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Marshall Lerner condition: https://docs.google.com/document/d/1PYR8QvtC7wWenuytYPSL9eSBcmCdFvJZ8DsjpHpBc0k/edit?usp=drivesdk

Tools of Monetary policy:

https://docs.google.com/document/d/1JsqarTzzrk_zx7gzaDyCNKedKFBFM70Kg5DqCrLfq4o/edit?usp=drivesdk

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IB2 ECONOMICS SEMESTER EXAM PORTIONS AUGUST 2025

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IB2 ECONOMICS SEMESTER EXAM PORTIONS AUGUST 2025

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IB2 ECONOMICS SEMESTER EXAM PORTIONS AUGUST 2025

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A country experiencing currency devaluation or depreciation may initially see a worsening trade balance

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4.10 Economic Growth & Development Strategies

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Economics Paper 2(SL and HL)- Practice Question

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Economics Paper 2(SL and HL)- Practice Question

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Paper 1- 10 and 15 marks ( sample answer)

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Paper 1- 10 and 15 marks ( sample answer)

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https://docs.google.com/document/d/1_Y_3EML_lbnP_9_sfv4HUO4A-yIXVZaE/edit?usp=drive_link&ouid=118298122745663668327&rtpof=true&sd=true

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Economics Paper 2 common for both SL and HL- Practice Question and answers[Note: Download the document to view the graph to be included in the written response]

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Economics Paper 2 common for both SL and HL- Practice Question and answers[Note: Download the document to view the graph to be included in the written response]

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https://docs.google.com/document/d/1PkeEsKZcI0J82gV2bh4Fn3dxR60vWQ5l/edit?usp=drive_link&ouid=118298122745663668327&rtpof=true&sd=true

https://drive.google.com/drive/folders/1620wOXMUKDLI40e6bqE5f86Obit--v9L?usp=drive_link

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Economics Paper 2 common for both SL and HL

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Economics Paper 2 common for both SL and HL- Practice Question 

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Economics Paper 2 common for both SL and HL- Practice Question 

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https://drive.google.com/drive/folders/1620wOXMUKDLI40e6bqE5f86Obit--v9L?usp=drive_link

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Three tasks to be completed before the first semester

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Three tasks to be completed before the first semester

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Completed - MICRO IA FINAL DRAFT(NO FEEDBACK)

SUBMIT ALONG WITH THE COVERSHEET ON 30TH JULY 2024- Refer to IB1 ECO PADLET

https://drive.google.com/drive/folders/1K1ffkkah_lqB4SVuibKkSqrfYUHIJvki?usp=drive_link

IA approval :

https://docs.google.com/document/d/1VujuEZQ8pmVrYtxn8g_FRsN89iMmC6AvKK0gxMBxCkQ/edit?tab=t.0

RWE BOOKLET: (14.8.2024) https://drive.google.com/drive/folders/1v95GPwENOOq_0vENKcr_KLYxGNOqXIDw

OBE RWE BOOKLET UPDATED LINK:

https://drive.google.com/drive/folders/1470ovWJ8RDlyeJy7jEywUYJYz-FvC1WP?usp=drive_link

(20 EXAMPLES)

Completed: PRESENTATION TOPICS:

AUGUST: Varun

https://docs.google.com/document/d/1TKC2ZNxnBe0R_RNElyoTHlccMsmOd0OyUljBiAo4O5U/edit

REVISION TEST:

https://docs.google.com/document/d/1OTc1dPlnBcI36NTn9UrXw36P1V_Go5fj4h6A-484T2Q/edit?usp=sharing

2025 IA APPROVAL SHEET:

https://docs.google.com/document/d/1VujuEZQ8pmVrYtxn8g_FRsN89iMmC6AvKK0gxMBxCkQ/edit?tab=t.0

TRADE PROTECTION POLICY: https://docs.google.com/document/d/1alyBXlp-xt38YXWG6OKQMXdf87bajwVjuwC-DP08Cl4/edit?usp=sharing

https://docs.google.com/spreadsheets/d/1qW8oeTQ-All6I_NCFHuZRBsUG_cbYeGX/edit?gid=894988014#gid=894988014

SL portions for calculations:

Quantitative analysis: Elasticities, Calculation based on National income accounting and Unemployment rate, Calculation: real interest rates from given data, Calculation: using exchange rates, the price of a good in different currencies, Calculation: changes in the value of a currency from set of data and Calculation: elements of the balance of payments from a set of data.

