STAGE 1 ECONOMICS

Understanding economic data

Chapter 1: Using and analysing data
SACE Subject Outline – Summary
Students collect and analyse data in order to explain economic activity. They use appropriate graphs, diagrams
and tables to display results that support their arguments.

In Stage 1 Economics you will be asked to both construct graphs and to analyse the results. Using data helps
predict market trends and measure the outcomes of the behaviour of consumers, firms and the government. Data
helps you make informed decisions. Development of the relevant skills require practices, and we should consider
some key relevant factors.

Constructing tables
When you are collecting data, it may first be useful to organise your findings in table format. You should provide
• An appropriate title
• A heading for each column, including showing in brackets such features as % or $US for instance, if numerical
data is being collected
• It may be useful to number your findings as Figure 1, Figure 2, etc. This enables ease of reference if writing a
report referring to a number of findings.
An example follows.

Table 1.1: Employment status of males in the Australian labour force, 2003–2017

Employed full time Employed part time

Year
(%) (%)
2002 69.1 11.5
2007 71.5 11.3
2012 68.9 13.7
2017 68.1 13.7

Sample male employment data. Source: HILDA survey, 2019

Note
Don’t expect the percentage males working part time, plus those working full time, to total 100%, because
there are many males of working age who are not working.

Constructing graphs
While collecting data and compiling a table is useful as a starting point, constructing a line graph to show trends
over time provides an effective visual impression.
You need to provide a heading, label each axis, and choose a scale to maximise use of the space provided and
to allow ease of interpretation.
You may be showing more than one feature on your graph, for instance both full-time and part-time male
employment compiled from our table above. To differentiate your two groups, use different colours for each
category, or perhaps one unbroken, and another broken line to assist in interpretation. If differentiating using
symbols, you may need to include a key to identify how you differentiated the two categories.

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An example follows.

80

60
The full
employment
40
The part-time

1
employment

20

0 Years
2002 2007 2012 2017

Figure 1.1: Employment status of males in the Australian labour force, 2003–2017

Some data is very effective when shown in bar graph form. For instance, you write a report stating that China
is the source of 40% of Australia’s online purchases, followed by USA with 22% and then a number of other
countries such as the UK, Hong Kong and New Zealand. How much more impact that information has when
conveyed visually, as below, possibly also making interpretation of that information easier, too.

Source Countries of Recent International Purchases (by Australians)

Figure 1.2: Source of 2019 online purchases

The data above regarding online purchases, also lends itself to effective representation as a pie graph (or pie
chart), as the components can be shown as a part of 100%.
Consider the following table.

Table 1.2: Percentage share of total Australian supermarket income in 2019

Supermarket Market share (%)

Woolworths 38
Coles 31
Independents 12
Aldi 10
IGA 7
Others 2

The power of the two majors, Woolworths and Coles, is instantly apparent when shown in pie graph format.

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Others
2%

IGA
7%
Aldi
10%
Woolworths
38%
Independents
12%

Coles
31%

Woolworths Coles Independents Aldi IGA Others

Figure 1.3: Market share (%) of leading Australian supermarkets, 2019

Hints for reading graphs

Collecting data and constructing a graph are necessary first steps when trying to explain what has happened in a
scenario. It is necessary to use economic knowledge and understanding, plus further research to provide credible
rationale for occurrences, before considering possible suggestions for improvement.

Identifying a particular period

Many students have trouble reading graphs when asked to identify a certain year, month or quarter. Remember
that the financial year is of importance to economists, and years will sometimes be labelled through a financial
year (July 1 – June 30).
Sometimes it is useful to go back to the origin of the ‘x’ axis and read forward from there when trying to separate
years or months. It might help to separate the relevant periods with a red pen so that you can identify a year,
month or quarter more readily.

Economic growth in Westeros

0
Quarterly

-2
2003 2007 2011 2015 2019

Figure 1.4: Economic growth in Westeros

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Knowing the quarters of the year

Much economic data is measured at quarterly intervals. The measures of inflation and economic growth are two
such important indicators. Published results may name quarters as the first, second, third or fourth quarters of the
year. We name the quarters for the month in which they end. There are three months in each quarters of a year, so
the first quarter is known as the March quarter, the second is June, the third September, and the fourth quarter of
the year is the December quarter. You can see the measurements in economic growth in Figure 1.4.

