IB Economics Topics: Full HL & SL Syllabus Breakdown

Choosing IB Economics? Smart move. Economics helps you understand how the world really works - from why your favourite coffee costs more than it did last year, to how governments make decisions that affect millions of people.

But what exactly will you study? The IB Economics syllabus covers everything from basic supply and demand to complex international trade theories. Whether you're taking Standard Level (SL) or Higher Level (HL), this guide breaks down every topic you'll encounter.

Let's dive into what makes IB Economics such a fascinating subject and how the syllabus is structured to build your understanding step by step.

IB Economics Topic Overview

The IB Economics course is split into four main sections. Think of them as building blocks - each builds on the last to give you a complete picture of how economies work.

All IB Economics students study the same core topics. The main difference between SL and HL? Higher Level students dive deeper into advanced theories and learn additional concepts that aren't covered at Standard Level.

Here's how it breaks down:

• Section 1: Introduction to Economics - The fundamentals everyone needs

• Section 2: Microeconomics - How individuals and businesses make decisions

• Section 3: Macroeconomics - How entire economies function

• Section 4: The Global Economy - How countries trade and interact economically

Each section has both SL and HL content, with HL students tackling more sophisticated theories and some basic mathematical models.

Section 1 – Introduction to Economics (SL & HL)

This is where your economics journey begins. You'll learn the language of economics and understand why economists think the way they do.

The Basic Economic Problem

• Economics starts with a simple but powerful idea: we have unlimited wants but limited resources. This creates scarcity, which forces us to make choices. Every choice has an opportunity cost - what you give up to get something else.

• For example, if you spend £10 on a cinema ticket, the opportunity cost might be the book you could have bought instead. This concept applies to individuals, businesses, and entire governments.

Positive vs Normative Economics

• Economists make two types of statements. Positive economics deals with facts - things that can be measured and tested. "Unemployment is 5%" is a positive statement. Normative economics involves opinions about what should happen - "Unemployment is too high" is a normative statement.

• Understanding this distinction helps you analyse economic arguments critically.

How Economists Think

• Economists use models to simplify complex reality. These models often assume "ceteris paribus" - all other things being equal. This helps isolate the effect of one variable.

• You'll also learn about different schools of economic thought. Keynesian economists believe government intervention can help economies, whilst classical economists prefer free markets.

• Behavioural economics (opens in a new tab), which studies how psychological factors affect economic decisions, is also introduced.

Resource Allocation and Markets

• How do societies decide what to produce and for whom? Market economies use prices as signals. Command economies rely on government planning. Most real economies are mixed, combining both approaches.

Section 2 – Microeconomics (Common to SL & HL)

Microeconomics zooms in on individual economic actors - consumers, workers, and firms. You'll discover how they make decisions and interact in markets.

Demand and Supply

• This is economics' most recognised concept. Demand shows how much consumers want at different prices. Supply shows how much producers are willing to sell.

• Where they meet determines market price and quantity. Shift the demand curve (perhaps due to changing tastes) and prices change. Shift supply (maybe due to new technology) and the market adjusts again.

Elasticities

• How sensitive are consumers to price changes? Price elasticity of demand measures this. If demand for a product is elastic, a small price increase causes a big drop in quantity demanded. If inelastic, quantity barely changes.

• This concept helps businesses set prices and governments predict the impact of taxes. Luxury goods tend to be elastic, whilst necessities like petrol are often inelastic.

• You can read more about this fascinating topic here in the Save My Exams revision notes.

Government Intervention

• Markets don't always work perfectly. Governments intervene through taxes, subsidies, and price controls.

• A tax on cigarettes might reduce smoking (the intended goal) but also creates deadweight loss - economic efficiency that's lost. Subsidies can encourage beneficial activities like renewable energy but cost taxpayers money.

• Price floors (like minimum wages) and price ceilings (like rent controls) directly set prices, often creating shortages or surpluses.