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Paper 2 ( Exclusion topics)

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Paper 2 is common for both HL AND SL- Questions in this paper are drawn from the four units of the syllabus excluding the HL extension material and topics studied at HL only.

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Guideline for writing Paper 3(Policy Paper) -10 mark question: ONLY HL

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Guideline for writing Paper 3(Policy Paper) -10 mark question: ONLY HL

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1. The question clearly states “Recommend a policy”, which makes it clear that ONLY ONE POLICY should be analyzed and evaluated.

2. So, Introduce the policy clearly and explain the policy in short. (Explanation must contain how this policy would correct the relevant economic issue given in the question itself).

3. There are no criteria for a diagram for this question, so the diagram is not needed either. Still if students want to draw a diagram, should remember that if the diagram is wrong and the explanation and the analysis of the same is wrong then students may lose points.

4. Evaluation must contain both side arguments. (Advantages and disadvantages of the policy -at least 3 for each side. These arguments must be with reference to the case/facts/data from the question.)

5. Students must include the conclusion.

Note: the marking scheme is very clear about just ONE POLICY, if the students discuss multiple policy they are NOT awarded for that. It is tempting for candidates to try and demonstrate their knowledge by identifying more than one to show their knowledge to the examiner. Faced with such a response the examiner will simply take the first one identified and then ignore any subsequent policies identified.

https://docs.google.com/document/d/1R9vfxNYKHjzXrVjpObFjwEVbgoeWUD9O/edit?usp=drive_link&ouid=118298122745663668327&rtpof=true&sd=true

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MICRO, MACRO AND GLOBAL ECONOMY IA FINAL DRAFT UPDATED AFTER THE FEEDBACK      ( TURNITIN COPY)          

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MICRO, MACRO AND GLOBAL ECONOMY IA FINAL DRAFT UPDATED AFTER THE FEEDBACK      ( TURNITIN COPY)          

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The Keynesian multiplier is a concept in macroeconomics that represents the ratio of a change in national income to the initial change in spending that led to it. While I can provide examples of countries that have implemented Keynesian policies, it's important to note that the effectiveness of the multiplier can vary based on economic conditions and policy implementation. Here are a couple of historical examples:

1. United States during the Great Depression:

- In response to the severe economic downturn in the 1930s, President Franklin D. Roosevelt implemented New Deal programs. These programs, including public works projects and increased government spending, were influenced by Keynesian principles. The resulting increase in government expenditures had a positive impact on economic output and employment, reflecting the Keynesian multiplier effect.

2. Japan in the 1990s:

- Faced with a prolonged period of economic stagnation and deflation, Japan implemented fiscal stimulus packages in the 1990s. These measures involved increased government spending on infrastructure projects and other programs to stimulate demand. The intention was to use the Keynesian multiplier to boost economic activity and counter the deflationary pressures.

It's essential to recognize that the effectiveness of the Keynesian multiplier can depend on various factors, including the economic context, the magnitude of the initial spending, and the responsiveness of consumers and businesses to changes in income.

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The table is titled “Debt-to-GDP ratios in selected countries (2018)”.

1. What is Debt-to-GDP Ratio?

It measures a country’s government debt compared to its Gross Domestic Product (GDP).

Formula:

Debt-to-GDP Ratio=Government Debt/ Total GDP*100

A high ratio means the country owes a lot relative to the size of its economy → may struggle to repay debt.

A low ratio suggests a lighter debt burden compared to economic output.

2. Countries with High Debt-to-GDP Ratios (2018):

Japan (234.2%) → Debt more than double its GDP (highest in the table).

Greece (181.8%), Italy (127.5%), United States (109.5%), Gambia (105.2%) → very high debt burdens.

3. Countries with Medium Ratios:

France (96.2%), Brazil (90.2%), Canada (83.8%), UK (85.9%) → debt close to GDP size.

Zimbabwe (72.6%), Angola (71.6%), Zambia (68.0%), India (67.3%) → moderate debt.

4. Countries with Low Ratios:

China (54.4%), Cameroon (34.1%), Chile (24.6%), Bulgaria (22.8%) → relatively low debt compared to GDP, easier to manage.

5. Connection with Credit Ratings (explained below the table):

High debt-to-GDP ratio → Government more likely to get a poor credit rating, since investors fear it may not repay. → Leads to higher interest rates when borrowing.

