Have you any questions on homework or the previous lesson?
Note the first two course objectives from your text page 19:
1. Make and interpret a time-series graph, a scatter diagram, and a cross-section
graph.
2. Distinguish between linear and nonlinear relationships and between relationships
that have a maximum and a minimum.
I. Graphing Data
A. Graphs are valuable tools that clarify what otherwise might be obscure relationships.
B. Graphs represent "quantity" as a distance.
C. Two-variable graphs use two perpendicular scale lines.
1. The vertical line is the y-axis.
2. The horizontal line is the x-axis.
3. The zero point in common to both axes is the origin.
D. Three types of graphs are scatter diagrams, time-series
graphs, and cross-section graphs.
1. A scatter diagram plots the value of one variable
that is associated with the value of another variable. For instance, as illustrated in the
textbook, a scatter diagram might show how the average level of consumption is associated
with the average income in the United States between 1986 and 1996.
a) Scatter diagrams can make clear the relationship between two
variables. For example, they may show that an increase in one variable (say, average
income) is correlated with an increase in other variable (say, average consumption).
Correlation does not necessarily imply causation.
b) Graphs can have breaks in their axes, indicating that there
are jumps in the variable being measured.
c) Graphs may mislead by stretching or squeezing an axis
to either over-emphasize or minimize fluctuations in a variable.
2. Time-series graphs plot time along the horizontal
axis and the variable being studied along the vertical axis.
a) A time-series graph shows the level of the variable, how it
changes over time, whether changes are rapid or slow, and whether there is any trend.
b) Comparing two time-series on a single diagram may require
the use of different scales for the variables.
3. A cross-section graph shows the values of an economic
variable for different groups at the same point in time. An example, given in the text, of
a cross-section graph is the average income in the nation’s ten largest metropolitan
areas in 1993.
II. Graphs Used in Economic Models
A. Graphs are often used to show the
relationship between variables in an economic model, a simplified description of
the economy or a part of the economy.
B. Graphs often have a basic pattern that can immediately
convey the relationship between the variables.
1. A positive relationship (or direct relationship)
occurs when an increase (decrease) in the variable on the horizontal axis is associated
with an increase (decrease) in the variable on the vertical axis.
a) A relationship illustrated by a straight line is a linear
relationship.
2. A negative relationship (or inverse relationship)
is shown when an increase (decrease) in the variable on the horizontal axis is related to
a decrease (increase) in the variable on the vertical axis.
3. A relationship may have a maximum or a minimum.
In this case, a particular value of one of the variables is associated with the highest
(or lowest) value for the other variable.
4. If there is no relationship between the variables, so
that no matter what happens to one variable the other remains constant, the diagram is
either a horizontal or a vertical line.
(The viewgraphs
provide assistance in mastering the course objectives.Take
your own notes.)
Divide into teams of three persons. Prepare a five minute oral report
wherein each of you provides either an introduction, body, or a conclusion from your
team's visit to one of the following:
http://www.nuff.ox.ac.uk/Economics/Growth/ Site includes links to statistical datasets, reading, research and matters related to
economic growth
http://www.igc/org/thp/ The Ending World Hunger Project links to conference reports, maps, and speeches
http://www.interaction.org/ 100 non-profit organizations wanting to help the world's poor with a mission
statement, search engine, calendar of events, etc.
http://www.worldbank.org/ The World Bank - a source of financing for less developed countries.
Notes
Introduction
Body
1.
2.
3.
4.
Conclusion
6. Let's begin the Questions and Problems (Study Guide pages 13-18)
What we don't complete in class, you can do as homework.
1. Review Key Concepts pages 11
- 12 in your study guide.
2. Complete the odd-numbered Questions from your study
guide pages 13 - 18 and check your answers on pages 19 - 22.
3. Compare your class notes and your understanding of the homework Questions with
your study partner.
4. Become comfortable with using your Economics in Action tutorial portion called Using EIA, and use the EIA tutorial to accomplish the section
called Making and Using Graphs.
7. A Half Dozen More Discussion Questions
1. Suppose you have 150
pairs of variables. Is it easier to find positive and negative relationships using a
graph, or by comparing sets of the variables?
2. How would a scatter diagram reveal whether two variables are positively or
negatively related?
3. You think that the price of gold rises when inflation rises, and the price of
gold falls when inflation falls. Which diagram or diagrams help you check your
hypothesis?
4. What is the connection between the slope of a line and whether the relationship
is direct or inverse?
5. If a line slopes downward and to the right, is its slope positive or negative?
If a line slopes upward and to the right, is its slope positive or negative?
6. If a curve has a maximum point, what is the slope of the curve to the left of the
maximum point, at the maximum point, and to the right of the maximum point?
8. Homework
1. Review Key Concepts pages 11
- 12 in your study guide.
2. Complete the odd-numbered Questions from your study
guide pages 13 - 18 and check your answers on pages 19 - 23.
3. Compare your class notes and your understanding of the homework Questions with
your study partner.
9. Summary
1. Graphs sometimes
reveal results that are otherwise not observed.
2. The delta, or "change in" symbol (a triangle) is a shorthand way of
helping you find the slope of a line =
delta Y / delta X.
3. If in the future you become puzzled about the math in the book, use this chapter
as a reference.
4. A scatter diagram plots the values of one variable associated with another
variable (such as consumer spending and consumer income for the decade of the1990s.
Scatter diagrams show relationships, such as whether spending rises as income rises.
5. A time-series graph plots time on the horizontal axis and the variable being
studied on the vertical axis (such as the Dow Jones Industrial Average during the most
recent month. Time-series show how a variable changes over time.
6. A cross-section graph shows values of an economic variable for different groups
for a point in time (such as average income in major U.S. cities during 1998).