Market Failure

• Sometimes markets fail to allocate resources efficiently. Negative externalities occur when production or consumption harms third parties - like pollution from factories. Positive externalities benefit society - education helps not just students but everyone.

• Public goods like street lighting can't be provided efficiently by markets because it's hard to exclude people who don't pay. Asymmetric information occurs when one party knows more than another, like when buying a used car.

Section 2 – Higher Level Only Material

Beyond Perfect Rationality

• HL students explore why real people don't always behave like perfectly rational economic actors. You'll study cognitive biases like anchoring (being influenced by first information received) and framing effects (how choices are presented affects decisions).

• Bounded rationality recognises that people have limited time and mental capacity to make perfect decisions.

• Choice architecture involves designing environments to nudge people towards better choices without restricting their freedom.

Theory of the Firm

• HL students also study how businesses operate in detail. You'll learn about different cost structures - fixed costs that don't change with output, variable costs that do, and marginal costs of producing one more unit.

• Different market structures create different outcomes. Perfect competition leads to efficient outcomes but zero long-term profits. Monopolies can earn supernormal profits but may be inefficient. Oligopolies involve strategic interactions between firms.

Section 3 – Macroeconomics (Common to SL & HL)

Macroeconomics steps back to look at entire economies. How do we measure economic success? What causes recessions? How can governments respond?

Macroeconomic Objective

• Governments typically pursue four main goals: economic growth, low inflation, low unemployment, and income equity. These objectives often conflict - policies that boost growth might increase inflation.

• Economic growth (opens in a new tab) measures how much an economy produces over time. Real GDP per capita shows whether average living standards are improving.

Aggregate Demand and Supply

• Just like individual markets have demand and supply curves, entire economies do too. Aggregate demand represents total spending in an economy - consumption, investment, government spending, and net exports.

• Aggregate supply shows total production. In the short run, it slopes upward - higher prices encourage more production. Long-run aggregate supply is vertical - the economy's productive capacity doesn't depend on the price level.

Economic Policies

• Governments have three main policy tools:

  • Fiscal policy involves government spending and taxation. During recessions, governments might increase spending or cut taxes to boost demand. This can help reduce unemployment but might increase government debt.

  • Monetary policy involves interest rates and money supply, typically controlled by central banks. Lower interest rates encourage borrowing and investment but might fuel inflation.

  • Supply-side policies aim to increase the economy's productive capacity through education, infrastructure, or deregulation.

Income Redistribution

• How equal should income distribution be? Progressive taxation takes higher percentages from high earners. Transfer payments like unemployment benefits help those in need.

• The (opens in a new tab)Gini coefficient (opens in a new tab) measures inequality - 0 means perfect equality, 1 means one person has everything.

Section 3 Higher Level Only Material

Government Debt Sustainability

• HL students also learn about when government borrowing becomes dangerous. Government debt is measured as a percentage of GDP - if the UK has £2 trillion debt and £2 trillion GDP, that's 100%.

• Budget deficits add to total debt each year. High debt creates problems: governments must pay interest (debt servicing), credit ratings fall, and future tax rises or spending cuts become necessary just to manage existing debt.

The Lorenz Curve

• The Lorenz curve visually represents income distribution. The further it bends from the line of equality, the more unequal the distribution.

The Laffer Curve

• The Laffer curve suggests tax revenue first increases then decreases as tax rates rise. Very high tax rates might discourage work so much that total revenue falls.

The Phillips Curve

• The Phillips curve originally suggested a trade-off between unemployment and inflation. Modern understanding recognises this relationship is more complex and temporary.

Section 4 – The Global Economy (Common to SL & HL)

No economy exists in isolation. This section explores how countries interact economically and the challenges facing developing nations.

International Trade and Protectionism

• Why do countries trade? Comparative advantage explains how everyone can benefit even when one country is better at producing everything. Countries should specialise in what they're relatively best at producing.