Low debt-to-GDP ratio → Better credit rating, cheaper borrowing costs.

👉 In short:
The table compares how much debt different countries had relative to the size of their economies in 2018. Japan and Greece were the most indebted, while Bulgaria and Chile had the lowest debt levels. This ratio directly affects a country’s creditworthiness and borrowing costs.

RWE:

1. Germany:

- Debt-to-GDP Ratio: Germany has historically maintained a relatively low debt-to-GDP ratio. As of 2021, it was around 70%, which is comparatively lower than many other developed countries.

2. Sweden:

- Debt-to-GDP Ratio: Sweden has also kept its debt-to-GDP ratio at moderate levels. As of 2021, it was approximately 38%, reflecting a prudent fiscal approach.

These figures are indicative and subject to change based on economic conditions, government policies, and other factors. To obtain the most recent and accurate statistical data, it's recommended to refer to official sources such as the World Bank, International Monetary Fund (IMF), or respective national statistical agencies.

One example of a country often cited for maintaining a sustainable level of debt is Germany. Known for its prudent fiscal policies, Germany has historically kept its debt-to-GDP ratio relatively low compared to other developed nations. This has allowed Germany to weather economic downturns more effectively and maintain a strong credit rating.

Another example is Sweden, which has a track record of managing its debt responsibly. Sweden combines a robust social welfare system with sound economic policies, resulting in a sustainable fiscal position.

It's important to note that assessing the sustainability of debt involves various factors, including economic conditions, government policies, and global economic trends. Each country's situation is unique, and what might be sustainable for one may not be the same for another.

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OBE ECONOMICS RWE[ Review due: 23rd November- Final Submission due: Jan 29]

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OBE ECONOMICS RWE[ Review due: 23rd November- Final Submission due: Jan 29]

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Cost-push inflation is analysed only by means of the monetarist/new classical AD-AS model. The Keynesian model is not equipped to deal with short-term fluctuations of aggregate supply. Keynes was concerned with showing the importance of aggregate demand in causing short-term fluctuations. The output level Yrec, though indicating a recession, is not called a recessionary/deflationary gap, because output gaps (whether recessionary or inflationary) can only be caused by too little or too much aggregate demand.
Meaning:
In the context of cost-push inflation, the term "recessionary gap" is typically not used because the concept of a recessionary gap is closely tied to demand-side factors, particularly in the Keynesian model. A recessionary gap, in Keynesian economics, refers to a situation where the actual level of output (Y) is below the potential level of output (Yp), and this gap is primarily seen as a result of deficient aggregate demand.

Cost-push inflation, on the other hand, is driven by supply-side factors, specifically increases in production costs, such as rising wages or higher input prices. In this scenario, the economy is experiencing inflationary pressure due to cost increases rather than a deficiency in aggregate demand leading to a recessionary gap. Therefore, the terminology shifts to emphasize the inflationary aspect, and it's often referred to as "cost-push inflation" or simply "inflationary pressure."

So, while the concept of a gap between actual and potential output is relevant in both inflationary and recessionary scenarios, the terminology is adjusted to reflect the underlying causes. In the context of cost-push inflation, it's more appropriate to discuss the inflationary pressures and the factors driving them rather than labeling it a "recessionary gap."

Additional information:
The concise summary of the differences between the monetarist/new classical AD-AS model and the Keynesian model in their approach to analyzing inflation and short-term fluctuations in the economy. In the monetarist/new classical model, cost-push inflation is analyzed, while the Keynesian model focuses on the importance of aggregate demand in causing short-term fluctuations. Additionally, output gaps, whether recessionary or inflationary, are seen in the Keynesian model as primarily caused by insufficient or excessive aggregate demand. This reflects the core distinctions between these two economic perspectives.

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4 Possible conflicts in the macroeconomic objectives

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4 Possible conflicts in the macroeconomic objectives

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4. Economic Growth vs. Income Inequality: Pursuing high economic growth can sometimes exacerbate income inequality. Policies that promote growth, such as tax cuts for businesses, can benefit the wealthy more than the lower-income groups, leading to a wider income gap.

https://docs.google.com/document/d/1PTThUKsknltp_teFKqAtxGHPtgiH-6DlRJNrf769ug8/edit#heading=h.gjdgxs

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Paper 2 HL AND SL blueprint ( Applicable for semester exam only- August 2024)

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Paper 2 HL AND SL blueprint ( Applicable for semester exam only- August 2024)

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Monetarist model- EFP- Recessionary gap
When there is an increase in AD- there will be an increase in the price level and smaller increase in the RGDP due to upward sloping portion of the SRAS curve which increases the price level.
Keynesian model- When there is an increase in the AD, there will be an  smaller increase in the price level and larger increase in the RGDP.

