since examiners reward application, not just theory.

Strong answers use a specific, named event rather than a generic one — a central bank's interest rate decision, a government's fiscal stimulus package, or a commodity price shock affecting a named economy. Vague references to 'a country' without detail rarely earn top-band marks on the assessment criteria.

AD/AS underpins the whole macroeconomics unit — it's the model you use to explain inflation, unemployment, economic growth, and every government policy response (fiscal, monetary, supply-side). Examiners frequently ask you to combine AD/AS with the Phillips curve or business cycle diagrams in extended essay questions.

The underlying model is broadly similar to A-Level, but IB Economics demands more diagram-and-essay synthesis — students must apply AD/AS to real-world case studies within a single extended response, rather than answering separate structured sub-questions. That integration is what most students find harder to practise for.

The best thing you can do is ask your child to explain a diagram out loud, from memory, using a real example — if they can teach it clearly to you, they've usually got it. Past-paper Paper 1 questions on AD/AS are freely available and the fastest way to check genuine understanding versus memorised definitions.

Past paper Paper 1 questions are the single best resource, because they show exactly how examiners phrase AD/AS prompts and what command terms ('explain', 'evaluate') actually require. Beyond that, topic-specific worksheets that isolate AD/AS from the rest of macroeconomics let you drill the diagram until it's automatic.