Economics for the 18 DIPLOMA This page intentionally left blank REVISION GUIDE Economics for the IB DIPLOMA Paul Hoang '1 ~D~~A~I~~ AN HACHETTE UK COMPANY Every effort has been made to trace all copyright holders, but if any have been inadvertently overlooked the Publishers will be pleased to make the necessary arrangements at the first opportunity. Although every effort has been made to ensure that website addresses are correct at time of going to press, Hodder Education cannot be held responsible for the content of any website mentioned in this book. It is sometimes possible to find a relocated web page by typing in the address of the home page for a website in the URL window of your browser. Hachene Livre UK's policy is to use papers that are natural, renewable and recyclable products and made from wood grown in sustainable forests. The logging and manufacturing processes are expected to conform to the environmental regulations of the country of origin. Orders: please contact Bookpoint Ltd, 130 Milton Park, Abingdon, Oxon OX14 4SB. Telephone: (44) 01235 827827. Fax: (44) 01235 400401. Lines are open 9.00---.5.00, Monday to Saturday, with a 24-hour message answering service. Visit our website at www.hoddereducation.com. © Paul Hoang 2014 First published in 2014 by Hodder Education An Hachette UK Company London NWI 3BH Impression number 5 4 3 2 l Year 2016 2015 2014 All rights reserved. Apart from any use permined under UK copyright law, no part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or held within any information storage and retrieval system, without permission in writing from the publisher or under licence from the Copyright Licensing Agency Limited. Further details of such licences (for reprographic reproduction) may be obtained from the Copyright Licensing Agency Limited, Saffron House, 6-10 Kirby Street, London EClN STS. Cover photo © jgroup/iStockphoro Illustrations by Aptara, Inc. Typeset in 10/12 Goudy Old Style by Aptara, Inc. Printed in Spain A catalogue record for this title is available from the British Library ISBN:978-14718-0718-J Contents How to use this revision guide vii Getting to know the exam viii Assessment objectives and command terms x Countdown to the exams xii Section 1 Microeconomics Section 2 Macroeconomics 58 Section 3 International economics 111 Section 4 Development economics 143 Are you ready? 170 My revision notes 175 Glossary 178 Dedications This book is dedicated to Mr Graham Hollamby, my economics teacher at Southwark College, London. My heartfelt thanks and love to Kin, Jake and Luke for always putting up with me. My sincere thanks to my publisher (and fellow Arsenal fan), So-Shan Au, for her help and guidance throughout this project. Finally, my gratitude to Samson Wong, an outstanding student who provided invaluable feedback from the perspective of an 1B learner. Acknowledgements The Publishers would like to thank the following for permission to reproduce copyright material: Photos: p. 86 © Tsvangirayi Mukwazhi/AP/Press Association Images. Text: p. 150: Figure 4.2, redrawn from http://en.wikipedia.org,/wiki/List-of-countries-by Human-Development-lndex Every effort has been made to trace all copyright holders, but if any have been inadvertently overlooked the Publishers will be pleased to make the necessary arrangements at the first opportunity. How to use this revision guide Welcome to the Economics for the 1B Diploma Revision Guide. TI1is OOOk will help you plan your revision and work through it in a methodological way. It follows the Economics syllabus topic by topic, with revision and exam practice questions to help you check your understanding. Features to help you succeed Expert tips Common mistakes Keyword definitions These tips give advice that will help These identify typical mistakes that Definitions are provided on the you boost your final grade. students make and explain how you pages where the essential key can avoid them. terms appear. These keywords are those that you can be expected to define in exams. A glossary of other essential terms, highlighted throughout the text, is given at the Some parts of the course require you to carry out mathematical calculations, end of the book. plot graphs, and so on. These examples show you how. EXAM PRACTICE Exam practice is given for the type of questions you might get. For the longer essay questions, sample sentences and paragraphs are given to show what examiners are looking for in your essay answers. For easy reference, the exam paper is indicated for each question. Use these questions to consolidate your revision and to practise your exam skills. EXAM PRACTICE (HL ONLY) Some parts of the Economics course require you to carry out mathematical calculations, plot graphs and so on. There are sample Paper 3 exam questions interspersed in the chapters, with suggested answers online. You