IB Economics Revision

Macroeconomics

Economic activity, AD/AS, growth, unemployment, inflation and macro policy.

Macroeconomics is a core part of IB Economics. Revise the key concepts and common mistakes below, then lock them in with the free games.

Key concepts

ADC + I + G + (X − M) at each price level
SRASShort-run aggregate supply, upward
LRASVertical at full employment output
Multiplierk = 1/(1−MPC) = 1/MPW
MPCMarginal propensity to consume
Output gapDifference of actual vs potential GDP
Monetary policyCentral bank changes rates / money
Fiscal policyGovernment changes tax and spending
ExpansionaryBoosts AD: lower rates or higher G
ContractionaryCools AD: higher rates or lower G
QEQuantitative easing — central bank asset buys
Automatic stabiliserTax / benefit that smooths the cycle
InflationSustained rise in average price level
CPIIndex of average household basket

Common mistakes to avoid

Questions where students often pick the tempting wrong answer — make sure you know the right one:

How does an economy grow?✗ By printing more money.   ✓ By increasing real output (real GDP) over time.
Who is counted as unemployed?✗ Anyone not in a job, including children and retirees.   ✓ People able to work and actively seeking a job but without one.

Practise Macroeconomics — free games

Test yourself with these quick revision games for this topic:

▶ Two Truths, One Lie▶ Reveal Race▶ Connections Grid▶ Falling Words▶ Word Web

See all 17 games in the Subjects Arcade →

More IB Economics topics

Introduction to EconomicsMicroeconomicsFirms & Market StructuresThe Global EconomyHL Extension & Quantitative

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