On EVALUATION

Based on guide compiled by J.Blink, Vienna, April 2004

There are likely to be several places on your exam where you are asked to EVALUATE
something. They are likely to be
1. the last part-question on the Data Response questions;
2. Part (B) of the Long Essay; and
3. the four Commentaries for Internal Assessment.
On these questions, the highest mark bands are reserved for students who can illustrate
the skill of evaluation; in other words, failure to properly EVALUATE automatically
prevents you from reaching the top band.
It is also possible to evaluate in the Short Answer questions, but it is more important on
these questions to present accurate theory with appropriate diagrams and APPLY the
theory to ANALYSE the issue/question. In fact, based on the most recent versions of
assessment criteria given by the IB examiners, EVALUATION is not required for Short
Answer questions.

What does evaluation mean?

Two dictionary definitions of evaluate are as follows:
v: to examine and judge carefully; appraise
v : place a value on; judge the worth of something

How can I accomplish evaluation?

It is not quite enough to simply finish a sentence that begins, On the other hand . . . but
it is a good start.
Prioritise the arguments
The most important argument against protectionism in international trade is that it
represents a global misallocation of resources. or The least effective argument for
protectionism in international trade, in terms of economic reasoning, is that the industry
is a strategic industry.
Long run vs. short run
In the short run, abnormal profits can be earned. However, in the long run this is not
possible. or In the short run, it may be possible to justify the infant industry argument.
However, the danger is that in the long run, the industry will remain inefficient.
Consider the issue from the points of view of different stakeholders.
What is a stakeholder? One dictionary definition is as follows: a person or group that has
an investment, share, or interest in something.

In terms of economic theory, examples of stakeholders could be domestic producers,

consumers, foreign producers, high income people, low income people, or the
government.
A high exchange rate may be good for consumers because it makes imported goods less
expensive and forces domestic producers to be more efficient so that they compete with
the less expensive imports. On the other hand, it is clearly a disadvantage for those
domestic producers who suffer from the competition from imports which become less
expensive with the higher value of the currency. or Supply side policies may be very
good in terms of creating a more flexible labour force and achieving economic growth.
However, it may lower the standards of living of workers who may suffer from
deregulation of the labour laws.

Practice
The law of demand says that the higher the price of a good, the lower will be the quantity
demanded. This accounts for the downward-sloping demand curve. However, there are
exceptions to this law. Two exceptions to the law are ____________________________.
There are several factors which cause a shift in the supply curve. These are ___ and . . . The most
important of these is _____ because ____ . . .
Minimum prices are good for _______________ because_____ . . .. However, they can be
considered to be negative for __________ because _______ . . . .
Maximum prices are good for _______________ because_____ . . . However, they can be
considered to be negative for __________ because ______ . . . .
Subsidies are good for _____ because ___ . . However, . . .
The answer to the question, Should prices be increased? depends on many things. It depends
on ______ . . .
One way to correct the market failure of negative externalities is to tax the producers of the good
creating the negative externality. However, this is difficult because, _____ . . It is also a
problems because _____ . . . ( Market failure is a topic which involves much evaluation. You
have to be able to evaluate any of the solutions to any of the sources of market failure.)
In the short run, a firm is only able to increase output up to a certain point. This is due to the law
of ____. However, in the long run, all ____ . . . .
The biggest advantage of perfect competition (although it is primarily a theoretical advantage as
is it very unlikely that a real life market structure would follow all the assumptions of perfect
competition) is that _____. The disadvantage , however, would be that ____ . . (Assess the
advantages and disadvantages of all the market structures, considering the different stakeholders
- and using the terms producer and consumer sovereignty)
Price discrimination can be considered to be negative because ______________ . . . On the
positive side, however, ______ . . .

There are four main central macroeconomic objectives which every government pursues. These
are: ____ . . . The difficulty that governments face is that when they pursue one objective, it is
highly likely that other objectives will come into conflict. For example, ___ . . (You can do this
many times)
In the short run, economists agree that the aggregate supply curve is upward sloping. There is
considerable controversy over the likely shape of a countrys long run aggregate supply curve.
Neo-Keynesians believe that ___ . . . Neo-classical economists, on the other hand, argue that
____ . However, economists agree that the LRAS curve is vertical at the full employment level
of output. (This writing would obviously be accompanied by several diagrams!)
Increasing aggregate demand may be good when ___ . . However, if the economy is __ . . . . .
Demand management may be appropriate for solving ____ unemployment. However, if the
unemployment is ___ . . then increasing AD is likely to ___ . . .
In the short run, there may be a trade-off between inflation and unemployment. However, ___ . . .
If a government wants to increase its spending to stimulate the economy, it may have to run a
budget deficit. The disadvantages of this are ___ . .
The advantages and disadvantages of tariffs depend on the various stakeholders. The diagram
showing the effect of a tariff is very useful for pointing out the various advantages and
disadvantages. As can be seen in the diagram below, ___ . . .
A country may decide to deal with a current account deficit by using expenditure reducing
policies. These include __ . . . The problems with these are __ . . . An alternate policy would be
expenditure switching. This can be done by ____ . . Disadvantages associated with these are ___
...
A high value of a currency is good for ____ and . . . . because ___ . . . However, it can be very
damaging for ___ . . . because _____ . . .
A low value of a currency is good for ____ and . . . . because ___ . . . However, it can be very
damaging for ___ . . . because _____ . . .
Economic growth is highly desirable because ____ . . . However, on the negative side, __ .. . .
The principal difference between economic growth and economic development is that ______ . . .
When considering the advantages and disadvantages of foreign direct investment, it is important
to look at the implications for both growth and development. In terms of achieving economic
growth, FDI is very important because ___ . . . However, when considering economic
development, there are different arguments. For example, __ . .
When considering the advantages and disadvantages of international trade to LDCs, it is
important to look at the implications for both growth and development. In terms of achieving

economic growth, trade is very important because ___ . . . However, when considering economic
development, there are different arguments. For example, __ . ..
When considering the advantages and disadvantages of foreign aid, it is important to look at the
implications for both growth and development. In terms of achieving economic growth, aid can
be very important in filling several gaps such as ___ . . However, the implications in terms of
development are ___ . . .
An outward-oriented strategy may be successful in terms of achieving _____. However, the
disadvantages may be ___ . . . .
The biggest disadvantage of an inward-oriented strategy is that ____ . .

Essay Questions
Evaluate the solutions that a government might employ to correct the problems of market
failure.
Evaluate the effects of a rising interest rate on an economy.
Evaluate the effects of a falling exchange rate on an economy.
Evaluate the arguments in favour of MNC investment in LDCs.
Evaluate the view that foreign aid is more of a disadvantage for LDCs than an advantage.
Evaluate the measures that a government might use to reduce unemployment.
Evaluate the measures that a government might use to reduce inflation.
Evaluate the measures that a government might use to achieve economic growth.
Evaluate the measures that a government might use to reduce a current account deficit.
Please note: The practice questions and essay titles above do not represent an exhaustive
list of all the questions you could be asked. Examiners do their best to come up with
original questions to test your knowledge and skills as an economist!