How do you handle economic data, make a reasoned judgement, and answer the question paper's command words?
Economic skills and decision making: interpreting and processing economic data, applying theory to evidence, making reasoned economic judgements, and answering the question paper's command words.
An SQA Higher Economics guide to the analytical skills examined in the question paper: interpreting and processing economic data (percentages, index numbers, graphs), applying economic theory to evidence, making and justifying economic decisions, and answering command words such as describe, explain, analyse and evaluate.
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What this key area is asking
The Higher Economics question paper does not just test recall: it tests skills. You must interpret and process economic data, apply theory to evidence, make and justify economic decisions, and answer the command words precisely. This page gathers those cross-cutting skills, which appear in every area of the course and carry a large share of the marks.
Interpreting and processing economic data
Many questions give you data, statistics, index numbers, tables or graphs, and ask you to use them. The core processing skills are:
- Percentage change: , used for growth rates, inflation and changes in any variable.
- Index numbers: the CPI is an index with a base of 100; a CPI of 104 means prices are 4% above the base year. Reading and comparing index numbers is a frequent task.
- Reading tables and graphs: identifying trends, comparing figures, and quoting the relevant numbers as evidence.
The rule for every data question is the same: do the calculation or reading accurately, then interpret it, say what the figure means in economic terms.
Applying theory to evidence
Higher rewards using the theory from the course to make sense of evidence. Faced with data on prices and quantities, you might apply demand and supply or elasticity; on the economy as a whole, the macroeconomic aims and policies; on trade, comparative advantage, the balance of payments or exchange rates. The skill is to connect the specific evidence to the relevant concept and draw out what it implies, rather than describing the data on its own.
Making economic decisions and judgements
This mirrors the conflicts between the aims: most real decisions involve a trade-off, so a good judgement names the trade-off and explains why one side outweighs the other given the data.
Answering the command words
The command word tells you what kind of answer earns the marks. The main ones in Higher Economics are:
| Command word | What it requires |
|---|---|
| Describe | Give detail or features, without reasons |
| Explain | Give reasons, link cause to effect |
| Analyse | Break the issue down and interpret it |
| Evaluate / Discuss | Weigh both sides and reach a judgement |
| Calculate | Work out a figure and show the steps |
Worked example: using data to make a decision
Why these skills matter
These analytical skills, data handling, applying theory, judgement and answering command words, run through the entire course and carry a large share of the question-paper marks. They are also the skills the assignment assesses in depth and that universities and employers value. Mastering them turns knowledge of the concepts into the marks the exam actually awards.
Try this
Q1. The CPI rises from 100 to 103 over a year. State the rate of inflation and what it means. [2 marks]
- Cue. Inflation is 3% (the percentage change in the index); the general price level has risen by 3% over the year, above the UK's 2% target.
Q2. State what the command word "evaluate" requires you to do. [2 marks]
- Cue. Weigh the evidence or arguments on both sides (strengths and weaknesses, for and against) and reach a clear, justified judgement supported by the strongest points.
Exam-style practice questions
Practice questions written in the style of SQA exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
SQA Higher (style)4 marksReal GDP rises from 200 billion to 210 billion. Calculate the percentage change and state what it shows.Show worked answer →
Worth 4 marks. The calculation and its meaning each earn marks.
Calculation (about 2 marks). Percentage change .
Interpretation (about 2 marks). Real GDP, which is national output adjusted for inflation, has risen by 5%. Because it is real (not just money) GDP, this shows genuine economic growth of 5% over the period: the economy is producing 5% more goods and services. Data-handling questions always want the figure and what it means in economic terms.
SQA Higher (style)6 marksUsing evidence, evaluate whether the government should cut interest rates given the data provided.Show worked answer →
Worth 6 marks. Use the data on both sides and reach a justified decision.
Use the evidence for and against (about 4 marks). A decision question requires you to weigh the data. If the evidence shows weak growth and rising unemployment, that supports cutting interest rates to boost demand, spending and jobs. If it also shows above-target inflation or a current account deficit, that argues against a cut, because lower rates could raise inflation further and worsen the deficit. Quote the figures that support each side.
Reach a justified judgement (about 2 marks). State a clear decision and justify it with the strongest evidence, for example: cut rates because the priority is the recession and weak jobs market, while noting the risk to inflation, or hold rates because inflation is the greater danger. The marks come from using the evidence on both sides and justifying the decision, not from the choice itself.
Related dot points
- The Higher Economics assignment: an independent research report on a current economic topic, applying economic theory to evidence, reaching a conclusion, and how it is assessed.
An SQA Higher Economics overview of the assignment, the coursework component in which a candidate researches a current economic topic, applies relevant economic theory to gathered evidence, analyses it and reaches a conclusion in a report, plus how the assignment is structured and assessed.
- Government policies: fiscal policy, monetary policy and supply-side policy, how each works to influence the macroeconomic aims, and their limitations.
An SQA Higher Economics answer on government policies, covering fiscal policy (taxation and spending), monetary policy (interest rates and the money supply, set by the Bank of England), and supply-side policy (raising productive capacity), how each affects the macroeconomic aims, and the limitations of each.
- Elasticity: price elasticity of demand and its calculation and determinants, the link to total revenue, and price elasticity of supply, income elasticity and cross elasticity.
An SQA Higher Economics answer on elasticity, covering how to calculate price elasticity of demand and interpret it, the factors that make demand elastic or inelastic, the link between PED and total revenue, and price elasticity of supply, income elasticity and cross elasticity of demand.
- The balance of payments: the structure of the current account, the meaning of a current account surplus and deficit, the causes of a deficit, and policies to correct one.
An SQA Higher Economics answer on the balance of payments, covering the structure of the current account (trade in goods and services, plus income), the meaning of a current account surplus and deficit, the causes of a persistent deficit, and the policies a government can use to correct one.
Sources & how we know this
- Higher Economics Course Specification and Specimen Question Paper — SQA (Qualifications Scotland) (2024)