IB Diploma Programme Economics HL, Unit 3 Macroeconomics (first assessment 2022). This topic covers syllabus sections 3.1–3.7 in full: measuring economic activity and illustrating its variations, aggregate demand and aggregate supply, macroeconomic objectives, the economics of inequality and poverty, monetary policy, fiscal policy and supply-side policies. One shared macro model runs through the worked examples — AD $P = 90 - Y/2$ against SRAS $P = 20 + Y/2$, equilibrium $(70, 55)$ — with the multiplier and CPI arithmetic from the earlier drives, so every number cross-checks.

Must-know for this topic:

Gross domestic product 国内生产总值 (3.1) is the value of all final goods and services produced within a country in a period — measurable by the output, income or expenditure approach (they agree in principle). NOMINAL GDP uses current prices; REAL GDP removes price changes with the GDP deflator: nominal index 112 with deflator 108 gives real $= \tfrac{112}{108} \times 100 = 103.7$; per head divides by population. GDP PER CAPITA is a headline welfare proxy with limits (non-market activity, distribution, environmental damage, price differences), which is why the IB pairs it with alternative indicators — the Human Development Index, health and education measures, and (HL) the adjusted net savings measure of sustainable welfare. The business cycle 经济周期 (also 3.1) illustrates short-run fluctuations around the trend: recovery → boom → recession → trough; each stage moves growth, inflation and unemployment together.

Aggregate demand 总需求 (3.2) $= C + I + G + (X - M)$; the components follow disposable income and confidence (consumption), the interest rate and expectations (investment), the budget (government spending) and incomes, exchange rates and world demand (net exports). The AD curve slopes down with the price level (wealth, interest-rate and trade effects); a price change MOVES along, a component change SHIFTS. The HL calculation: with $C = 60$, $I = 20$, $G = 20$ and $X - M = 0$, AD $= 100$.

Aggregate supply 总供给: short-run AS rises with the price level; the LONG run divides the schools — the KEYNESIAN range is flat with spare capacity then curves up to full employment; the MONETARIST (classical) AS is vertical at the natural level of output, so demand-side policy moves only prices. On the shared model AD meets SRAS at $(70, 55)$; a demand injection shifting AD up 15 gives the new equilibrium $(85, 62.5)$ — more output AND a higher price level; against a vertical LRAS the same shift only raises prices. Shifters of LRAS: technology, productivity, education, labour-force growth, institutional quality.

HL adds the multiplier 乘数: $k = \tfrac{1}{1 - MPC} = \tfrac{1}{MPW}$ where $MPW = MPS + MPT + MPM$. With MPC $= 0.5$, $k = 2$, so a £30bn injection raises income by £60bn (the SAM anchor from the earlier drive); with $MPW = 0.5$ the same $k = 2$; with MPC $= 0.8$, $k = 5$ and 20 becomes 100. The crowding-out debate — government spending displacing private investment — is the standard evaluation.

The objectives (3.3): LOW unemployment 失业 (measured by the ILO definition; types cyclical, structural, seasonal, frictional, voluntary — the HL addition being the natural rate and its policy neutrality); LOW AND STABLE inflation 通货膨胀 (the CPI basket: weights 50/30/20 over relatives 110/100/120 gives CPI $= 109$, inflation 9%; demand-pull vs cost-push); EQUITY IN THE DISTRIBUTION OF INCOME (3.4 pairs here — the Lorenz curve and Gini with the quintile 5/10/15/20/50 calculation of 0.40, absolute vs relative poverty, and the equity-efficiency trade-off); and (HL extension) HEALTHY GROWTH and BALANCE OF PAYMENTS STABILITY, with the Phillips-curve short-run trade-off between unemployment and inflation as the classic conflict. The losses from deflation and demand-deficient unemployment quantify the cost of missing the objectives; every objective answer evaluates the trade-offs among them.

Monetary policy 货币政策 (3.5) is the central bank's management of interest rates and the money supply: higher rates raise borrowing costs, cut consumption and investment, cool demand and inflation (and appreciate the currency). QE adds money when rates are near the zero bound; the equity of distributional effects is the standard critique. A rate cut works through the same mechanism in reverse — the SAM India anchor (6.5% → 6.25%) shows a 25-point cut supporting demand.

Fiscal policy 财政政策 (3.6) uses government spending and taxation: expansionary shifts AD right through the multiplier ($k = 2$ turns £30bn into £60bn); contractionary does the reverse. The BUDGET balance divides into the structural deficit (persists at full employment) and the cyclical deficit (varies with the cycle); automatic stabilisers (taxes falling, benefits rising in recessions) dampen fluctuations without discretion, and the balanced-budget multiplier is HL. Debt and deficits raise crowding-out and intergenerational-equity concerns.

Supply-side policies 供给侧政策 (3.7) shift LRAS right: education and training, infrastructure, deregulation and privatisation, lower taxes on work and investment, labour-market reform. On the shared model, LRAS from 85 to 105 along AD cuts the price level from 47.5 to 37.5 while output RISES — growth with disinflation, the contrast the IB wants drawn against demand management.

• GDP by the three approaches; nominal vs real (112/108 → 103.7); per capita; welfare limits and the alternative indicators; the business cycle's four stages (3.1).
• AD = C + I + G + (X − M) with each component's shifter; movements vs shifts (3.2).
• SRAS; the Keynesian vs monetarist long run; LRAS shifters (3.2).
• The multiplier k = 1/(1−MPC) = 1/MPW; £30bn → £60bn at MPC 0.5; crowding out (3.2 HL).
• The objectives: ILO unemployment with its five types and the natural rate; CPI 109 → 9% with both causes; the Phillips trade-off (3.3).
• Inequality and poverty: Lorenz/Gini 0.40; absolute vs relative; equity-efficiency (3.4).
• Monetary policy: the interest-rate mechanism, QE, distributional critique; the India 6.5 → 6.25 anchor (3.5).
• Fiscal policy: the multiplier route; structural vs cyclical deficits; automatic stabilisers; debt concerns (3.6).
• Supply-side: the six instruments; LRAS 85 → 105 cutting prices from 47.5 to 37.5 with rising output (3.7).

Boundary notes: HL Paper 3 quantifies the multiplier, deflator and AD/AS arithmetic above; Paper 1's 25-mark macro essays want a labelled AD/AS diagram, the transmission mechanism named link by link, and evaluation of trade-offs and lags — the key concepts change, interdependence and intervention frame it. All worked numbers are original or SAM-adapted as labelled.