Considering the trend

Able to be mathematically constructed, at its simplest, the trendline shows the general direction over time and
is widely used in economics. Whilst outliers will appear on some graphs, the general pattern of values should be
followed when considering trends, as can be seen below.

Overseas visitor arrivals into Essos

1
830

Seasonally adjusted
820
Trend

810

800

790
Thousands

780

770

760

750

740

730
Aug-17 Dec-17 Apr-18 Aug-18 Dec-18 Apr-19 Aug-19

Figure 1.5 Overseas visitor arrivals into Essos

Identifying relationships between graphs, or lines on a graph

It is useful to recognise and understand the existence of patterns which may appear on graphs. For instance,
it could be suggested that if economic growth, as shown by gross domestic product, is increasing, there could
be more jobs around, and more people participating in the workforce. If the economist finds that both economic
growth and the participation rate are both increasing, we say that there is a direct relationship between these
two indicators. If economic growth was falling, and the unemployment rate increasing, the relationship is inverse,
or indirect. You can see that in the graph which follows.

U/e rate
(%)
billion
(US$) 7.0
22,000 Economic growth
(LHS)
6.0

20,000
5.0

18,000
Unemployment rate
(RHS) 4.0
16,000

14,000 3.0
2014 2015 2016 2017 2018 2019

Figure 1.6: Economic growth and unemployment in the USA

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Take a closer look at Figure 1.6. To analyse this graph, the scale for the unemployment rate percentages is shown
on the right-hand side (RHS) of the vertical axis, while the economic growth figures are shown on the left-hand
side (LHS).

Knowing the language of your subject

As you progress through this course you will be exposed to many terms which are new to you, or have a slightly
different meaning to the word which you are familiar with. It is useful to keep a glossary of economic terminology
so that you have a solid foundation which will help you build your knowledge and understanding of economics.

Interpreting a graph correctly

Be careful when explaining trends from a graph. Take note of what the graph is actually showing. For instance, if
asked to comment on the trend during the global financial crisis (GFC) of 2008-9, many students would say private
sector ‘wages fell’. But look at the heading. It shows ‘wages growth’. So wages actually grew, but at a diminishing
rate. It would be correct to say that ‘wages growth fell’.

Non-government wages growth

5.0

4.5

4.0

3.5

3.0
Percent

2.5

2.0

1.5

1.0

0.5 Total

0.0
Sep-2007

Sep-2012

Dec-2018
Mar-2000

Mar-2015
Jun-2001

Jun-2006

Jun-2011

Jun-2016

Figure 1.7: Private sector wages growth in Australia

Understanding seasonal adjustment

Some useful measures related to the economy have expected upturns and downturns throughout the year. One
example would be retail sales, which would generally be expected to peak just before Christmas. Without seasonal
adjustment, it would appear that the increase in retail sales could be a sign of a strengthening economy, and
policy actions may be taken to this effect. This then, could be a misleading signal. There is a statistical method for
calculating seasonal adjustment, but for our purposes let us say that the calendar-related change is not omitted
altogether, but is averaged out over the entire period. There are many activities which have seasonal peaks or
troughs, for instance in relation to agriculture and food sales relating to certain products. Consider reasons for the
trend relative to airline travel in the USA in the activities which follow this chapter.

90

80

70

60

50
Seasonally adjusted
40 thousands of air revenue
Billions

passenger miles
30
Thousands of air
revenue passenger miles
20

10
Jan 2000

Jan 2002

Jan 2004

Jan 2006

Jan 2008

Jan 2010

Jan 2012

Jan 2014

Figure 1.8: Passenger miles, USA

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Analysing graphs
A major role of the economist is in the interpretation of data. You will be expected to make suggestions regarding
what could have caused changes. Of course, you should research possible reasons, but you will also be expected
to draw on your life experience and asked to make a sensible suggestion. Economics was described by one my
students as ‘organised common sense’. Don’t imagine that you cannot make a suggestion if you are new to the
subject. You can. Technological change, for instance, has had a huge impact on some employment sectors, social
change regarding the growth of women being in the workforce is another. The growth of renewable sources of
energy, and the desire for university education after secondary school are also significant changes in our society.
You know about all of these issues. There are often a variety of possible answers, and maybe none of them may
be ‘wrong’, just perhaps less likely than another factor. So, when asked to make a suggestion, have a try!

