Marking a short economics explanation
A two-mark answer about interest rates shows why naming an outcome is only part of an explanation.
The question
Explain how a rise in interest rates can reduce household consumption. (2 marks)
The marking guide
- Award 1 mark for identifying higher borrowing costs or increased rewards for saving.
- Award 1 further mark for linking that change to reduced household spending. Accept a clear mechanism involving disposable income, postponed purchases or saving instead of spending.
The sample response
Higher interest rates make loans more expensive. Households with variable-rate mortgages have higher repayments, leaving less income to spend on other goods and services.
Axtant’s mark and feedback
You identify that loans become more expensive and explain that higher mortgage repayments leave households with less income to spend. This gives both the change in borrowing costs and its link to reduced spending.
Why the guide matters here
The answer identifies a borrowing-cost change and follows it through to spending. Naming consumption alone would not establish that connection.
A useful teaching follow-up
Ask students to connect the policy change to a household decision. A short answer can earn full credit without a long introduction.
Try it with your material
This practice question, guide and sample response were written for Axtant. The mark and feedback shown are Axtant’s own for that response.