• However, free trade has critics. Protectionism uses tariffs, quotas, and subsidies to protect domestic industries. This might save jobs in the short term but typically reduces overall economic efficiency.

Exchange Rates

• Currency values constantly fluctuate. A stronger pound makes imports cheaper for British consumers but British exports more expensive for foreigners.

• Exchange rates affect tourism, trade balances, and inflation. Central banks sometimes intervene in currency markets to influence these rates.

• You can read more about exchange rates in the Save My Exams IB Economics revision notes.

Balance of Payments

• This records all economic transactions between a country and the rest of the world. The current account includes trade in goods and services plus income flows. The capital account covers investment flows.

• A current account deficit means a country imports more than it exports. This isn't necessarily bad - it might reflect strong domestic demand or investment opportunities.

Economic Development and Sustainability

• Why are some countries rich whilst others remain poor? Development economics examines factors like education, healthcare, infrastructure, and institutions.

• Sustainable development (opens in a new tab) recognises that economic growth must consider environmental and social impacts. The UN's Sustainable Development Goals provide a framework for balanced progress.

Section 3 Higher Level Only Material

• Advanced Trade Theory

• HL students explore terms of trade - the rate at which countries exchange exports for imports. Improving terms of trade means getting more imports for the same amount of exports.

• The Marshall-Lerner condition determines when currency depreciation improves a country's trade balance. It requires that demand for exports and imports be sufficiently elastic.

Internal Assessment (IA): Linking Topics to Real-World News

Your IB Economics internal assessment (IA) requires three 750-word commentaries analysing real economic events. This is where theory meets reality.

IA Structure

Each commentary needs:

• A relevant news article (published within one year)

• Clear identification of economic concepts from the syllabus

• Analysis using appropriate diagrams and theory

• Evaluation of different perspectives and limitations

Best Topics for Commentary

Some syllabus areas work particularly well for IA:

• Price elasticity stories are goldmines. When Netflix raises subscription prices or petrol prices spike, you can analyse consumer responses and revenue implications.

• Government intervention provides endless material. New taxes, subsidy programmes, or regulation changes offer rich analytical opportunities.

• Monetary policy decisions by central banks like the Bank of England give you chances to discuss interest rates, inflation targets, and economic growth.

• Trade policy changes - new tariffs, trade agreements, or Brexit-related developments - connect to Section 4 concepts perfectly.

Linking Articles to Syllabus Content

Strong commentaries explicitly connect news events to multiple syllabus points. A story about rising house prices might involve demand and supply shifts, government intervention through stamp duty, and macroeconomic factors like interest rates.

The key is showing deep understanding rather than just listing concepts. Explain why the theory applies and what the real-world implications might be.

Frequently Asked Questions

What topics are only taught at HL in IB Economics?

Higher Level students study additional content in three main areas:

• In microeconomics, you'll examine behavioural economics - why people don't always make perfectly rational decisions. You'll also study market structures in detail, including business objectives beyond profit maximisation.

• Macroeconomics HL includes advanced curves like the Lorenz curve for income inequality and the Phillips curve for inflation-unemployment relationships.

• In the global economy section, HL students learn about terms of trade and complex conditions like Marshall-Lerner that determine when exchange rate changes improve trade balances.

What is the hardest topic in IB Economics?

Many students find elasticity calculations challenging initially. The key is practice - work through lots of examples until the formulas become second nature.

HL students often struggle with market structures, particularly understanding different market structures and their characteristics. Draw lots of diagrams and use real company examples to make abstract concepts concrete.

Macroeconomic policy interactions can be complex too. Remember that policies often have multiple effects and trade-offs between objectives.

You can read more about economic trade-offs in Save My Exams’ IB Economics revision notes.

Can I get a 7 in IB Economics without HL Maths?

Absolutely. Whilst mathematical skills help, particularly for HL students, IB Economics focuses more on understanding concepts and applying them analytically.

The maths involved is mainly basic algebra, percentages, and graph interpretation. Strong writing skills, logical thinking, and the ability to apply theory to real situations matter more than advanced mathematics.