Monetarist model- CFP- Inflationary gap
When there is a fall in the AD- there will be a decrease in  the price level
Whereas under Keynesian model, when there is a fall in the AD- Price level will not fall easily because in the short-run, prices and wages are sticky and inflexible.
When there is an increase in AD- it will lead to increase in the price level.
Keynesian model is a short-run economic phenomenon whereas Monetarist model is a long -run phenomenon

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The specific demands of the question are understood and addressed. Relevant economic theory is explained fully. Relevant economic terms are used appropriately throughout the response. Where appropriate, relevant diagram(s) are included and fully explained.    The response contains evidence of effective and balanced synthesis or evaluation. The use of information from the text/data is appropriate, relevant and is used to formulate a reasoned argument supported by analysis/evaluation           

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The specific demands of the question are understood and addressed. Relevant economic theory is explained fully. Relevant economic terms are used appropriately throughout the response. Where appropriate, relevant diagram(s) are included and fully explained.    The response contains evidence of effective and balanced synthesis or evaluation. The use of information from the text/data is appropriate, relevant and is used to formulate a reasoned argument supported by analysis/evaluation           

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The growth of the tech economy, as exemplified by companies like Uber, Deliveroo, and Spotify, has had significant impacts on consumers, producers, and governments in the economy. Here's a discussion of those impacts:

**Impact on Consumers:**
1. **Convenience and Accessibility:** Tech companies have revolutionized industries by offering convenient and accessible services to consumers. Uber and Deliveroo, for instance, provide on-demand transportation and food delivery respectively, making these services more convenient and accessible than traditional alternatives.

2. **Lower Costs:** These platforms often offer services at lower prices compared to traditional alternatives. Uber's ride-hailing service tends to be more affordable than traditional taxis, while Deliveroo can provide access to a variety of restaurant meals without the need for customers to leave their homes.

3. **Customization and Choice:** Services like Spotify have transformed the way consumers access and enjoy music. The ability to stream a wide range of music content based on individual preferences has given consumers more control over their entertainment choices.

4. **Widening Consumer Base:** Tech services have often reached demographics that were previously underserved. For instance, Uber's lower prices have made taxi-like transportation more accessible to low-income households who might have otherwise relied on less desirable forms of transportation.

**Impact on Producers:**
1. **New Business Models:** The growth of the tech economy has led to the emergence of new business models. Platforms like Uber and Deliveroo have allowed individuals to become drivers or delivery partners, enabling them to earn income on a flexible basis.

2. **Competition and Innovation:** Tech platforms often introduce competition to traditional industries. For example, Spotify's entry into the music industry challenged established models and encouraged innovation. This competition can lead to better products and services for consumers.

3. **Income Opportunities and Challenges:** While tech platforms offer income opportunities, they also present challenges. Deliveroo and Uber workers often operate as independent contractors, which gives them flexibility but also exposes them to uncertain working conditions and potentially lower wages.

4. **Royalty Disputes:** As seen with Spotify, the growth of digital platforms has stirred debates about fair compensation for content creators. Artists have raised concerns about low royalty payments, highlighting the need for equitable distribution of earnings.

**Impact on Government:**
1. **Tax Challenges:** The growth of the tech economy has raised challenges for governments in terms of collecting taxes. Tech companies, especially those operating internationally, have been criticized for using complex tax structures to minimize their tax liabilities, leading to debates on fair taxation.

2. **Regulatory Concerns:** Governments have grappled with regulating the gig economy. Issues such as labor rights, minimum wages, and social benefits for workers in these platforms have prompted discussions about ensuring worker protection and maintaining a level playing field.

3. **Balancing Innovation and Regulation:** Governments strive to strike a balance between fostering technological innovation and protecting consumers and workers. Finding the right regulatory framework can be challenging, as seen in the varying approaches taken by different countries.

4. **Data Privacy and Security:** The tech economy relies heavily on the collection and utilization of user data. Governments are tasked with regulating data privacy and security to ensure that user information is protected and not misused.