Be creative
The line, bar and pie charts referred to here are just a starting point. When doing a PP presentation, for instance,
1
the visual impact of your material is important, so be creative in the way you make connections and display your
findings.

Helpful online resources

Investigate the range of graphs and displays at:
[Link]

Be careful
Don’t be misled by numbers. A large number isn’t necessarily good. The banknote below, the largest unit of
currency printed by Zimbabwe at the height of its hyperinflation in the first decade of the 21st century, was actually
equal to US$10!

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Activities
1. (a).

Female employment status of the Australian labour force, 2003–2017

Employed full time Employed part time

Year
(%) (%)
2002 34.6 29.9
2007 38.7 31.1
2012 36.5 32.0
2017 39.2 32.0

Construct a line graph showing female labour force employment status. Take note of the previous
suggestions relating to scale and labelling features of your graph.

(b) Compare the graph which you have drawn, with the graph showing male employment status on
page 3 of this chapter.
(i) Suggest a reason for the differences relating to male and female part-time employment.


(ii) Male full time employment fell slightly from 2002 to 2017, while male part-time employment
rose. Suggest a possible reason for this trend.


(iii) Provide two reasons why males or females of working age may not be employed in either a
full or part-time capacity.


(iv) Discuss the trend for male full-time employment between 2002 and 2017, compared with
the trend for female full-time employment over this time.





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Activities
2. Refer to the graph showing economic growth in Westeros (page 4).
(a) In which year did economic growth most recently peak in Westeros?

(b) Identify the most recent prolonged period when economic growth was weakest.

(c) Suggest a major reason which could contribute to economic growth falling (the value of production
of goods and services).

3. (a) Provide an economic reason for the upward trend in overseas visitor arrivals into Essos (page 5). 1


(b) Provide both a potential advantage and disadvantage of this trend.




4. (a) Describe and explain the relationship which exists between economic growth and unemployment
in the USA, as shown in the graph on (page 5).


(b) Do a web search and provide possible reasons for the trend prior to 2019.



(c) Now go one step further and suggest how that trend over time might affect individuals, firms and
the government.






(d) If you were in government, would you be more likely to vote to raise or lower taxes in 2014 to deal
with the economic state of the nation? Explain your choice.



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Activities
5. (a) Consider the graph showing passenger miles in the USA, on page 6.
You can see that in the unadjusted passenger miles, there seems to be a peak at a similar time
of each year. When is it? Provide a suggestion as to why this occurs.


(b) Would you expect the same seasonal pattern in Australia? Why?


(c) ‘The expected, seasonal change in passenger miles is ignored so that misleading impressions of
growth are not created.’ Comment on this statement.



6. Display this table in the graphical form which you think is most appropriate for maximum visual impact
and for ease of interpretation.

Number of Australians by income tax bracket

Taxable income 2016–17

$18,200 or less 2,700,000*
$18,201 – $37,000 3,100,000
$37,001 – $80,000 5,600,000
$80,001 – $180,000 2,000,000
$180,001 or more 500,000
Total 13,900,000
*Number of Australians rounded to the nearest 100,000

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Activities
(a) Refer to the table below.

Tax scales for an Australian resident in 2019 – 20

Taxable income Tax on this income

$18,200 or less Nil
$18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $87,000 $3572 plus 32.5c for each $1 over $37,000

1
$87,001 – $180,000 $19,822 plus 37c for each $1 over $87,000
$180,001 and over $54,232 plus 45c for each $1 over $180,000

Use the information in the table above to help you calculate the amount of tax due by an individual
employee with a taxable income of:
(i) $50,000 pa


(ii) $100,000 pa


(iii) $200,000 pa


(b) Investigate why it is that on double the taxable income you are due to pay double the tax.



(c) ‘In 2016–17 over 2,000,000 citizens earned $18,200 or less. Extreme poverty is widespread in
Australia.’ Comment on this statement.



7. Georgia did an excellent job of steadily reducing
COVID-19 cases even while loosening their restrictions
faster than many other states'.
Comment on this statement after closely observing the
graph. (The employee who produced this graph for the
Georgia Health Department lost their job.)








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