IB Diploma Programme Economics SL, Unit 4 The global economy (first assessment 2022). This topic covers the SL content of syllabus sections 4.1–4.10 in full: the benefits of international trade, types of trade protection, the arguments for and against trade control, economic integration, exchange rates, the balance of payments, sustainable development, measuring development, barriers to growth and development, and development strategies. The trade model reuses the shared curves at a world price of 12 and the exchange model sits at 5 domestic per foreign currency. At SL both are read as DIAGRAMS: the tariff arithmetic, the comparative-advantage calculations, the Marshall–Lerner condition, the J-curve and the terms of trade are HL extensions and are left out.

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The benefits of trade (4.1): free trade 自由贸易 — trade without government barriers — lets each country specialise in what it produces most cheaply and import the rest. The SL list of gains: increased competition driving efficiency, lower prices for consumers, greater choice and variety, access to resources and larger markets, economies of scale, more efficient resource allocation and faster growth (the comparative-advantage theory behind the gains is the HL extension). Types of trade protection 贸易保护 (4.2): tariffs 关税 (import taxes), quotas 配额 (quantity limits), SUBSIDIES to domestic producers, and administrative/technical barriers. The tariff on the shared diagram: at the world price 12 imports are 48; a tariff of 4 raises the domestic price to 16, imports fall to 24 and domestic output rises; the diagram shows the revenue rectangle on the imports that remain and the two welfare-loss triangles — the labelled DIAGRAM is the SL requirement, the arithmetic is Paper 3.

The arguments (4.3): FOR protection — infant industries, protection of domestic employment, anti-dumping, national security, revenue for developing states, diversification; AGAINST — higher consumer prices, retaliation and trade wars, inefficiency behind the wall, rent-seeking. The IB evaluation always weighs short-run protection against long-run comparative advantage. Economic integration 经济一体化 (4.4) deepens in stages — free-trade area, customs union, common market, economic and monetary union — trading trade creation against trade diversion; the WTO polices the multilateral rules.

The exchange rate 汇率 (4.5) is the price of one currency in another, set by demand and supply: interest rates, speculation, and the imports/exports of goods and services. The model: demand meets supply at 5 domestic per foreign currency; import-demand growth shifts demand right and the rate moves to 6.5 — a depreciation 贬值 (import prices rise in domestic currency and export prices fall abroad, so net exports tend to improve while import-cost inflation rises — the current-account effect depends on demand elasticities, an HL extension). Fixed systems revalue or devalue by policy; floating systems appreciate or depreciate by the market.

The balance of payments 国际收支 (4.6) records all transactions with the rest of the world: the CURRENT ACCOUNT (goods and services, primary and secondary income) and the CAPITAL AND FINANCIAL ACCOUNTS; the accounts balance overall, so a current-account deficit is matched by net financial inflows — borrowing abroad or selling assets. A persistent deficit can be corrected by expenditure-SWITCHING policies (depreciation of the currency, trade protection) or expenditure-REDUCING policies (deflating demand); each route carries its own cost, and supply-side competitiveness is the long-run answer — the SL evaluation pairs them.

Sustainable development 可持续发展 (4.7) meets present needs without compromising future generations — the intergenerational equity that GDP ignores and the key concept sustainability frames. MEASURING DEVELOPMENT (4.8): GDP per head (Purchasing Power Parity adjusted), the Human Development Index 人类发展指数 (education, health and income in one geometric mean), and complements such as health, education and gender measures; each indicator hides distribution. BARRIERS (4.9): the savings gap (domestic saving too small to fund the investment growth needs), primary-product dependency, debt, capital flight, corruption and poor governance, geographical isolation, and the poverty trap (low income → low savings → low investment → low growth, the circle that locks the lowest-income countries out of growth). STRATEGIES (4.10): trade liberalisation and export promotion, FDI and multinational investment, aid and debt relief, microfinance, human-capital development and infrastructure — each evaluated for dependency, sustainability and equity; the IB pairs every strategy with the barriers it targets.

• Free trade and the SL gains list — competition, prices, choice, scale, resources, growth (4.1).
• Tariffs, quotas, subsidies, administrative barriers; the tariff diagram read off (imports 48 → 24) with the revenue rectangle and welfare-loss triangles labelled (4.2).
• The protection arguments both ways; integration's four stages with trade creation vs diversion; the WTO (4.3–4.4).
• Exchange-rate determination at 5; depreciation to 6.5 with its price effects; revaluation vs appreciation (4.5).
• Balance of payments structure; current vs capital/financial accounts; financing a deficit; expenditure-switching vs expenditure-reducing correction (4.6).
• Sustainable development and intergenerational equity (4.7).
• Measuring development: PPP GDP per head, HDI's three components, the complements (4.8).
• Barriers: savings gap, primary-product dependency, debt, capital flight, governance, geography, the poverty trap (4.9).
• Strategies: liberalisation, FDI, aid, debt relief, microfinance, human capital, infrastructure — each with the barriers it targets (4.10).

Boundary notes: SL sits Papers 1 and 2 only; the tariff, exchange-rate and terms-of-trade arithmetic belong to HL Paper 3. Paper 1 essays want the labelled diagram, the mechanism, and evaluation against the key concepts (interdependence, sustainability, equity, intervention). All worked numbers are original on the shared models.