The global economy: notes and practice questions
Trade and its gains, the four kinds of protection, the arguments each way, economic integration, exchange rates, the balance of payments, then four subtopics on development: sustainability, measurement, barriers and strategies. The largest unit at SL and the one where SL and HL are closest. The hard parts are the protection diagrams, which carry six labelled areas each and are the most information-dense diagrams in the course; the balance of payments, which at SL is pure definition and calculation and at HL becomes an entire evaluative subtopic including Marshall-Lerner and the J-curve; and the development half, which has no diagrams of its own and expects students to borrow from the rest of the course. Examined heavily on Paper 1, because the development subtopics have three AO3 rows between them and support essays without needing new theory.
Subtopics
- Practice questionsBenefits of international trade
This topic examines the advantages countries gain from engaging in international trade. Benefits include increased competition, leading to lower prices and greater consumer choice.
- Practice questionsTypes of trade protection
This topic examines various government measures used to restrict international trade. Trade protection refers to policies that shield domestic industries from foreign competition.
- Practice questionsArguments for and against trade control/protection
This topic examines the various reasons governments implement trade controls and the economic consequences of such policies. Arguments for trade protection include protecting infant industries, national security, health and safety, environmental standards, anti-dumping, addressing unfair competition, correcting balance of payments deficits, generating government revenue, protecting domestic jobs, and promoting diversification in economically least developed countries (ELDCs).
- Practice questionsEconomic integration
This topic examines different forms of economic integration and the role of the World Trade Organization (WTO). Preferential trade agreements can be bilateral, regional, or multilateral.
- Practice questionsExchange rates
This topic examines how the value of one currency is determined relative to another and the economic implications. Floating exchange rates are determined by the market forces of demand and supply for a currency.
- Practice questionsBalance of payments
This topic covers the structure and components of a country's balance of payments, recording all economic transactions with the rest of the world. The balance of payments consists of the current account, capital account, and financial account.
- Practice questionsSustainable development
This topic explores the meaning of sustainable development and the role of the Sustainable Development Goals. Sustainable development refers to meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.
- Practice questionsMeasuring development
This topic covers the multidimensional nature of economic development and its measurement using various indicators. Single indicators include GDP/GNI per capita at purchasing power parity (PPP), health, education, inequality, energy, and environmental measures.
- Practice questionsBarriers to economic growth and/or economic development
This topic examines the various obstacles that hinder a country's economic growth and development. Poverty traps (or cycles) illustrate how linked factors perpetuate poverty.
- Practice questionsEconomic growth and/or economic development strategies
This topic covers various strategies governments and organizations use to promote economic growth and/or economic development. Strategies include trade policies such as import substitution, export promotion, economic integration, and diversification.
