approaching data response questions with confidence skills involved in answering data response...
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Approaching Data Response Approaching Data Response Questions with ConfidenceQuestions with Confidence
Skills Involved in Answering Data Skills Involved in Answering Data Response Questions in IB Response Questions in IB
EconomicsEconomics
OutlineOutline
IntroductionIntroduction
Skills Tested in Data Response QuestionsSkills Tested in Data Response Questions
Questions to Consider with DataQuestions to Consider with Data
PracticePractice
IntroductionIntroduction
IB Economics assessment has four partsIB Economics assessment has four parts– Paper 1. One long essay, 1 hour, 20%Paper 1. One long essay, 1 hour, 20%
– Paper 2. Three short answers, 1 hour, 20%Paper 2. Three short answers, 1 hour, 20%
– Paper 3. Three data response questions, 2 hours, 40%Paper 3. Three data response questions, 2 hours, 40%
– Internal Assessment. Four commentaries, 20%Internal Assessment. Four commentaries, 20%
IntroductionIntroduction
Data Response Questions (DRQ) Data Response Questions (DRQ) account for 40% of HL assessmentaccount for 40% of HL assessment
2 hours, must answer 3 out of 5 2 hours, must answer 3 out of 5 questionsquestions
Only standard IB reading time – 5 Only standard IB reading time – 5 minutes before exam startsminutes before exam starts
The “Data” may consist ofThe “Data” may consist of• Text, maximum 400 wordsText, maximum 400 words• Data tablesData tables• Data chartsData charts• Or a combination of all threeOr a combination of all three
IntroductionIntroduction
Each DRQ will have exactly the same formatEach DRQ will have exactly the same format• Part 1: 2 definitions and/or calculationsPart 1: 2 definitions and/or calculations
– 2 points each for a total of 4 points2 points each for a total of 4 points
– Vague definition will earn you 1 of 2 points per Vague definition will earn you 1 of 2 points per questionquestion
– Precise definition with an appropriate example will Precise definition with an appropriate example will earn you 2 of 2 points per questionearn you 2 of 2 points per question
– For calculations, show your stepsFor calculations, show your steps
– E.g. What is the price elasticity of demand?E.g. What is the price elasticity of demand?
– E.g. What is the multiplier implied in the data?E.g. What is the multiplier implied in the data?• (need to define and calculate)(need to define and calculate)
IntroductionIntroduction
• Part 2 & 3 – identification and application of Part 2 & 3 – identification and application of appropriate theoryappropriate theory
– 4 points in total per Part (each Part with only 1 4 points in total per Part (each Part with only 1 question)question)
– For each Part, identification of correct appropriate For each Part, identification of correct appropriate theory will earn you 1 point of 2theory will earn you 1 point of 2
– Correct application of appropriate theory will earn you Correct application of appropriate theory will earn you full marksfull marks
IntroductionIntroduction
• Part 4 – effective evaluation, supported by appropriate Part 4 – effective evaluation, supported by appropriate evidence or theoryevidence or theory
– 8 points in total (only 1 question)8 points in total (only 1 question)– Relevant concepts recognized and developed in reasonable Relevant concepts recognized and developed in reasonable
depth, with some attempt at application and analysis will earn depth, with some attempt at application and analysis will earn you 3-5 pointsyou 3-5 points
– Relevant concepts recognized and developed in reasonable Relevant concepts recognized and developed in reasonable depth, effective evaluation, supported by appropriate evidence depth, effective evaluation, supported by appropriate evidence or theory will earn you 6-8 pointsor theory will earn you 6-8 points
– Tip: When deciding which DRQ to answer, read Part 4 of Tip: When deciding which DRQ to answer, read Part 4 of each DRQ and see if you are comfortable with that each DRQ and see if you are comfortable with that question question
• Part 4 generally builds upon the first three parts and Part 4 generally builds upon the first three parts and • Part 4 is worth more points than each of the first three partsPart 4 is worth more points than each of the first three parts
The DRQ’s will cover all sections of the syllabusThe DRQ’s will cover all sections of the syllabus Each DRQ may cover a couple of sectionsEach DRQ may cover a couple of sections
– Need to apply theory in a linked wayNeed to apply theory in a linked way MUST use evidence/data from the article for MUST use evidence/data from the article for
the last 3 parts!!the last 3 parts!!– Extract data from article and label the diagrams with Extract data from article and label the diagrams with
appropriate and specific labels, e.g.appropriate and specific labels, e.g.• Price of oil and not just PricePrice of oil and not just Price• Price points – use real values, $50/barrel, instead of just PPrice points – use real values, $50/barrel, instead of just P00
– Refer to the text in your answers!!Refer to the text in your answers!! Need to EVALUATE in the last partNeed to EVALUATE in the last part
– See separate guidance on how to EVALUATESee separate guidance on how to EVALUATE
IntroductionIntroduction
OutlineOutline
IntroductionIntroduction
Skills Tested in Data Response QuestionsSkills Tested in Data Response Questions
Questions to Consider with DataQuestions to Consider with Data
PracticePractice
Skills Tested in DRQSkills Tested in DRQ
The range of skillsThe range of skills
Examples of questions and banana Examples of questions and banana skins to avoid! skins to avoid!
