IB Economics 2.1.1 the Law of Demand Flashcards

1.1.1 Economics as a Social Science

1.1.2 The Problem of Choice

1.1.3 The Production Possibilities Curve Model (PPC)

1.1.4 Modelling the Economy

1.2.1 Economic Methodology

1.2.2 Economic Thought

2.1.2 Demand Curve

2.1.3 Relationship Between an Individual Consumer’s Demand and Market Demand

2.1.4 Non-Price Determinants of Demand

2.1.5 Movements and Shifts of the Demand Curve

2.2.1 The Law of Supply (HL)

2.2.2 The Supply Curve (HL)

2.2.3 Relationship Between an Individual Producer’s Supply and Market Supply

2.2.4 Non-Price Determinants of Supply

2.2.5 Movements Along and Shifts of the Supply Curve

2.3.1 Demand and Supply Curves Forming a Market Equilibrium

2.3.2 Shifting Demand and Supply Curves to Produce a New Market Equilibrium

2.3.3 Functions of the Price Mechanism

2.3.4 Consumer and Producer Surplus (HL)

2.3.5 Social/Community Surplus

2.3.6 Allocative Efficiency at the Competitive Market Equilibrium

2.4.1 Rational Consumer Choice (HL Only)

2.4.2 Behavioural Economics in Action (HL Only)

2.4.3 Business Objectives (HL Only)

2.5.1 Concept of Elasticity

2.5.2 Price Elasticity of Demand (PED) (HL)

2.5.3 Importance of PED for Firms and Government Decision Making

2.5.4 Why PED for Primary Commodities Is Generally Lower than Manufactured Products (HL Only)

2.5.5 Income Elasticity of Demand (YED)

2.5.6 Importance of YED (HL Only)

2.6.2 Why PES for Primary Commodities Is Lower than for Manufactured Products (HL Only)

2.7.1 Reasons for Government Intervention in Markets

2.7.2 Main Forms of Government Intervention in Markets (HL)

2.8.1 Marginal Social Benefit (MSB) Equals Marginal Social Cost (MSC)

2.8.2 Government Intervention in Response to Externalities and Common Pool Resources

2.8.3 Strengths and Limitations of Government Policies to Correct Externalities

2.8.4 Importance of International Cooperation

2.9.1 Public Goods

2.9.2 Government Intervention in Response to Public Goods

2.10.1 Asymmetric Information

2.10.2 Responses to Asymmetric Information

2.11.1 Perfect Competition

2.11.2 Monopoly - Single or Dominant Firm, High Barriers to Entry, No Close Substitutes

2.11.3 Imperfect Competition

2.11.4 Rational Producer Behaviour

2.11.5 Degrees of Market Power

2.11.6 Monopoly

2.11.7 Oligopoly

2.11.8 Monopolistic Competition

2.11.9 Advantages of Large Firms Having Significant Market Power

2.11.10 Risks in Markets Dominated by One or a Few Very Large Firms

2.11.11 Government Intervention in Response to Abuse of Significant Market Power

2.12.1 The Market’s Inability to Achieve Equity

3.1.1 National Income Accounting as a Measure of Economic Activity

3.1.2 Income, Output and Expenditure Approaches to National Income Accounting

3.1.3 Nominal GDP as a Measure of National Output

3.1.4 Nominal GNI as a Measure of National Output

3.1.5 Real GDP and GNI

3.1.6 Real GDP/GNI per Person (per Capita)

3.1.7 Business Cycle

3.1.8 Appropriateness of Using GDP or GNI Statistics

3.1.9 Alternative Measures of Well-Being

3.2.1 Aggregate Demand (AD)

3.2.2 Components of AD

3.2.3 Determinants of AD Components

3.2.4 Shifts of the AD Curve Caused by Changes in Determinants

3.2.5 Short-Run Aggregate Supply (SRAS) Curve

3.2.6 Shifts of the SRAS Curve

3.2.7 Alternative Views of Aggregate Supply (AS)

3.2.8 Shifts of the AS Curve Over the Long-Run

3.2.9 Macroeconomic Equilibrium

3.2.10 Assumptions and Implications of the Monetarist/New Classical and Keynesian Models

3.3.1 Economic Growth

3.3.2 Consequences of Economic Growth

3.3.3 Low Unemployment

3.3.4 Low and Stable Rate of Inflation

3.3.5 Relative Costs of Unemployment Versus Inflation (HL)

3.3.6 Sustainable Level of Government (National) Debt (HL Only)

3.3.7 Potential Conflict Between Macroeconomic Objectives (HL)

