Heya! I’m Adithi, a KIS Academics tutor for IB Economics HL, and if you’re feeling anxious about attempting the Paper 1 essays – fret not! This blog covers not just a list of tips, but the real thing, along with explanations for why it works.
I'm going to walk you through a 10-marker essay, broken down paragraph by paragraph, so you can see the structure, reasoning, and techniques that consistently do well.
But First, What is in the IB Economics HL Paper 1?
A quick recap on the extended response paper:
- Total marks awarded: 25 (10 for Part A + 15 for Part B)
- 1 hour 15 minutes long
- 20% of your final grade at HL (30% at SL)
- You pick one question from a choice of three, each split into parts (a) and (b)
Part A asks you to explain or analyse a concept: think definitions, diagrams, and logical reasoning. Part B asks you to evaluate, which means discussing multiple perspectives, pros and cons, real-world examples, and arriving at a justified conclusion.
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IB Economics Paper 1 Exemplar Response
Explain how expansionary fiscal policy can be used to reduce unemployment.
Fiscal policy refers to the use of government spending and taxation to influence economic activity. Expansionary fiscal policy is increasing government spending and/or reducing taxes to stimulate aggregate demand (AD) in the economy.
For instance, following the 2008 Global Financial Crisis, the Australian government's $42 billion stimulus package, which included direct cash transfers to households and infrastructure investment, shifted AD rightward and helped firms maintain output and prevent large-scale layoffs.
Oftentimes, questions in Paper 1 usually give you a case study to analyse, in which case you may omit an RWE.
Tip: Create a document with potential prompts under each unit and research applicable RWEs.
When the government increases such spending, money is injected into the circular flow of income. (Draw an appropriate diagram, here an AD-AS curve and explain, answering the prompt) This raises the AD, which can be seen as a rightward shift in the AD curve (from AD₁ to AD₂ in the diagram below). As AD shifts and real GDP rises (from Y₁ to Y₂), firms respond to the higher consumer demand by increasing production. Therefore, more workers are hired, which reduces cyclical unemployment. The multiplier effect amplifies this initial injection, and the extra income earned by newly employed workers is re-spent in the economy, creating further rounds of income and employment.
- Insert AD/AS diagram here showing a rightward shift in AD, showing an increase in real GDP and a fall in unemployment, with the price level rising from PL₁ to PL₂
- Following this, there’s a brief explanation of the shifts happening in the graph, followed by a chain of reasoning: government spending → ↑ AD → ↑ real GDP → ↑ firm production → ↑ labour demand → ↓ (cyclical) unemployment.
- Each step of reasoning is built on the previous, so always explain your diagram explicitly (what shifts, what happens to GDP and price level, and why).
Additionally, a reduction in income taxes increases households' disposable income (Y-T). This stimulates consumer spending, again shifting AD rightward and generating the same employment effects through the multiplier. Furthermore, a reduction in corporate taxes may encourage investment, further contributing to AD and job creation.
In conclusion, an expansionary fiscal policy reduces unemployment by stimulating AD, raising real output, and incentivising firms to hire labour, all of which are amplified further by the multiplier.
A brief linking sentence at the end of Part A ties your analysis back to the question and signals to the marker that your response has been intentional.
Why does this part A response score well?
- Follows the DEDE structure:
- Definitions
- Example
- Diagram
- Explanation
- A relevant RWE, detailed to some extent, along with a labelled diagram explicitly explained, is included.
- Two clear, analytical paragraphs and a link back to the question with consistent use of theory and terminology.
Check out more of our IB Economics study guides to learn how to score top marks.
Manoj Arachige
Manoj Arachige
Manoj Arachige
FAQS
Do I need diagrams in my IB Economics responses?
For part A of Paper 1, always include a clearly labelled diagram, and stick to just one to leave space for a thorough explanation.
How many definitions do I need?
Ideally, define every key economic term in the question. Otherwise, pick 2-3 that are the most pertinent.
How long should I spend on answering Part A of my IB Economics Paper 1
You don’t want to spend more than 30 minutes on this part, so 1-2 pages long.
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Written by KIS Academics Tutor, Adithi Potty. Adithi is currently studying for a Bachelor of Economics and Politics with International Studies at the University of Melbourne. You can view Adithi’s profile here and request her as a tutor.
