Comparative advantage using PPCs
Compare opportunity costs and specialization between two countries.
All diagrams / The global economy
The global economy diagrams
Study international trade, protectionism, exchange rates and economic development through IB Economics diagrams. Compare the effects of tariffs, quotas and subsidies, then explore currency changes, the J-curve and the Marshall–Lerner condition. Check each lesson for its SL or HL scope.
Production subsidy in an importing market
Show how a domestic production subsidy changes output, imports and government expenditure.
Poverty cycle
Trace the reinforcing links between low income, investment, capital, productivity and growth.
World price, imports and exports
Compare domestic production and consumption at an importing or exporting world price.
Free trade and welfare
Show consumer surplus, producer surplus and gains from international trade.
Import tariff
Trace tariff revenue, reduced imports and the production and consumption welfare losses.
Import quota
Relate a quantitative import restriction to domestic price, quota rent and welfare loss.
Export subsidy
Show higher domestic prices, expanded exports, government expenditure and welfare loss.
Trade protection and welfare
Compare the effects of protection on consumer surplus, producer surplus, government revenue and welfare loss.
Floating exchange-rate equilibrium
Determine the freely floating exchange rate from demand and supply for a currency.
Change in demand for a currency
Connect exports, investment and speculation to currency appreciation or depreciation.
Change in supply of a currency
Connect imports and financial outflows to movements in a floating exchange rate.
Currency appreciation and depreciation
Compare the original and new floating exchange rates after a market shift.
Fixed exchange rate above equilibrium
Show an overvalued currency, excess supply and reserve intervention.
Fixed exchange rate below equilibrium
Show an undervalued currency, excess demand and reserve accumulation.
Central-bank foreign-exchange intervention
Calculate the currency purchases or sales required to defend a target rate.
Managed exchange-rate system
Use an intervention band around a central rate while retaining market adjustment.
J-curve effect
Trace the short-run deterioration and long-run improvement in the current account after depreciation.
Marshall–Lerner condition and adjustment
Connect export and import elasticities to the time path of the current account after depreciation.
Current-account correction through AD
Show how depreciation raises net exports and shifts the AD curve when the elasticity condition is met.
Customs union: trade creation
Show lower-cost partner imports replacing higher-cost domestic production after integration.
Customs union: trade diversion
Show imports switching from a lower-cost non-member to a higher-cost partner supplier.
Customs-union welfare effects
Compare trade-creation gains with tariff-revenue loss and trade-diversion cost.