can keep track of your revision by ticking off each topic heading in the book. There is also a checklist at the end of the lxlok. Use this checklist to record progres.s as you revise. Tick each box when you have: • revised and understO<X:! a topic • used the Exam practice questions and gone online to check your answers. Use this book as the cornerstone of your revision. Don't hesitate to write in it and personalise your notes. Use a highlighter to identify areas that need further work. You may find it helpful to add your own notes as you work through each topic. Good luck! viii Economics for the 18 Diploma Getting to know the exam Exam paper Duration Format Topics Total marks Paper 1 1.5 hours Essay 1 and 2 50 Paper 2 1.5 hours Data response 3 and 4 40 Paper 3 {HL only) 1 hour Structured questions All 50 At the end of your Economic.s course you will sit two papers -Paper I and Paper 2. Paper I is worth 30% of the final marks and Paper 2, 50% of the final marks. The other assessed part of the course (20%) is made up of the Internal Assessment, which is marked by your teacher. HL students will sit an additional paper -Paper 3, worth 20%. For HL students, Paper I is worth 30% of the final marks, and Paper 2 also 30% of the final marks. The other assessed part of the course (20%) is the Internal Assessment (or IA) which is marked by your teacher. Here is some general advice for the exams: • Make sure you have learned the command terms (e.g. evaluate, explain, outline). There is a tendency to focus on the content in a question rather than the command term, but if you do not address what the command term is asking of you then you will not be awarded marks. (Command terms are covered on page x.) • If you run out of rCXJm on the page, use continuation sheets and indicate clearly that you have done this on the cover sheet. • The fact that the question continues on another sheet of paper needs to be clearly indicated in the text box provided. • Plan your time carefully before the exams. Paper 1 Paper I ( 1.5 hours) contains two sections: Section A is based on Microeconomic.sand Section Bis based on Macroeconomics. You will need to answer one of the two questions from each section. Part a) of each essay is worth 10 marks and part b) is worth 15 marks. Hence, the total number of marks for this paper is 50. • It is necessary to include definitions in the essays, so make sure you have learned the keyword definitions in this book. • As the paper is only out of 50 marks, the questions cannot cover all aspects of Microeconomics and Macroeconomics. It is therefore essential that you thoroughly revise the whole of Topics I and 2 of the syllabus so that you can tackle any questions that come up. • The 10-mark questions do not involve any evaluation, but do require a concluding statement that answers the question. The 15-mark questions do require an evaluation. • Wherever appropriate, include fully labelled diagrams and the application of real-\vorld examples to substantiate your answers. How to use this revision guide ix Paper 2 Paper 2 ( 1.5 hours) contains two sections: Section A contains two data-response questions on International economics; you must answer one of these, which is worth a total of 20 marks. In Section B you must answer one of the two data response questions on Development economics, again \Vorth 20 marks. The total maria for the paper is therefore 40. In Paper 2 you may be given a range of data in various fonns (e.g. diagrams, graphs, charts and data tables) relating to a specific case study on lntcmational economics and Development economics. Questions will test your knowledge of Topic 3 and Topic 4 of the syllabus, and your ability to apply this to the given case studies. • Do not spend tco much time on one of the two sections. • Plan your time carefully (do this before the exam!). You should spend no more than 45 minutes on each section. • By practising past exam papers, you will be able to fine-tune your time management; this may vary from student to student. • Choose your questions carefully. Lcok at all sections of the data-response questions before making your choices. • You will be required to provide definitions (for the 2-mark questions) and to draw relevant diagrams (for the 4-mark questions). Practise drawing accurate and fully labelled diagrams. • Some students write far too much for questions worth only 2 marks, and then run out of time later on for the 8-mark question. Look carefully at the number of marks available for each question and adjust the amount of time you spend on that question accordingly. • There are several parts to each data-response question -make sure you ans\ver all parts. • Case studies help answer Paper 2 data-response questions -make sure you read the stimulus material and analyse the supplementary data as you will be expected to apply your knowledge.