3.3.8 High Economic Growth

3.4.1 Relationship Between Equality and Equity

3.4.2 The Meaning of Economic Inequality

3.4.3 Measuring Economic Inequality

3.4.4 Meaning of Poverty

3.4.5 Measuring Poverty

3.4.6 Difficulties in Measuring Poverty

3.4.7 Causes of Economic Inequality and Poverty

3.4.8 Impact of Income and Wealth Inequality

3.4.9 Role of Taxation in Reducing Poverty, Income and Wealth Inequality (HL)

3.4.10 Further Policies to Reduce Poverty, Income and Wealth Inequality

3.5.1 Monetary Policy

3.5.2 Goals of Monetary Policy

3.5.3 The Process of Money Creation by Commercial Banks (HL Only)

3.5.4 Tools of Monetary Policy (HL Only)

3.5.5 Demand and Supply of Money (HL Only)

3.5.6 Real Versus Nominal Interest Rates

3.5.7 Expansionary and Contractionary Monetary Policies to Close Deflationary/Recessionary and Inflationary Gaps

3.5.8 Effectiveness of Monetary Policy

3.6.1 Fiscal Policy

3.6.2 Goals of Fiscal Policy

3.6.3 Expansionary and Contractionary Fiscal Policies in Order to Close Deflationary/Recessionary and Inflationary Gaps

3.6.4 Keynesian Multiplier (HL Only)

3.6.5 Limitations of Fiscal Policy (HL)

3.6.6 Strengths of Fiscal Policy (HL)

3.7.1 Goals of Supply-Side Policies

3.7.2 Market-Based Policies

3.7.3 Interventionist Policies

3.7.4 Demand-Side Effects of Supply-Side Policies

3.7.5 Supply-Side Effects of Demand-Side Policies

3.7.6 Effectiveness of Supply-Side Policies

4.1.1 Benefits of International Trade

4.1.2 Absolute and Comparative Advantage (HL)

4.1.3 Limitations of the Theory of Comparative Advantage (HL)

4.2.1 Tariffs (HL)

4.2.2 Quota (HL)

4.2.3 Subsidy/Export Subsidy (HL)

4.2.4 Administrative Barriers

4.3.1 Arguments For Trade Protection

4.3.2 Arguments Against Trade Protection

4.3.3 Free Trade Versus Trade Protection

4.4.1 Preferential Trade Agreements

4.4.2 Trading Blocs

4.4.3 Advantages and Disadvantages of Trading Blocs

4.4.4 Monetary Union (HL)

4.4.5 The World Trade Organization (WTO)

4.5.1 Floating Exchange Rates

4.5.2 Changes in Demand and Supply of a Currency

4.5.3 Consequences of Changes to the Exchange Rate

4.5.4 Fixed Exchange Rates

4.5.5 Managed Exchange Rates

4.5.6 Fixed Versus Floating Exchange Rate Systems (HL Only)

4.6.1 Balance of Payments

4.6.2 Components of the Balance of Payments

4.6.3 Interdependence Between the Accounts

4.6.4 Relationship Between the Current Account and the Exchange Rate (HL Only)

4.6.5 Relationship Between the Financial Account and the Exchange Rate (HL Only)

4.6.6 Implications of a Persistent Current Account Deficit (HL Only)

4.6.7 Methods to Correct a Persistent Current Account Deficit (HL Only)

4.6.8 The Marshall-Lerner Condition and the J-Curve Effect (HL Only)

4.6.9 Implications of a Persistent Current Account Surplus (HL Only)

4.7.1 The Meaning of Sustainable Development

4.7.2 Sustainable Development Goals

4.7.3 Relationship Between Sustainability and Poverty (HL Only)

4.8.1 The Multidimensional Nature of Economic Development

4.8.2 Single Indicators

4.8.3 Composite Indicators

4.8.4 Strengths and Limitations of Approaches to Measuring Economic Development

4.8.5 Possible Relationship Between Economic growth and Economic Development

4.9.1 Poverty Traps and Poverty Cycles

4.9.2 Economic Barriers

4.9.3 Political and Social Barriers

4.9.4 Significance of Different Barriers to Economic Growth and/or Economic Development

4.10.1 Strategies to Promote Economic Growth and Economic Development

4.10.2 Strengths and Limitations of Strategies for Promoting Economic Growth and Economic Development

4.10.3 Strengths and Limitations of Government Intervention Versus Market-Oriented Approaches to Achieving Economic Growth and Economic Development

4.10.4 Meeting the Sustainable Development Goals