In conclusion, the growth of the tech economy has transformed the way consumers access services, altered business models, and posed challenges to governments in terms of taxation and regulation. While these innovations have brought benefits like convenience and lower costs, they have also raised questions about labor rights, fair compensation, and the appropriate level of regulation in a rapidly evolving economic landscape.

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Economics Guide ( First assessment in 2024)

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Explain how banks help in the Process of Money Creation and Credit Creation

We know that Banks take Deposits from Public and provide loans or credit to other people with that money

Suppose Banks Receive Deposits of Rs 1,00,000

They cannot give loan of whole Rs 1,00,000

They have to keep a certain amount as Reserve (called Reserve Deposit Ratio or Legal Reserve Ratio)

Suppose Legal Reserve Ratio is 20%

It means Banks have to keep 20,000 with them as Reserve

They can give loan of balance 80,000

Now when bank gives Balance Rs 80,000 as loan

Person who receives this loan money makes a number of expenses with this money

Lets assume He makes expenses of Rs 80,000 with this money as Salary to employee

This Employee will again deposit this Rs 80,000 with bank

Banks will retain Reserve of 20% (Rs80,000*20% = Rs16,000)

They will give loan of balance amount Rs 80,000 - 16,000 = Rs 64,000

Similarly the process continues as shown below

Note

More we go down ,the amount of reserves will diminish

It will soon come a point where Total Reserves will be equal to Initial amount deposited

Initial Amt deposited = Total Reserves = Rs 1,00,000

At this Stage, Total Deposits will be Rs 5,00,000

and Total loans will be Rs 4,00,000

Hence, we can Say that

With Initial Deposits of Rs 1,00,000

Banks are able to generate Deposits of Rs 5,00,000 and Credit of Rs 4,00,000

What is Money Multiplier?

It is the multiple by which initial deposits increase

It is the Ratio of Deposits Created over Initial Deposits

Money Multiplier = Deposits Created/Initial Deposits

Formula for Calculating Money Multiplier

(Without making Table)

Money Multiplier = 1/Legal Reserve Ratio

NC113:C198

Question 8

What is money multiplier?

What determines the value of this multiplier?

View Answer

Ans

It is the multiple by which initial deposits increase

It is the Ratio of Deposits Created over Initial Deposits

The value of this multiplier is determined by Legal reserve ratio (LRR)

It is the Ratio of Reserves kept by bank to Total Deposits.

Legal reserve ratio = Total Reserves of Bank

LRR Total Deposits of bank

Money Multiplier = 1/Legal Reserve Ratio

Example

Legal Reserve Ratio was 0.2

So

Money Multiplier = 1/Legal Reserve Ratio

= 1 /0.2

= 1*10/2

= 10/2

= 5

Question 10

Do you consider a commercial bank 'creator of money' in the economy?

View Answer

Ans

Suppose Banks Receive Deposits of Rs 1,00,000

They cannot give loan of whole Rs 1,00,000

They have to keep a certain amount as Reserve (called Reserve Deposit Ratio or Legal Reserve Ratio)

Suppose Legal Reserve Ratio is 20%

It means Banks have to keep 20,000 with them as Reserve

They can give loan of balance 80,000

Now when bank gives Balance Rs 80,000 as loan

Person who receives this loan money makes a number of expenses with this money

Lets assume He makes expenses of Rs 80,000 with this money as Salary to employee

This Employee will again deposit this Rs 80,000 with bank

Banks will retain Reserve of 20% (Rs80,000*20% = Rs16,000)

They wil give loan of balance amount Rs 80,000 - 16,000 = Rs 64,000

Similarly the process continues as shown below

Note

More we go down ,the amount of reserves will diminish

It will soon come a point where Total Reserves will be equal to Initial amount deposited

Initial Amt deposited = Total Reserves = Rs 1,00,000

At this Stage, Total Deposits will be Rs 5,00,000

and Total loans will be Rs 4,00,000

Hence, we can Say that

With Initial Deposits of Rs 1,00,000

Banks are able to generate Deposits of Rs 5,00,000 and Credit of Rs 4,00,000

Hence, commercial banks leads to money creation and credit creation in economy

Other Books

Question 1

In the following questions, select the correct answers:

Through the process of _____, commercial banks are able to create credit, which is in far excess of the initial deposits.

