Exam-style question
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Calculate 3.2.1.3 uses of index numbers using a external-cost example from The national and international economy.
Model answer
What a good answer should say
- A strong answer should calculate 3.2.1.3 uses of index numbers by defining the relevant economic relationship, applying it to the external-cost example, and showing how the mechanism changes incentives, market outcomes, welfare or macroeconomic performance.
Explanation
Why this works
The reasoning should move from cause to transmission mechanism to consequence. Use a diagram, calculation or data point if it is relevant, then test the answer with Economics evaluation: size of effect, time period, elasticity or responsiveness, assumptions, and distribution of gains and losses.
This keeps the response specific to The measurement of macroeconomic performance rather than repeating a generic question template.
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