Basics of good preparation for Basics of good preparation for the data response paperthe data response paper
Thorough knowledge of basic Thorough knowledge of basic definitionsdefinitions and important economic and important economic data data measuresmeasures
Good understanding of key Good understanding of key economic relationships economic relationships (theoretical ideas (theoretical ideas are tested!)are tested!)
Awareness of Awareness of current policy debatescurrent policy debates in the world in the world Ability to Ability to interpret figuresinterpret figures and work with them - the essence of data and work with them - the essence of data
response!response! Awareness of the Awareness of the limitations of economic datalimitations of economic data Willingness to bring into an answer wider knowledge and evidence Willingness to bring into an answer wider knowledge and evidence
(not provided in the question)(not provided in the question)
Part 1. Part 1. Knowledge questions - definitionsKnowledge questions - definitions
Tests a lower order skill but from knowledge comes the higher order skills
Appears at the start of a paper - e.g. define the terms used in the text, or charts and tables
Clear, precise definitions are required Learn up to four main economics definitions a day in the final
prep for the exams! Look carefully at the mark allocation - only 2 marks will be
available per definition Don’t spend too much time on the definitions but beware
dropped marks If calculations, show your work!
Can you define these precisely?Can you define these precisely? opportunity cost monopoly market failure negative externality demerit good economic growth labor productivity structural unemployment
multiplier-accelerator process real disposable income real rate of interest standard of living price level inflation trade-weighted exchange rate
index
- All terms to be defined must be from the syllabus (not necessarily mentioned, but could be included implicitly
- Must read the IB Glossary (on intranet) and the definitions at the back of the Lipsey textbook
- Ask me for a copy of the Collins Economics Dictionary
Can you distinguish between:Can you distinguish between:
direct and indirect taxation fixed and floating exchange rates GDP and GNP income and wealth inflation and the value of money money and real income private and social costs relative and absolute poverty
Part 2 & 3. Data analysis / Part 2 & 3. Data analysis / theory application questions (1)theory application questions (1)
First, comprehension• Without data comprehension, you can’t have
correct application of theory to data• Answers might include
– outlining a trendoutlining a trend– identifying a peak or a troughidentifying a peak or a trough – selecting relevant evidenceselecting relevant evidence from information given. from information given.– some some summarising of the datasummarising of the data or or simple calculations simple calculations
particularly where index numbers are usedparticularly where index numbers are used
• Are you asked to describe short run or longer run changes?
Data sets used in questionsData sets used in questions
balance of paymentsbalance of payments interest ratesinterest rates money supply money supply inflation measuresinflation measures real GDP datareal GDP data consumption and savings consumption and savings
datadata general macroeconomic general macroeconomic
forecastsforecasts
company investment and company investment and profitsprofits
competitiveness indicatorscompetitiveness indicators currency trendscurrency trends employment data employment data unemployment dataunemployment data taxation and government taxation and government
spendingspending international economic international economic
indicatorsindicators
Example -consumption trendsExample -consumption trends
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97-4
-2
0
2
4
6
8
Annual percentage change in consumption
CONSUMPTION GROWTH 1980-1997
Remember to describe the rate of change carefully!Remember to describe the rate of change carefully!
Part 2. Data analysis / theory Part 2. Data analysis / theory application questions (2)application questions (2)
Second, analyse the data with application of economic Second, analyse the data with application of economic principles principles
• Higher order skills - reflected in the mark allocationHigher order skills - reflected in the mark allocation
• Often requires a theoretical relationship to beOften requires a theoretical relationship to be– identified identified
– explainedexplained
– illustrated / supported / questioned by using the data available illustrated / supported / questioned by using the data available in the examin the exam
• You need to use the data to score highly!You need to use the data to score highly!
