Macroeconomics
Macroeconomics (IB Economics SL)
Macro is where examiners reward chains of reasoning over memorised facts — every mark scheme for a policy question is really a sequence of arrows (rate cut → cheaper borrowing → higher C and I → AD shifts right → real GDP up). Learn the AD/AS diagram once, properly, and every subtopic here becomes a variation on the same picture.
Overview — The Macro Toolkit
Macroeconomics studies the economy as a whole: how governments and central banks try to steer growth, employment, prices and equity using two policy families — demand-side (monetary and fiscal) and supply-side. Every question ultimately asks you to trace an intervention through to its effect on aggregate demand (AD), aggregate supply (AS), or both, and to weigh short-run gains against long-run costs.
- Demand-side policies shift AD — fast-acting but can trigger inflation or crowding out.
- Supply-side policies shift LRAS — slow to work but address the root cause of low growth or structural unemployment.
- Four macro objectives (growth, low unemployment, stable low inflation, equitable income distribution) frequently conflict — a 'trade-off' answer is often the strongest one.
The shape of the chapter
Command terms that decide your mark
| Command term | What it demands | AO | Mark-earning move |
|---|---|---|---|
| Define | State the precise meaning of a term | AO1 | 2 marks — must be a full, technically accurate sentence, not just a synonym |
| Explain | Give reasons/causes — build a logical chain | AO2 | Each linked step in the chain earns a mark; a bald assertion with no mechanism caps you at 1/2 or 2/4 |
| Distinguish | State the difference between two terms | AO2 | Must compare directly (e.g. 'X affects... whereas Y affects...'), not two separate definitions |
| Evaluate | Weigh strengths and weaknesses to reach a justified judgement | AO3 | No credit for judgement without a supporting reason tied to context (the numbers in the stem) |
Key point
Overview