Approaching Data Response Questions with Confidence

1
Approaching Data Response Questions with
Confidence

• Skills Involved in Answering Data Response
  Questions in IB Economics

2
Outline

• Introduction
• Skills Tested in Data Response Questions
• Questions to Consider with Data
• Practice

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Introduction

• IB Economics assessment has four parts
• Paper 1. One long essay, 1 hour, 20
• Paper 2. Three short answers, 1 hour, 20
• Paper 3. Three data response questions, 2 hours,
  40
• Internal Assessment. Four commentaries, 20

4
Introduction

• Data Response Questions (DRQ) account for 40 of
  HL assessment
• 2 hours, must answer 3 out of 5 questions
• Only standard IB reading time 5 minutes before
  exam starts
• The Data may consist of
• Text, maximum 400 words
• Data tables
• Data charts
• Or a combination of all three

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Introduction

• Each DRQ will have exactly the same format
• Part 1 2 definitions and/or calculations
• 2 points each for a total of 4 points
• Vague definition will earn you 1 of 2 points per
  question
• Precise definition with an appropriate example
  will earn you 2 of 2 points per question
• For calculations, show your steps
• E.g. What is the price elasticity of demand?
• E.g. What is the multiplier implied in the data?
• (need to define and calculate)

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Introduction

• Part 2 3 identification and application of
  appropriate theory
• 4 points in total per Part (each Part with only 1
  question)
• For each Part, identification of correct
  appropriate theory will earn you 1 point of 2
• Correct application of appropriate theory will
  earn you full marks

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Introduction

• Part 4 effective evaluation, supported by
  appropriate evidence or theory
• 8 points in total (only 1 question)
• Relevant concepts recognized and developed in
  reasonable depth, with some attempt at
  application and analysis will earn you 3-5 points
• Relevant concepts recognized and developed in
  reasonable depth, effective evaluation, supported
  by appropriate evidence or theory will earn you
  6-8 points
• Tip When deciding which DRQ to answer, read Part
  4 of each DRQ and see if you are comfortable with
  that question
• Part 4 generally builds upon the first three
  parts and
• Part 4 is worth more points than each of the
  first three parts

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Introduction

• The DRQs will cover all sections of the syllabus
• Each DRQ may cover a couple of sections
• Need to apply theory in a linked way
• MUST use evidence/data from the article for the
  last 3 parts!!
• Extract data from article and label the diagrams
  with appropriate and specific labels, e.g.
• Price of oil and not just Price
• Price points use real values, 50/barrel,
  instead of just P0
• Refer to the text in your answers!!
• Need to EVALUATE in the last part
• See separate guidance on how to EVALUATE

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Outline

• Introduction
• Skills Tested in Data Response Questions
• Questions to Consider with Data
• Practice

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Skills Tested in DRQ

• The range of skills
• Examples of questions and banana skins to avoid!

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Basics of good preparation for the data response
paper

• Thorough knowledge of basic definitions and
  important economic data measures
• Good understanding of key economic relationships
  (theoretical ideas are tested!)
• Awareness of current policy debates in the world
• Ability to interpret figures and work with them -
  the essence of data response!
• Awareness of the limitations of economic data
• Willingness to bring into an answer wider
  knowledge and evidence (not provided in the
  question)

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Part 1. Knowledge 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
• Dont spend too much time on the definitions but
  beware dropped marks
• If calculations, show your work!

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Can you define these precisely?

• multiplier-accelerator process
• real disposable income
• real rate of interest
• standard of living
• price level
• inflation
• trade-weighted exchange rate index

• opportunity cost
• monopoly
• market failure
• negative externality
• demerit good
• economic growth
• labor productivity
• structural unemployment

• 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

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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

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Part 2 3. Data analysis / theory application
questions (1)

• First, comprehension
• Without data comprehension, you cant have
  correct application of theory to data
• Answers might include
• outlining a trend
• identifying a peak or a trough
• selecting relevant evidence from information
  given.
• some summarising of the data or simple
  calculations particularly where index numbers are
  used
• Are you asked to describe short run or longer run
  changes?

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Data sets used in questions

• balance of payments
• interest rates
• money supply
• inflation measures
• real GDP data
• consumption and savings data
• general macroeconomic forecasts

• company investment and profits
• competitiveness indicators
• currency trends
• employment data
• unemployment data
• taxation and government spending
• international economic indicators

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Example -consumption trends
Remember to describe the rate of change carefully!
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Part 2. Data analysis / theory application
questions (2)

• Second, analyse the data with application of
  economic principles
• Higher order skills - reflected in the mark
  allocation
• Often requires a theoretical relationship to be
• identified
• explained
• illustrated / supported / questioned by using the
  data available in the exam
• You need to use the data to score highly!
• A change in the data is normally multi-causal

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Global disinflation
What factors might explain the lower inflation
experienced in G7 nations during the 1990s?
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Trends in the sterling exchange rate
Why has the exchange rate been so strong in the
last two years?
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Trends in unemployment
What is meant by long-term unemployment? Why has
unemployment fallen in the last 3 years?
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Real output unemployment
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Analysis questions on economic growth the
budget deficit
Explain using the evidence in the chart how might
the trend In economic growth might be expect to
affect the PSBR
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The exchange rate the BOP
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Part 3. Evaluation

• Pros and cons
• On the one hand, on the other hand
• From the s point of view
• The Keynesians believe but the monetarists
• In the short run,, but in the long run
• Review the paper on EVALUATION!

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Outline

• Introduction
• Skills Tested in Data Response Questions
• Questions to Consider with Data
• Practice

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Questions to Consider with Data

• In what time period is the data presented?
• 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?

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Quarterly data example (1)

• Look for turning points in the charts
• Look also for peaks troughs

This is just one way of showing the economic cycle
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Percentage change and level of consumption and
interest rates
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Both percentage changes
What theoretical relationship would you expect
between economic growth and total employment?
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Percentage of
Why has the savings ratio stayed so high?
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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

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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

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Examples 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

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Index 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

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Data in index number format
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The sterling exchange rate index
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Describing data in index format

• Check the base year
• Is it a weighted index? CPI and the Weighted
  Exchange Rate are examples of this
• Calculate percentage changes in the data based on
  the index numbers (a good skill to practise!)
• Be careful not to express the figures in monetary
  terms!

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Outline

• Introduction
• Skills Tested in Data Response Questions
• Questions to Consider with Data
• Practice

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Practice

• The Economist back pages with data and charts
• The Financial Times
• The World Bank Development Report 2004
• Other sources on the Economics subject page (e.g.
  Bized)
• The news articles you use for your portfolio
• In-class tests and exercises