Explaining relationships within one issue's data
The second Achieved criterion
- Achieved requires "providing explanations of relationships in statistical data for each of the two contemporary economic issues using economic concepts and/or models".
- "For each" — so you do this twice, once per issue, before you ever compare the two.
- A relationship within one issue means a link between two or more series that both belong to that issue.
What counts as a relationship within one issue
| Issue | Series that relate to each other |
|---|---|
| Inflation | CPI, the OCR, wage growth, the price of individual CPI groups |
| Unemployment | The unemployment rate, participation rate, underutilisation rate, employment, unemployment by age or region |
| Economic growth | Real GDP, nominal GDP, real GDP per capita, GDP by industry, investment |
| International trade | Export receipts, import payments, the balance on goods and services, the exchange rate, export volumes |
The three-part structure of an explanation
Every relationship explanation needs all three, in order:
1 — Describe what the data shows.
- Use actual numbers from your figure.
- "Between 2022 and 2024 the unemployment rate rose from 3.4% to 4.6%, while the underutilisation rate rose from 9.1% to 11.8%."
2 — Name the economic concept or model that explains it.
- This is the part the criterion insists on — "using economic concepts and/or models".
- "Underutilisation includes the unemployed plus the underemployed and available potential jobseekers…"
3 — Explain the mechanism.
- Say how one causes or relates to the other, step by step.
- "…so when firms respond to weaker demand by first cutting hours rather than staff, underemployment rises before unemployment does. The wider gap between the two rates therefore shows that the labour market weakened by more than the headline rate alone indicates."
Steps 1 and 2 without step 3 is description. All three is explanation.
Worked relationships you can use
Inflation: CPI and the OCR
- Concept: monetary policy and the RBNZ's Remit (a 1–3% inflation target).
- Mechanism: rising CPI → RBNZ raises the OCR → retail interest rates rise → borrowing and spending fall → AD shifts left → the price level falls. Expect the OCR to move after CPI rises, and CPI to respond with a further lag of a year or more.
Unemployment: the unemployment rate and the participation rate
- Concept: the HLFS definition; discouraged workers.
- Mechanism: a falling unemployment rate with a falling participation rate suggests people leaving the labour force rather than finding work, because discouraged workers fail the "actively seeking" test and are removed from both the numerator and the denominator.
Growth: real and nominal GDP
- Concept: real versus nominal indicators.
- Mechanism: the gap between the two series is inflation. A widening gap means an increasing share of nominal growth is price rather than quantity.
Trade: export receipts and export volumes
- Concept: receipts = price × quantity.
- Mechanism: receipts rising while volumes fall means prices rose enough to more than offset the volume loss — so the gain came from world prices, not from producing more.
Worked ExampleOne issue, two series, one relationship
Issue: unemployment. You have plotted the unemployment rate and the participation rate over ten years.
⚠️ Invented data, for method only.
| Year | Unemployment rate | Participation rate |
|---|---|---|
| Year 6 | 3.3% | 71.7% |
| Year 7 | 3.6% | 71.4% |
| Year 8 | 4.2% | 70.8% |
| Year 9 | 4.5% | 70.2% |
| Year 10 | 4.4% | 69.6% |
Explain the relationship between these two series.
Step 1 — Describe what the data shows
Between Year 6 and Year 9 the unemployment rate rose from 3.3% to 4.5%, an increase of 1.2 percentage points. Over the same period the participation rate fell steadily, from 71.7% to 70.2%.
In Year 10 the unemployment rate fell slightly, from 4.5% to 4.4% — but the participation rate continued to fall, to 69.6%.
Step 2 — Name the concepts
- The HLFS definition of unemployment: without paid work, available, and actively seeking.
- The labour force: the employed plus the unemployed.
- The participation rate: the labour force as a proportion of the working-age population.
- Discouraged workers: people who want work but have stopped actively seeking.
Step 3 — Explain the mechanism for Years 6 to 9
Both series moved in the same story: more people unemployed, and fewer people in the labour force at all.
As unemployment rose, some jobseekers searched for a long time without success. Once they stopped actively seeking, they failed the third HLFS condition and were reclassified as not in the labour force.
That is why the participation rate fell at the same time as the unemployment rate rose: the labour market was weak enough both to leave more people without work and to persuade others to stop looking altogether.
Step 4 — Explain Year 10 — the important part
In Year 10 the unemployment rate fell. Taken alone, that reads as an improvement.
But the participation rate kept falling, to 69.6%. Since
and discouraged workers leave both the numerator and the denominator, their departure mechanically lowers the rate without anyone finding a job.
The likely explanation is therefore that the Year 10 improvement is not real. It reflects people giving up rather than employers hiring.
Step 5 — State the check that would settle it
The decisive figure is total employment — the number of people in work, not a rate.
- If employment rose in Year 10, the improvement is genuine and participation fell for another reason, such as an ageing population.
- If employment fell or was flat while the unemployment rate fell, discouragement is confirmed.
The underutilisation rate is the second check: it counts discouraged workers as available potential jobseekers, so it would show no improvement in Year 10 if the discouragement explanation is right.