Handling Data in AS and A2 Economics

Confidence in Handling Economic Data
Revision slides showing how economic data is
presented in charts and tables and some
strategies for effective use of data in your AS and
A2 economics exams

Confidence in Handling Economic Data in Exams
Using Figure 1, describe two significant features of the data
Figure 1: Annual labour migration into/out of UK Figure 1 shows total
inflow, outflow and net
migration figures for the
UK. In each year net
migration into the UK
was positive as inflows
exceeded outflows, the
average has been around
250,000 per year.
The figure for net
migration in 2014 was
the highest since 2005.
Inflows reached a peak
of 624,000 and 327,000
people left causing net
migration to climb to
298,999 in 2014.
1
2

Using Figure 1, describe two significant features of the data
Figure 1: World price of high grade copper 1. Over the period from
2000 to 2014, the
world price of copper
has increased
significantly from an
average of less than 80
US cents per pound in
2000-03 to a price
above 300 cents from
2010-2014.
2. Although copper prices
have seen a trend rise,
the price has been
volatile for example, it
fell by 28% from 2007
to 2009 before rising
by 71% in the following
two years
1
2

Confidence in Handling Data in Economics Exams
Referring to the data in Figure 1, calculate an index number for the oil price in
March 2012, using January 2005 as the base period. Show your working (6 marks)
Answer
In January 2005, figure 1
shows that the world price of
oil was $45 per barrel. The
index number for a base value
is always 100.
In March 2012, the price of oil
had risen to $125 per barrel.
Index number March 2012 =
(March12 price / Jan05 price)
x 100
= ($125/$45) x 100
= 277.8

Confidence in Handling Data in Economics Exams
With reference to the information provided, explain two possible causes of the
decrease in tobacco smoking (4 marks)
Answer
Figure 1 shows that the % of adults
smoking has more than halved from
45% in 1974 to 20% in 2010.
1. One explanation is likely to be a
rise in the real tax (duty) on
cigarettes mentioned in Extract 2
The tax has risen above inflation
thereby reducing the real
purchasing power of smokers.
2. Another factor might be the
effects of advertising bans and
ban on smoking in public places in
the last ten years mentioned in
Extract 1. Figure 1 shows a faster
rate of decline in the last ten years
reflecting an inward shift of the
market demand curve for
cigarettes.
Extract 1
Tobacco smoking has fallen over the past fifty years following government
health campaigns warning people of its dangers and greater regulations on
its sale and consumption. Higher taxes on cigarettes have also contributed
to the decline in smoking. The tax on tobacco now accounts for 80% of the
£7.45 price paid for a premium packet of cigarettes.
Extract 2
In the 2012 Budget the Chancellor George Osborne increased the tax on
tobacco by 5 percentage points above the rate of inflation (known as the
tobacco tax escalator). This added 37 pence to the price of a packet of
cigarettes.
Application

Different ways in which macroeconomic data is displayed
This chart
shows the
annual %
change in
real GDP
This chart
shows
index
numbers
with a
base year
of 2007
This chart
shows
data
expressed
as a % of
GDP
This chart
shows
cross-
country
data
expressed
as a % of
GDP
Notice the long time period here Are you familiar with the countries?

Index numbers for different sectors of the UK Economy
Figure 1: Index of output, 2008-2014 The chart tracks an index of
output for three key industries
in the UK economy. Service
industries such as finance and
tourism account for over 80%
of GDP (by value-added) and
this sector has seen a strong
recovery with growth in excess
of 10% since the 2nd quarter of
2010.
Construction is the most
volatile of the industries shown
in the chart. Twice since 2008,
the construction sector has
been in a recession and output
in 2014 was below levels
achieved before the 2008-09
recession.
When given data in index number format is it often a
good idea to do some quick % change calculations to
describe the extent of change in the data over time.
Note the base period
Source: HM Treasury

Seasonally Adjusted Data
1. The labour market is a good example of when much of the data presented is given a
seasonal adjustment. This is because the aggregate demand for labour varies at
different times of the year due to seasonal changes in the number of jobs on offer.
Examples of seasonal industries include agriculture, tourism, catering, hospitality
and retailing.
2. The purpose of seasonal adjustment is to remove the variations associated with the
time of the year for example when retail sales and employment rise in the run up to
Christmas but fall away again early in the New Year.
Source: HM Treasury

The growth of consumer prices and earnings – real wages
• This is one of those
macroeconomics charts that
requires careful reading in the
exam hall!
• The y-axis tells us that the data
shows the annual% change in
earnings from work and also
consumer prices
• CPI inflation (the black dotted
line) has been persistently
above the growth of earnings
• This means that for many (but
not all) real wages have fallen
each year since 2010.
• Only now with inflation falling
towards zero are real wages
starting to edge higher.
Main Data Source: HM Treasury
Avoid confusing a fall in the rate of growth with a fall in
the level of an economic variable. E.g. consumer price
inflation has been falling but the rate of inflation (until
April 2015) has remained positive.

International comparisons – productivity data for the G7 nations
• Often in exams, students are
asked to make a cross-country
comparison using some key
macro data.
• In this case we see a chart
showing GDP per hour worked
in 2013 for the G7 countries.
• Output per hour in the UK is
taken as the base value – what
can we imply from this data?
• The key point is that five of the
other G7 nations have higher
relative productivity. Only in
Japan is productivity (using this
measure) relatively lower
• Make sure to include the
actual data in your answer
and/or do a simple %
calculation.
The chart data is for one year only – it does not tell us
whether productivity was rising or falling in that year!

Forecast data – be aware of the uncertainty / inaccuracy!
This chart shows the annual government budget surplus / deficit over more than 30 years.
Budget surpluses are rare – the last one was fifteen years ago. But look carefully at the
chart – the light green data shows a forecast from the Office for Budgetary Responsibility.
Forecasts always carry a health warning. There are many reasons why the forecast is
unlikely to be accurate over the next five years. Main Data Source: HM Treasury
Forecast
problems
Volatile economic growth and unemployment
Hard to predict direct & indirect tax revenues
Unexpected changes in government spending

Trade patterns and trade balances for the UK
There is a lot of data in this
table! It would test your skills
of application!
1. Britain exported £511bn
of goods & services in
2013 but imported
£543bn – a trade deficit
of £32bn
2. Our biggest export
market is the USA but the
next four countries are all
inside the Euro Area
3. We run a large trade
surplus with the USA but
a significant trade deficit
with Germany
One key aspects of this data is the importance of the European
Union for the UK – 44% of exports and 52% of imports
China figures in the top three import countries but our exports
to China are a much smaller percentage of trade

Unemployment rates in the UK – by age
• If you get some unemployment data be careful to look at the unit of measurement
• In the chart above the unemployment rate is measured as a % of the labour force
• A long run of data is shown. It shows that youth unemployment (people aged 18 to 24) is
persistently higher than for the whole economy
• Youth unemployment surged to 20% in 2011 but has since fallen quite sharply to 15%
• This is welcome news, but it remains almost 3 times the national average rate of 5.7%
% of what? The
chart does not
make this clear!

Confidence in Handling Economic Data
Follow the Tutor2u team on twitter
@tutor2u Jim Riley
@tutor2u_econ Geoff Riley

Handling Data in AS and A2 Economics

More Related Content

What's hot (19)

Viewers also liked (20)

Similar to Handling Data in AS and A2 Economics (20)

More from tutor2u (20)

Recently uploaded (20)

Handling Data in AS and A2 Economics