a. Advancing of Loans

b. Money Creation

c. Credit Creation

d. Accepting Deposits

View Answer

Ans

b. Money Creation

c. Credit Creation

Explanation

Money Creation is the process by which initial deposits increase

It is the Ratio of Deposits Created over Initial Deposits

It is also called Credit Creation

The value of this is determined by Legal reserve ratio (LRR)

Money Multiplier = 1/Legal Reserve Ratio

Question 2

Banks create credit:

a. Out of nothing

b. On the basis of their securities

c. On the basis of their total assets

d. On the basis of deposits

View Answer

Ans

d. On the basis of deposits

Explanation

Money Creation is the process by which initial deposits increase

It is the Ratio of Deposits Created over Initial Deposits

The value of this is determined by Legal reserve ratio (LRR)

Money Multiplier = 1/Legal Reserve Ratio

Question 3

If the total deposits created by commercial banks is Rs10,000 crores and LRR is 40%,

then amount of initial deposits will be ____.

a. Rs 2000 crores

b. Rs 3000 crores

c. Rs 4000 crores

d. Rs 14000 crores

View Answer

Ans

c. Rs 4000 crores

Explanation

LRR = 40% Deposits Created = Rs 10,000 crores

Money Multiplier = 1/Legal Reserve Ratio

Putting value in Eq 1

Money Multiplier = 1/40%

Money Multiplier = 1*100/ 40

Money Multiplier = 1*10/ 4

Money Multiplier = 2.5

Also,

Money Multiplier = Deposits Created/Initial Deposits

Putting value in Eq 2

2.5 = 10,000/ Initial Deposits

Initial Deposits = 10,000/2.5

Initial Deposits = Rs 4000 crores

Question 4

Deposit creation by banks come to an end when:

a. Fresh deposits with banks become zero

b. Legal Reserve Ratio becomes zero

c. Money Multiplier becomes zero

d. Total Cash Reserves becomes equal to Initial Deposits

View Answer

Ans

d. Total Cash Reserves becomes equal to Initial Deposits

Question 5

The value of multiplier will be ____, when LRR = 20%.

a. 2

b. 3

c. 4

d. 5

View Answer

Ans

d. 5

Explanation

LRR = 20%

Money Multiplier = 1/Legal Reserve Ratio

Money Multiplier = 1/ 20%

Money Multiplier = 1*100/ 20

Money Multiplier = 10/2

Money Multiplier = 5

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[Economics Class 12] Explain the Concept of Money Multiplier - Teachoo

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Shortcut Formula to Calculate Money MultiplierMoney Multiplier depends upon Legal Reserve RatioMoney Multiplier = 1/Legal Reserve RatioExample 1 Initial Deposit 10000 Legal Reserve Ratio 20% Money Multiplier 1/Legal Reserve Ratio = 1/

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https://youtu.be/RHGh_dDTc_Q

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Correction of Over- valued ( dep/ dev) and Under- valued currency ( app/ rev)- effects in the long- run.

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Correction of Over- valued ( dep/ dev) and Under- valued currency ( app/ rev)- effects in the long- run.

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Economics syllabus guide( Till May 2023 exam)

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Economics syllabus guide( Till May 2023 exam)

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67-68( IA DETAILS AND ROLE OF TEACHER)

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Automatic stabilizers

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Automatic stabilizers

Automatic stabilization policies are pre-set government policies that automatically adjust to stabilize the economy during periods of economic downturn or upswing. These policies aim to mitigate economic fluctuations without requiring legislative or executive action.

Types of Automatic Stabilization Policies:

1. Progressive Income Taxation: Increases government revenue during economic booms and reduces it during recessions.

2. Unemployment Benefits: Provides financial support during recessions, increasing disposable income.

3. Social Welfare Programs: Automatically adjusts benefits based on economic conditions.

4. Automatic Fiscal Stabilizers: Adjusts government spending or taxation based on GDP growth.

Key Characteristics:

1. Automatic: No need for legislative or executive action.

2. Countercyclical: Policies counter economic trends.

3. Stabilizing: Reduce economic fluctuations.

Benefits:

1. Quick Response: Automatic policies respond rapidly to economic changes.

2. Reduced Volatility: Smoothes economic fluctuations.

3. Increased Predictability: Provides certainty for businesses and individuals.

Examples:

1. US Unemployment Insurance

2. UK National Insurance Contributions

3. Australian Goods and Services Tax (GST)

Limitations:

