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2.3

Economic Data

Index Numbers Used to compare changes in some variable rela7ve to some

base period.

Value of index in = given period

absolute value in given period absolute value in base period

X 100

Chapter 2, Slide 1

Fig. 2-­‐2

Index Values for Steel and Newsprint Output

Chapter 2, Slide 2

Graphing Economic Data Economic variables usually come in two basic forms: • Cross-­‐sec@onal data • Time-­‐series data A scaBer diagram is a useful and common way of looking at the rela7onship between two variables.

Chapter 2, Slide 3

Graphing Economic Data Economic variables usually come in two basic forms: •

1. Cross-­‐sec@onal data

Average House Prices for Ten Canadian Provinces, 2012

2. Time-­‐series data

A scaBer diagram is a useful and common way of looking at the rela7onship between two variables.

Chapter 2, Slide 4

2.4

Graphing Economic Theories

A func@onal rela@on can be expressed: • in a verbal statement • in a numerical schedule (a table)

• in a mathema7cal equa7on • in a graph

Example:

When income is zero, the person will spend \$800 a year, and

for every extra \$1 of income the person will increase expenditure by 80 cents. C= \$800 + 0.8Y Copyright © 2014 Pearson Canada Inc.

Chapter 2, Slide 5

Fig. 2-­‐6 Income and Consump@on

Annual Income

Consump@on Reference LeBer

\$

0

\$

800

p

2 500

2 800

q

5 000

4 800

r

7 500

6 800

s

10 000

8 800

t

Chapter 2, Slide 6

Graphing Func@onal Rela@ons The rela7onship between two variables may be posi@ve or nega@ve.

If the graphs of these rela7onships are straight lines, the variables

are linearly related to each other.

Otherwise, variables are said to be non-­‐linearly related.