• A change in the data is normally A change in the data is normally multi-causal multi-causal
Global disinflationGlobal disinflation
80-8485-89 90
9192
9394
9596
970
1
2
3
4
5
6
7
8
9
Ann
ual %
cha
nge
in c
onsu
mer
pri
ces
INFLATION IN THE G7 NATIONS
What factors might explain the lower inflation What factors might explain the lower inflation experienced in G7 nations during the 1990s?experienced in G7 nations during the 1990s?
Trends in the sterling exchange Trends in the sterling exchange raterate
93Q12
3494Q1
23
495Q1
23
496Q1
23
497Q1
23
4
80
85
90
95
100
105
Trade weighted index (1990=100)
STERLING TRADE WEIGHTED INDEX
Why has the exchange rate been so strong in the last Why has the exchange rate been so strong in the last two years? two years?
Trends in unemploymentTrends in unemployment
91Q13
92Q13
93Q13
94Q13
95Q13
96Q13
97Q13
Source: Labour Market Statistics
200
300
400
500
600
700
800
900
1000
1100
1200
Thousa
nds
(Seaso
nally
adju
sted)
LONG TERM UNEMPLOYMENT IN THE UK 1991-1997
What is meant by long-term unemployment?What is meant by long-term unemployment?
Why has unemployment fallen in the last 3 years?Why has unemployment fallen in the last 3 years?
Real output & unemploymentReal output & unemployment
ECONOMIC GROWTH AND UNEMPLOYMENT IN THE UK
1400
1600
1800
2000
2200
2400
2600
2800
3000
3200
91
Q1 2 3 4
92
Q1 2 3 4
93
Q1 2 3 4
94
Q1 2 3 4
95
Q1 2 3 4
96
Q1 2 3 4
97
Q1
Economic Trends, Labour Market Statistics
Un
em
plo
ym
en
t (0
00
s)
se
as
on
ally
a
dju
ste
d
95
97
99
101
103
105
107
109
111
113
GD
P (
fac
tor
co
st)
, se
as
on
ally
a
dju
ste
d (
19
90
=1
00
)
Unemployment (LHS) Gross Domestic Product (RHS)
Analysis questions on economic Analysis questions on economic growth & the budget deficitgrowth & the budget deficit
90 91 92 93 94 95 96 97-1
0
1
2
3
4
5
6
7
8
PS
BR
(%
ofG
DP
)
-3
-2
-1
0
1
2
3
4
5
% c
han
ge
in r
eal
GD
P
PSBR
GDP GROWTH
REAL ECONOMIC GROWTH & THE BUDGET DEFICIT
Explain using the evidence in the chart how might the trend In Explain using the evidence in the chart how might the trend In economic growth might be expect to affect the PSBR economic growth might be expect to affect the PSBR
The exchange rate & the BOPThe exchange rate & the BOP
94Q
1 2 3 495
Q1 2 3 4
96Q
1 2 3 497
Q1 2 3 4
-4
-3
-2
-1
0
1T
hous
ands
TR
AD
E B
ALA
NC
E (
mill
ion
poun
ds)
80
85
90
95
100
105
EX
CH
AN
GE
RA
TE
IND
EX
(19
90=
100)
Trade Balance (LHS)
Sterling Index (RHS)
UK TRADE & THE STERLING EXCHANGE RATE
Part 3. EvaluationPart 3. Evaluation
Pros and consPros and cons On the one hand, on the other handOn the one hand, on the other hand From the …’s point of viewFrom the …’s point of view The Keynesians believe… but the monetarists…The Keynesians believe… but the monetarists… In the short run,…, but in the long run…In the short run,…, but in the long run…
Review the paper on EVALUATION!Review the paper on EVALUATION!
OutlineOutline
IntroductionIntroduction
Skills Tested in Data Response QuestionsSkills Tested in Data Response Questions
Questions to Consider with DataQuestions to Consider with Data
PracticePractice
Questions to Consider with DataQuestions to Consider with Data
• In what time period is the data presented?In what time period is the data presented?– quarterly / monthly / annual data?quarterly / monthly / annual data?
• Is data measured as a level or as a percentage change?
• Is the data showing a percentage change and percentage of something (important!)
• Is the data in monetary terms or an index number?
• What unit of currency is used? (common currency?)
• Is the data expressed in nominal or real terms?
• Has the data been subjected to a seasonal adjustment? • Does the evidence include forecasts?
• Who has produced the information? How reliable is it?
