Lesson preview · Answering like an economist
A full data-response question, start to finish
~15 min · Free to read
Sami has 30 minutes for the last question on his economics paper. It has a short news story about Country X, a table of figures and four parts, worth 2, 4, 4 and 10 marks. He spends 12 minutes on the 2-mark part and 14 on the two 4-mark parts. That leaves 4 minutes for the 10-mark part. He knows the economics. He runs out of time to show it.
Key Term
Five habits for a data-response question
A data-response question gives you a short case, with text and figures, then several linked parts about it.
- Read the parts first, then the data. As you read, mark the figures each part needs. Check each unit: dollars, percent or an index (a number that compares each value with a base period set at 100).
- Turn marks into minutes. A rule of thumb is about 1.5 minutes a mark, so a 10-mark part gets about 15 minutes. Check your own paper: divide its minutes by its marks.
- Draw each diagram once, then build on it. Label everything. In later parts, point back to it and add a curve when you need one. If a part has its own answer space, sketch a quick labelled copy there.
- Quote the data. Give the figure, its unit and its date.
- End with a judgement. Evaluate means weigh both sides, then decide.
The case (all figures are invented):
Country X has one oil refinery, which makes most of the diesel its lorries, farms and factories use. In January, a fire shuts it. Repairs will take about a year, and imports fill only part of the gap. The central bank aims for 2% inflation.
| January | July | |
|---|---|---|
| Price of diesel (dollars a litre) | 1.50 | 2.10 |
| Inflation (% a year) | 2.0 | 4.8 |
| Real GDP (index, January = 100) | 100 | 98.8 |
| Unemployment (%) | 4.0 | 5.1 |
(a) Calculate the percentage change in the price of diesel. (2 marks) (b) Using a supply-and-demand diagram, explain why the price of diesel rose. (4 marks) (c) Using an AD–AS diagram (aggregate demand and aggregate supply), analyse the effect of dearer diesel on Country X’s economy. (4 marks) (d) Evaluate whether the central bank should raise its interest rate. (10 marks)
The plan. At 1.5 minutes a mark, 20 marks take 30 minutes: 3 for (a), 6 each for (b) and (c), and 15 for (d). Try part (a) yourself first.
Check yourself · no marks
Do part (a) now: calculate the percentage change in the price of diesel.
Commit to one first. Guessing and being wrong beats reading the answer cold.
The fire hit sellers, not buyers, so only supply moved. At the old price, buyers wanted more diesel than sellers had: a shortage. So the price rose to 2.10 dollars a litre by July. One cause, one curve, and a quoted figure.
Parts (c) and (d) move from one market to the whole economy, on an AD–AS diagram. Aggregate demand (AD) is total planned spending at each price level, the average of all prices. Short-run aggregate supply (SRAS) is what firms will make at each price level while their costs stay fixed. Long-run aggregate supply (LRAS) is potential output: what the economy can make when its workers and machines are fully employed.
Dearer diesel raised costs for almost every firm, so SRAS moved left. Prices rose and output fell together: inflation went from 2.0% to 4.8%, and real GDP (total output, with price rises taken out) fell 1.2%. That pattern marks cost-push inflation (prices pushed up by higher costs).
LRAS stayed put, because the refinery will be repaired. So the shock should fade once the refinery reopens: the key fact for part (d).
Trap · Common Misconception
"Demand falls too, because people buy less"
When diesel gets dearer, drivers buy less, so it is tempting to shift demand left as well. Don’t. Buying less at a higher price is a movement along the demand curve. A full diagram already shows it: the quantity falls from Q₁ to Q₂. Move a second curve only for a second, separate cause.
Tip
A judgement in three parts
“There are arguments on both sides” isn’t a judgement. End with a frame like this: On balance, [your answer], because [your strongest reason, with a figure]. This would change if [the condition that would flip it]. Either answer can earn the marks if your reasons back it.
Check yourself · no marks
In part (d), you want to show what a rate rise would do. Do you need a whole new diagram?
Commit to one first. Guessing and being wrong beats reading the answer cold.
Practice · 1 / 6
Country X’s unemployment rate rose from 4.0% to 5.1% between January and July. Which sentence quotes this change correctly?
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