1. Effectiveness depends on policy design.

2. May not address underlying economic issues.

3. Potential for inflationary pressures.

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PAPER 2 EXAM STYLE QUESTIONS ALONG WITH THE ANSWERS

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PAPER 2 EXAM STYLE QUESTIONS ALONG WITH THE ANSWERS

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Great Depression of 1929- New deal

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SUMMARY OF COST OF INFLATION AND PHILLIPS CURVE MODEL

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SUMMARY OF COST OF INFLATION AND PHILLIPS CURVE MODEL

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Circular flow of income model: closed economy-https://share.sketchpad.app/24/94f-69c9-a2d9dd.png

open economy: https://share.sketchpad.app/24/518-2758-8b00b6.png

The meaning of real GDP/GNI per capita at purchasing power parity (PPP):

https://docs.google.com/document/d/1sjmGaliQqQaWaHCryfBBC_ds_ea0_xhyxMVBmYZpEb8/edit?usp=sharing

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IA PLAN

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2 PRESENTATIONS FOR THIS ACADEMIC SESSION( INDIVIDUAL AND GROUP)

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2 PRESENTATIONS FOR THIS ACADEMIC SESSION( INDIVIDUAL AND GROUP)

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IB ECONOMICS SYLLABUS AND ASSESSMENT PATTERN

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IB ECONOMICS SYLLABUS AND ASSESSMENT PATTERN

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https://docs.google.com/document/d/16w6vkMtji4PMikvwtAme75XROQZ29aM2PzuaH-zvRok/edit?tab=t.0

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https://share.sketchpad.app/24/26c-0007-d776da.png

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Additional information: BALANCE OF PAYMENTS( IGCSE ECONOMICS INFO FOR REFERENCES)

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Additional information: BALANCE OF PAYMENTS( IGCSE ECONOMICS INFO FOR REFERENCES)

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BOP= CURRENT ACCOUNT+ CAPITAL ACCOUNT+ FINANCIAL ACCOUNT

BOT IN GOODS= EXPORT OF GOODS- IMPORTS OF GOODS

BOT IN SERVICES= EXPORT OF SERVICES- IMPORTS OF SERVICES

BOT IN GOODS AND SERVICES= EXPORT OF GOODS + EXPORTS OF SERVICE - IMPORTS OF GOODS - IMPORTS OF SERVICES

Shares and bonds are categorized under the capital account and financial account as portfolio investment because they represent investments in financial assets that involve the acquisition of ownership stakes or claims on income streams.

Here's an explanation of why shares and bonds are considered portfolio investments in the context of the capital and financial accounts:

1. Capital Account:

- The capital account records transactions involving the acquisition or disposal of non-produced, non-financial assets. This includes transactions related to changes in ownership of fixed assets (such as land and buildings) and intangible assets (such as patents and copyrights). However, in modern economic accounting frameworks, the capital account also includes certain financial transactions, particularly those related to changes in ownership of financial assets and liabilities.

- Shares and bonds are included in the capital account because they represent investments in financial assets that involve the acquisition of ownership stakes or claims on income streams from corporations or governments. When individuals or entities purchase shares (equity) or bonds (debt) issued by corporations or governments, they are effectively acquiring ownership interests or creditor claims in those entities.

2. Financial Account:

- The financial account records transactions involving changes in ownership of financial assets and liabilities between residents and non-residents. It includes transactions such as direct investment (e.g., acquisitions of foreign companies), portfolio investment (e.g., purchases of foreign stocks and bonds), other investment (e.g., loans and deposits), and reserve assets (e.g., holdings of foreign currency reserves).

- Shares and bonds are specifically categorized under portfolio investment in the financial account because they represent investments in financial assets that do not involve direct control or management of the underlying entities. Portfolio investment refers to investments in financial assets for the purpose of earning a return, with investors typically seeking capital appreciation, dividends, or interest income.

In summary, shares and bonds are classified as portfolio investments in both the capital and financial accounts because they represent investments in financial assets that involve ownership stakes or claims on income streams from corporations or governments, and they are typically acquired for the purpose of earning a return on investment.

Simple explanation:

Of course! Let's simplify it:

1. Capital Account:

- This account keeps track of changes in ownership of non-produced and non-financial things like land or patents. But it also includes some financial transactions. Shares and bonds are included here because when you buy them, you're essentially buying a piece of a company (for shares) or lending money to a company or government (for bonds). So, it's like buying something valuable, just like land or buildings.