Quarterly data example (1)Quarterly data example (1)
90
Q1 3
91
Q1 3
92
Q1 3
93
Q1 3
94
Q1 3
95
Q1 3
96
Q1 3
97
Q1 3
-4-3-2-1012345
% change year on year
REAL GDP GROWTH SINCE 1990 Look for Look for turning turning points in points in the the chartscharts
Look Look also for also for peaks & peaks & troughstroughs
This is just one way of showing the economic cycleThis is just one way of showing the economic cycle
Percentage change and level of …Percentage change and level of …consumption and interest ratesconsumption and interest rates
3
90Q
1 3
91Q
1 3
92Q
1 3
93Q
1 3
94Q
1 3
95Q
1 3
96Q
1 3
97Q
1 3
-4
-3
-2
-1
0
1
2
3
4
5
Con
sum
er s
pend
ing
- %
cha
nge
year
on
year
4
6
8
10
12
14
16
Bas
e In
tere
st R
ates
(%)
Consumption
Interest Rates
Both percentage changesBoth percentage changes
80-8485-89 89
9091
9293
9495
9697
-4
-3
-2
-1
0
1
2
3
4
5A
nn
ua
l pe
rce
nta
ge
ch
an
ge
GDPEMPLOYMENT
REAL GDP AND EMPLOYMENT GROWTH
What theoretical relationship would you expect between What theoretical relationship would you expect between economic growth and total employment?economic growth and total employment?
Percentage ofPercentage of
88 89 90 91 92 93 94 95 96 974
5
6
7
8
9
10
11
12
13
Per
cent
age
of d
ispo
sabl
e in
com
e sa
ved
PERSONAL SECTOR SAVINGS RATIO
Why has the savings ratio stayed so high?Why has the savings ratio stayed so high?
Percentage change (growth of)Percentage change (growth of)
Rate of inflation - the annual percentage change in consumer prices
Consumer spending Retail sales growth Growth of wages and average earnings Percentage change in real gross fixed
investment spending Percentage change in the money supply
Percentage of (scale measure)Percentage of (scale measure) Budget Deficit (PSBR) as a percentage of GDP (e.g.
one of the Maastricht Convergence Criteria) Personal Sector Savings Ratio - measured as a
percentage of Real Personal Disposable Income The Current Account deficit/surplus on the UK
Balance of Payments as a percentage of GDP UK Manufactured Exports as a percentage of total
world trade Unemployment as a percentage of the employed
labour force
Examples of index numbersExamples of index numbers
Relative Unit Labour Costs (a measure of international competitiveness)
Consumer Price Index or the Producer Price Index (various other measures!)
Terms of Trade Effective Exchange Rate Index Consumer Confidence Index
Index numbersIndex numbers
Indices are values expressed as a percentage of a chosen base figure.
They don't have specified units such as pounds sterling This is an advantage of index numbers - particularly
when we want to look at data measured in different units to identify trends and relationships
Do some simple calculations if presented with index number series
Data in index number formatData in index number format
86Q
1 387
Q1 3
88Q
1 389
Q1 3
90Q
1 391
Q1 3
92Q
1 393
Q1 3
94Q
1 395
Q1 3
96Q
1 397
Q1 3
Source: National Income Data Releases
85
90
95
100
105
110
115
85
90
95
100
105
110
115
Real National Output 1990=100
UK REAL GDP 1986-1997
The sterling exchange rate indexThe sterling exchange rate index
93Q12
34
94Q12
34
95Q12
34
96Q12
34
97Q12
34
80
85
90
95
100
105
Trade weighted index (1990=100)
STERLING TRADE WEIGHTED INDEX
Describing data in index formatDescribing data in index format
Check the base yearCheck the base year Is it a weighted index? CPI and the Weighted Is it a weighted index? CPI and the Weighted
Exchange Rate are examples of thisExchange Rate are examples of this Calculate percentage changes in the data based Calculate percentage changes in the data based
on the index numbers (a good skill to practise!)on the index numbers (a good skill to practise!) Be careful not to express the figures in Be careful not to express the figures in
monetary terms!monetary terms!
OutlineOutline
IntroductionIntroduction
Skills Tested in Data Response QuestionsSkills Tested in Data Response Questions
Questions to Consider with DataQuestions to Consider with Data
PracticePractice
PracticePractice
– The Economist – back pages with data and chartsThe Economist – back pages with data and charts
– The Financial Times The Financial Times – The World Bank Development Report 2004The World Bank Development Report 2004
– Other sources on the Economics subject page Other sources on the Economics subject page (e.g. Bized)(e.g. Bized)
– The news articles you use for your portfolioThe news articles you use for your portfolio
– In-class tests and exercisesIn-class tests and exercises