Many top Economics students take SL Maths. Focus on understanding economic logic rather than worrying about mathematical complexity.

How should I revise for Paper 1, Paper 2, and Paper 3?

Paper 1 is essay-based

• Each question has two parts: (a) theory-based analysis and (b) evaluation. 

• For part (b), you must always use a real-world example — this is compulsory and key to scoring high marks. 

• Practice planning essays with clear structure: concise introductions, labelled diagrams, applied examples, and evaluative conclusions that compare perspectives.

Paper 2 is data response.

• Build skill in interpreting extracts, selecting relevant theory, and applying it to the case material. Strong answers integrate definitions, diagrams, and real-world context drawn from the text or current knowledge.

Paper 3 (HL only)

• Tests quantitative techniques. Memorise the required formulas, practise step-by-step calculations, and write clear workings. 

• Go beyond the maths by interpreting what the numbers mean for economic policy or outcomes.

In my years marking IB scripts, I’ve seen students lose marks not because they misunderstood the concept, but because they drew a diagram without explaining it in words. Remember: examiners only award marks when you connect the diagram to your written analysis.

For all papers, keep up with economic news. Specific, recent examples (e.g. inflation in Argentina, carbon taxes in Sweden, exchange rate shifts in Japan) strengthen answers and demonstrate applied understanding.

What are good IA topics in IB Economics?

Look for stories that clearly connect to syllabus content with plenty of analytical potential:

• Central bank interest rate decisions work brilliantly for macroeconomics commentary. You can discuss monetary policy transmission, inflation targeting, and effects on economic growth.

• Companies changing prices offer great microeconomics opportunities. Analyse demand elasticity, market power, and consumer responses.

• Government policy changes - new taxes, spending programmes, or regulations - provide rich material for discussing government intervention and market failure.

• Trade disputes or new trade agreements connect perfectly to global economy topics like protectionism and comparative advantage.

To build IA readiness and deepen your understanding, it helps to practise linking theory to real-world examples. 

A great way to do this is through Google News searches. Try entering keywords like “tariff”, “cigarette tax”, or “inflation”, and then narrow your search by region (e.g., “tariff site:.sg” for Singapore or “cigarette tax site:.au” for Australia). 

This ensures you’re drawing on fresh, region-specific news stories — perfect for finding the kind of topical, varied case studies that make for strong IB Economics commentaries.

Final Thoughts

IB Economics opens your eyes to how the world really works. From understanding why your local café prices coffee the way it does to grasping how government decisions affect unemployment, this subject connects theory to everyday life.

Past students regularly reach out to me to say thank you for the understanding they gained from this fabulous course. For many, it has enhanced their life and career choices.

The syllabus might seem overwhelming initially, but remember - each topic builds on previous ones. Master the basics in Section 1, and everything else becomes much clearer. Strong foundations in supply and demand make market failure easier to understand. Solid microeconomics knowledge helps when you reach macroeconomic policies.

Start engaging with economic news early. Read articles, watch economics videos, and think about how real events connect to what you're learning in class. This approach makes your internal assessment (IA) much stronger and helps you see economics everywhere around you.

Whether you're aiming for university economics courses or simply want to understand global events better, IB Economics gives you powerful tools for analysing the world. The concepts you learn will stay relevant long after your final exams.

Remember, economics isn't just about memorising theories - it's about developing critical thinking skills that help you evaluate arguments, understand trade-offs, and make better decisions throughout your life.

Save My Exams IB Economics Resources

HL Revision Notes
HL Exam Questions and student-friendly model answers
HL Practice Papers and Markschemes

SL Revision Notes
SL Practice Papers and Markschemes

References

International Baccalaureate Organization. (2020). Economics guide: First assessment 2022. International Baccalaureate Organization. https://www.ibo.org/programmes/diploma-programme/curriculum/individuals-and-societies/economics/ (opens in a new tab)