2. Financial Account:

- This account is about tracking changes in ownership of financial stuff between people and companies in different countries. Shares and bonds are put in the "portfolio investment" category here. That's because when you invest in shares or bonds, you're not directly controlling the company or government. You're more like a "shareholder" or a "lender" hoping to make money from dividends (for shares) or interest (for bonds).

In simple terms, shares and bonds are treated as investments in both the capital and financial accounts because when you buy them, you're either becoming a part-owner of a company (shares) or lending money to a company or government (bonds). And whether it's for making money or owning a piece of something, they're tracked in these accounts to keep an eye on who owns what.

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14.2 Free trade: Absolute and comparative advantage(HL only)

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14.2 Free trade: Absolute and comparative advantage(HL only)

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absolute cost and comparative cost advantages

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International trade: Part 1 ( full) and Part 2 (15.1)

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International trade: Part 1 ( full) and Part 2 (15.1)

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Note: Do not refer to the production subsidy graph in the PPT. Refer to my handout/ textbook.

Extra information:

A production subsidy and an export subsidy are two different types of economic interventions, and their effects on consumption differ due to their distinct impacts on the production and trade of goods.

1. Production Subsidy:

- A production subsidy is provided to producers, often in the form of financial assistance or tax breaks, to encourage increased production of a particular good or service.

- The subsidy aims to lower production costs for producers, making it more profitable for them to produce and supply a greater quantity of goods.

- The subsidy typically does not directly affect consumers or consumption; rather, its primary impact is on the producers by incentivizing them to produce more.

2. Export Subsidy:

- An export subsidy is designed to support and promote the export of goods by providing financial incentives or other benefits to exporters.

- By subsidizing exports, the government aims to make the country's goods more competitive in international markets, leading to an increase in export volumes.

- Unlike a production subsidy, an export subsidy can have an indirect impact on consumption. When a country subsidizes its exports, the increased competitiveness often leads to higher levels of production and, consequently, more employment. This can result in increased income for individuals, potentially leading to higher levels of consumption.

In summary, while a production subsidy primarily influences producers and production levels, an export subsidy has the potential to impact consumption indirectly through its effects on employment, income, and the overall economic activity stimulated by increased exports. The export subsidy's impact on consumption is a result of the broader economic effects it generates, whereas the production subsidy is more directly linked to the production process.

Tariff ( before and after)- Negative welfare impacts: https://slideplayer.com/slide/16129757/

Slide no: 10

WELFARE EFFECTS OF THE TARIFF:

https://docs.google.com/spreadsheets/d/1qW8oeTQ-All6I_NCFHuZRBsUG_cbYeGX/edit?usp=drivesdk&ouid=118298122745663668327&rtpof=true&sd=true

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EFP AND CFP ( Monetarist and Keynesian Model) https://share.sketchpad.app/24/296-6168-2aab20.png

https://docs.google.com/document/d/1JsqarTzzrk_zx7gzaDyCNKedKFBFM70Kg5DqCrLfq4o/edit?tab=t.0

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https://docs.google.com/document/d/1PTThUKsknltp_teFKqAtxGHPtgiH-6DlRJNrf769ug8/edit#heading=h.gjd

1. Percentage Increase (Inflation):

- If the price of a product increases by 10% from its original value, we say there is a 10% inflation in the price.

2. Percentage Decrease (Deflation):

- Conversely, if the price of a product decreases by 5% from its original value, we observe a 5% deflation in the price.

3. Slower Rate of Increase (Disinflation):

- If the inflation rate was 10% initially but decreases to 3%, we have disinflation. It's still an increase, but at a slower rate.

https://share.sketchpad.app/24/3fe-d251-17931e.png

https://share.sketchpad.app/25/6fe-378b-664e4d.png

https://share.sketchpad.app/24/b4a-8d27-9d5480.png

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https://share.sketchpad.app/24/bf3-ad5d-78760b.png

https://share.sketchpad.app/24/8da-6d04-9e5fac.png

https://share.sketchpad.app/24/fa8-de42-cb0c10.png

https://share.sketchpad.app/24/517-73ed-01443a.png

https://docs.google.com/document/d/1EaKnVc4hVNfoB6_2xTWXCNLbrRQbSZNP9o2alp8W_jA/edit