3.1 Measuring economic activity questions for IB Economics
139 questions on Measuring economic activity, written by Augment in the style of IB exam papers. Six of them are below in full, to answer on paper.
- IB Economics
- Part of 3 Macroeconomics
- SL and HL
Questions by paper and level
SL and HL questions are for students at either level. HL only questions cover what only HL students study.
| Paper | SL and HL | HL only | All |
|---|---|---|---|
| Paper 1 | 26 | 6 | 32 |
| Paper 2 | 93 | 4 | 97 |
| Paper 3HL only | 0 | 10 | 10 |
| Every paper | 119 | 20 | 139 |
Counted on
Questions to try
Written by Augment in the style of IB exams, not past papers. Answer them on paper, then check each one against its markscheme with a free account.
Economics is often described as a social science that tests its theories against evidence.
- (a)
Explain how economists use hypotheses, empirical evidence and refutation to develop economic theories.
10 marks
- (b)
Using real-world examples, evaluate the view that real GDP per capita is a sufficient basis for comparing living standards between countries.
15 marks
Read the extract and answer the questions that follow.
Text A — A shrinking flow of income in Tarvesh
[1] Tarvesh is a high-income economy in northern Europe with a large manufacturing sector. Around 45 % of its manufactured goods are sold to its neighbour, Holvenia.
[2] In 2025, a recession in Holvenia reduced spending on Tarvesh's exports. Exports are an injection into Tarvesh's circular flow of income, while saving, taxes and imports are leakages. At the same time, Tarvesh's households became more cautious and increased their saving. Estimates for 2025 are shown in Table 1.
[3] The finance minister has said that the government will 'not stand by while the economy shrinks', but has not yet announced any measures.
Table 1: Leakages and injections in Tarvesh, 2025 (TVS billion)
Item | Value |
|---|---|
Saving | 42 |
Taxes | 65 |
Imports | 58 |
Investment | 38 |
Government spending | 70 |
Exports | 49 |
- (a)
Define the term injection indicated in bold in the text (Text A, paragraph 2).
2 marks
- (b)(i)
Using information from Table 1, calculate the difference between total leakages and total injections in Tarvesh in 2025.
2 marks
- (b)(ii)
Using your answer to (b)(i), state whether Tarvesh's national income is likely to rise or fall.
1 mark
- (c)
Using a circular flow of income diagram, explain how the recession in Holvenia is likely to affect household incomes in Tarvesh (Text A, paragraphs 1 and 2).
4 marks
- (d)
Explain two measures the government of Tarvesh could use to bring leakages and injections back into balance at a higher level of national income (Text A, paragraph 3).
4 marks
Planning for a downturn at Golden Crust Bakeries
Golden Crust Bakeries operates 120 shops in Country Z. Forecasters expect average real household income in Country Z to fall by 4 % next year. The firm's managers have estimated the income elasticity of demand (YED) for each of its main product lines, shown in Table 1. Prices are not expected to change.
Table 1: Golden Crust's main product lines
Product | Weekly sales (units) | Price (ZDL per unit) | Estimated YED |
|---|---|---|---|
White sliced loaf | 40 000 | 1.80 | −0.3 |
Wholegrain loaf | 15 000 | 2.60 | 0.6 |
Artisan sourdough loaf | 6000 | 4.50 | 1.8 |
Celebration cake | 800 | 30.00 | 2.5 |
(ZDL = Country Z dollars)
- (a)(i)
Using Table 1, calculate the expected weekly sales of artisan sourdough loaves next year.
2 marks
- (a)(ii)
Using Table 1, calculate the expected change in Golden Crust's total weekly revenue from white sliced loaves and celebration cakes combined.
3 marks
- (a)(iii)
Using Table 1, identify the product line whose sales are expected to rise during the downturn.
1 mark
- (a)(iv)
Explain two ways in which Golden Crust could use its estimates of YED when planning its business.
4 marks
In the 21st century, economists have paid growing attention to the links between the economy, society and the natural environment.
- (a)
Explain why awareness of the interdependence between the economy, society and the environment has led economists to question the use of GDP alone to measure progress.
10 marks
- (b)
Using real-world examples, evaluate the strengths and limitations of composite indicators as measures of economic development.
15 marks
Read the extract and answer the questions that follow.
Text A — Port Keswin feels the global slowdown
[1] Port Keswin is a small, high-income city-state whose economy depends on exporting electronic components and refined petroleum products. Exports are equivalent to more than 150 % of its gross domestic product (GDP), because many exported goods are assembled from imported parts and materials.
[2] In 2025 a slowdown in its main export markets cut foreign orders. Manufacturers reduced shifts, and the economy entered a recession. Firms also postponed investment plans. Data for the main flows into and out of Port Keswin's circular flow of income are shown in Table 1.
[3] Some economists argue that the city-state should reduce its dependence on exports by developing financial services, tourism and education for the domestic and regional market.
Table 1: Leakages and injections in Port Keswin (PKD billion)
Item | 2024 | 2025 |
|---|---|---|
Saving | 28 | 25 |
Taxes | 22 | 21 |
Imports | 100 | 88 |
Investment | 30 | 26 |
Government spending | 24 | 24 |
Exports | 96 | 78 |
- (a)
Define the term recession indicated in bold in the text (Text A, paragraph 2).
2 marks
- (b)(i)
Using information from Table 1, calculate the change in total injections into Port Keswin's circular flow of income between 2024 and 2025.
2 marks
- (b)(ii)
Using information from Table 1, state whether total leakages were greater than, equal to or less than total injections in 2025.
1 mark
- (c)
Using a circular flow of income diagram, explain why the fall in Port Keswin's exports was accompanied by a fall in its imports (Text A, paragraph 1 and Table 1).
4 marks
- (d)
Using an AD/AS diagram, explain the effect of the fall in exports and investment on Port Keswin's real GDP (Text A, paragraph 2).
4 marks
- (e)
Using information from the text/data and your knowledge of economics, discuss whether Port Keswin should reduce its dependence on exports.
15 marks
Where household income comes from in Quellmark
A household survey in Quellmark recorded the annual market income of three households in 2024.
Table 1: Sources of annual market income for three households in Quellmark, 2024 (QMK)
Source | Household A | Household B | Household C |
|---|---|---|---|
Wages and salaries | 18 000 | 45 000 | 120 000 |
Interest | 0 | 2 000 | 0 |
Rent | 0 | 0 | 30 000 |
Dividends (profit) | 0 | 0 | 50 000 |
- (a)(i)
Using Table 1, calculate the total annual market income of Household C.
1 mark
- (a)(ii)
Using Table 1, calculate the percentage of Household C's market income that comes from the ownership of assets.
2 marks
- (a)(iii)
Using Table 1, calculate how many times greater Household C's market income is than Household A's.
1 mark
- (a)(iv)
Define the term factors of production.
2 marks
- (a)(v)
Using a circular flow of income diagram and the information in Table 1, explain why the market income of Household C is so much greater than that of Household A.
4 marks
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More questions in Macroeconomics
- 3.1Measuring economic activityThis page
- 3.2Aggregate demand and aggregate supply
- 3.3Macroeconomic objectives
- 3.4Economics of inequality and poverty
- 3.5Monetary policy
- 3.6Fiscal policy
- 3.7Supply-side policies
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