Analysing Economic Interrelationships

In the following items, economic interrelationships are depicted in a graph or table. Your task is to analyse these interrelationships and interpret them correctly.

For each item, choose the correct answer (A, B, C or D) and mark the appropriate letter on your answer sheet.

General recommendations on taking the “Analysing Economic Interrelationships” test:
In this test you will encounter various types of illustrations: curve graphs (cf. Item 2), column or bar graphs (cf. Item 3), pie graphs (cf. Item 1) and tables.

In curve and column graphs, pay special attention to the units with which the axes are marked. In the simplest case, your will find absolute numbers (e.g. the number of residents or the price in Euros). But sometimes the axis will represent percentages (e.g. the percentage of the population of a country). In the latter case, it is difficult to keep track of the overall number to which the percentage refers. Ten percent of the U.S. population is naturally a greater number of persons than ten percent of the population of Germany.

Experience has shown that graphs depicting percentage changes (cf. Item 3) are particularly difficult. As a little exercise, check Statements III and IV against the graph in Item 3:

• Statement III: In the first quarter of 2001 the earnings were greater than in the second quarter of 2001.
  The statement may appear correct at first sight. But be careful: The statement cannot be evaluated on the basis of the graph, since it would be wrong to compare the bars with one another (cf. above). It is entirely possible that the earnings in 2/2001 were greater than in 1/2001; but it is also possible that they were smaller. Since we do not know the answer, the statement is incorrect.
• Statement IV: In the fourth quarter of 2003, the earnings were smaller than in the fourth quarter of 2000. This statement is incorrect. In 4/2001 the earnings were one percent greater than in 4/2000. In 4/2002 they were about 0.5 percent greater than in 4/2001, and in 4/2003 they were slightly lower than in 4/2002. Altogether, the earnings in 4/2003 were therefore more than one percent greater than in 4/2000.