A-Level Economics: Data Skills — Index Numbers and Real Values

Data-response questions in A level Economics regularly hand you a table of index numbers or figures in money terms and expect you to turn them into something meaningful: a percentage change, a real-terms comparison, an inflation rate. The DfE quantitative skills annex requires you to calculate and interpret index numbers, to convert money values into real terms and to understand the mean, the median and quantiles. This material is a focused workout on exactly those skills.

It starts with the mechanics of index numbers: building an index from raw prices with a base year of 100, calculating the percentage change between two index values (and seeing why a rise from 120 to 132 is 10%, not 12%), and rebasing a series to a new base year. You then build weighted price indices with weights expressed as shares and as parts per thousand, which shows why a large price change in an item with a small weight moves the overall index only a little.

The link to real-world measurement comes through the Consumer Prices Index: how the basket and its weights are chosen to reflect average household spending, why it may not match any particular household's experience, how quality changes and new products complicate it, and how CPIH differs by including owner-occupiers' housing costs and council tax.

The second half converts money values into real values. You deflate a pay rise, a government spending figure and nominal GDP using a price index or the GDP deflator, and see how a 20% rise in money terms can be a 4% fall in real terms, and a fall of about 7% per person once population growth is included. You also approximate the real interest rate and compare the mean with the median for a skewed set of incomes.

Every quiz question is a short calculation or interpretation with one correct answer and a worked explanation. The material offers the 12-question quiz, a flashcard deck of the formulas and definitions, and a printable written sheet of eight calculation tasks with full worked model answers. As a skills topic it has no oral exam. The skills practised are those in the DfE annex, which the exam boards (for example AQA, Pearson Edexcel and OCR) assess across their papers.

• Calculate an index from raw data and the percentage change between two index values
• Rebase an index series to a new base year
• Construct a weighted price index and explain the role of weights
• Describe how the CPI is built, how CPIH differs and the limitations of both
• Convert money values into real values using a price index or the GDP deflator
• Calculate and interpret the mean and the median of a data set

Practice material written by Zestly, based on the quantitative skills annex of the DfE GCE A level economics subject content (2014): 'calculate and interpret index numbers', 'make calculations to convert from money to real terms', 'understand and use the terms mean, median and relevant quantiles'. All data in the questions are invented for practice.